HB 112 — CANNABIS LICENSURE CHANGES

e t 17 [X.] Y.

"financial consideration" means value that w l n d 18 is given or received, directly or indirectly, through sales, e= t= 1719 barter, trade, fees, charges, dues, contributions or donations;

wa l ni da 18e r 20 [Y.] Z.

"homegrown" or "homemade" means grown or =a =t 19m am l21 made for purposes that are not for resale;

id ar e r22 20 [Z.] AA.

"illegal cannabis product" means a ac te ms mk 2123 cannabis product that is:

de ra en 22b 24 (1) produced or manufactured outside New cu e[ s k 23 Mexico;

e.230717.2 a- n6 b- 24HCEDC/HB 112 (2) produced, manufactured, distributed or u [ sold in New Mexico by a person not licensed to produce, .229324.1 - 6 - manufacture, distribute or sell the cannabis product;

e t 17 (1) production of cannabis at a single w l n d 18 licensed premises;

provided that the person shall not possess e= t= 1719 more than two hundred total mature cannabis plants at any one wa l ni da 18e r 20 time;

=a =t 19m am l21 (2) manufacture of cannabis products at a id ar e r22 20 single licensed premises;

ac te ms mk 2123 (3) sales and transportation of cannabis de ra en 22b 24 products produced or manufactured by that person or another cu e[ s k 23 cannabis producer microbusiness or integrated cannabis e.230717.2 a- n7 b- 24HCEDC/HB 112 microbusiness;

u [ (4) operation of only one retail .229324.1 - 7 - establishment;

(3) all areas of a standalone cannabis consumption area, including retail and other areas, whether in enclosed or outside spaces, and including private or members- e t 17 only clubs where cannabis products are available for sale or w l n d 18 consumption;

and e= t= 1719 (4) with respect to a location that is wa l ni da 18e r 20 specifically licensed for the production of cannabis outside of =a =t 19m am l21 a building, the amount of land that the licensee owns, leases id ar e r22 20 or has a right to occupy that is identified in the application ac te ms mk 2123 for licensure for cultivation of cannabis;

provided that the de ra en 22b 24 licensed premises may be decreased but shall not be increased cu e[ s k 23 without permission of the division;

e.230717.2 a- n8 b- 24HCEDC/HB 112 FF.

"licensee" means a person that is licensed u [ pursuant to the Cannabis Regulation Act;

.229324.1 - 8 - [EE.] GG.

"medical cannabis registry" means the system by which the department of health approves or denies applications and issues and renews registry identification e t 17 cards for qualified patients and primary caregivers;

w l n d 18 [JJ.] LL.

"primary caregiver" means a resident of e= t= 1719 New Mexico who is at least eighteen years of age and who is wa l ni da 18e r 20 responsible for managing the well-being of a qualified patient =a =t 19m am l21 with respect to the medical use of cannabis pursuant to the id ar e r22 20 Lynn and Erin Compassionate Use Act;

ac te ms mk 2123 [KK.] MM.

"public space" means any place to which de ra en 22b 24 the general public has access;

cu e[ s k 23 [LL.] NN.

"qualified patient" means a resident of e.230717.2 a- n9 b- 24HCEDC/HB 112 New Mexico who holds a registry identification card pursuant to u [ the Lynn and Erin Compassionate Use Act;

.229324.1 - 9 - [MM.] OO.

"residence" or "household" means a housing unit and includes any place in or around the housing unit that is not a public space and at which an occupant of the housing unit produces, manufactures, keeps or stores homegrown or homemade cannabis products or stores legally purchased e t 17 cannabis;

w l n d 18 [OO.] QQ.

"retail establishment" means a location e= t= 1719 at which cannabis products are sold directly to consumers;

wa l ni da 18e r 20 [PP.] RR.

"superintendent" means the superintendent =a =t 19m am l21 of regulation and licensing;

id ar e r22 20 [QQ.] SS.

"unprocessed" means unaltered from an ac te ms mk 2123 original, raw or natural state;

and de ra en 22b 24 [RR.] TT.

"vertically integrated cannabis cu e[ s k 23 establishment" means a person that is authorized to act as one e.230717.2 a- n10 b- 24HCEDC/HB 112 or more of the following:

u [ (1) a cannabis courier;

.229324.1 - 10 - (2) a cannabis manufacturer;

No later than January 1, 2022, the division e t 17 shall promulgate rules that are consistent with industry w l n d 18 standards necessary for the division to carry out its duties e= t= 1719 pursuant to the Cannabis Regulation Act as follows:

wa l ni da 18e r 20 (1) qualifications and procedures for =a =t 19m am l21 licensure;

provided that qualifications shall be directly and id ar e r22 20 demonstrably related to the operation of the applicable ac te ms mk 2123 cannabis establishment;

de ra en 22b 24 (2) security requirements for a cannabis cu e[ s k 23 establishment;

e.230717.2 a- n11 b- 24HCEDC/HB 112 (3) requirements related to:

u [ (a) inspection and monitoring of a .229324.1 - 11 - cannabis establishment;

(a) a person who is twenty-one years old or older shall not purchase more than two ounces of cannabis, sixteen grams of cannabis extract and eight hundred milligrams e t 17 of edible cannabis at one time;

and w l n d 18 (b) as to commercial cannabis activity:

e= t= 1719 1) a consumer shall not possess more than two ounces of wa l ni da 18e r 20 cannabis, sixteen grams of cannabis extract and eight hundred =a =t 19m am l21 milligrams of edible cannabis outside the consumer's private id ar e r22 20 residence;

2) any cannabis in excess of the amounts described ac te ms mk 2123 in Item 1) of this subparagraph shall be stored in the person's de ra en 22b 24 residence and shall not be visible from a public place;

and 3) cu e[ s k 23 the division shall not limit the amount of tetrahydrocannabinol e.230717.2 a- n12 b- 24HCEDC/HB 112 concentration in a cannabis product;

provided that the division u [ may adopt requirements for apportionment and packaging of .229324.1 - 12 - cannabis products;

(8) procedures that promote and encourage e t 17 racial, ethnic, gender and geographic diversity and New Mexico w l n d 18 residency among license[license] applicants, licensees and cannabis e= t= 1719 industry employees;

wa l ni da 18e r 20 (9) rules for a certification process to =a =t 19m am l21 identify cannabis products for consumers from integrated id ar e r22 20 cannabis microbusinesses or cannabis producer microbusinesses ac te ms mk 2123 or owned by representatives of communities that have been de ra en 22b 24 disproportionately harmed by rates of arrest through the cu e[ s k 23 enforcement of cannabis prohibitions in law and policy and e.230717.2 a- n13 b- 24HCEDC/HB 112 underserved communities that include tribal, acequia, land u [ grant-merced and other rural historic communities;

.229324.1 - 13 - (10) in consultation with the economic development department, development of a technical assistance resource guide for rural New Mexico residents who are seeking to establish vertically integrated cannabis establishments, cannabis producer microbusinesses or integrated cannabis microbusinesses;

and (c) which additives are approved for and e t 17 prohibited from inclusion in cannabis products;

provided that w l n d 18 nicotine shall be prohibited;

e= t= 1719 (12) in consultation with the New Mexico wa l ni da 18e r 20 department of agriculture and the department of environment, =a =t 19m am l21 rules to establish standards for quality control, inspection id ar e r22 20 and testing of cannabis products for potency and contaminants, ac te ms mk 2123 except for cannabis produced or harvested for research purposes de ra en 22b 24 and not for ingestion;

provided that all such rules and cu e[ s k 23 standards shall be consistent with the rules and standards for e.230717.2 a- n14 b- 24HCEDC/HB 112 testing of medical cannabis products;

and u [ (13) in consultation with the state fire .229324.1 - 14 - marshal's office of the homeland security and emergency management department, rules with regard to health and safety.

No later than January 1, 2022, the division shall promulgate rules in consultation with the New Mexico e t 17 department of agriculture, the department of environment and w l n d 18 the office of the state engineer to establish:

e= t= 1719 (1) environmental protections;

and wa l ni da 18e r 20 (2) protocols to ensure licensees' compliance =a =t 19m am l21 with state and local laws and ordinances governing food and id ar e r22 20 product safety, occupational health and safety, environmental ac te ms mk 2123 impacts, natural resource protection, water use and quality, de ra en 22b 24 water supply, hazardous materials, pesticide use and wastewater cu e[ s k 23 discharge.

e.230717.2 a- n15 b- 24HCEDC/HB 112 E.

No later than January 1, 2022, the division u [ shall adopt rules in consultation with the department of health .229324.1 - 15 - to establish standards and determinations on requirements for reserving cannabis products for sale to qualified patients, primary caregivers and reciprocal participants.

e t 17 G.

The "cannabis regulatory advisory committee" w l n d 18 shall be created no later than September 1, 2021.

The e= t= 1719 committee shall advise the division on the development of rules wa l ni da 18e r 20 pursuant to the Cannabis Regulation Act, including best =a =t 19m am l21 practices and the promotion of economic and cultural diversity id ar e r22 20 in licensing and employment opportunities and protection of ac te ms mk 2123 public health and safety while ensuring a regulated environment de ra en 22b 24 for commercial cannabis activity that does not impose cu e[ s k 23 unreasonable barriers that would perpetuate, rather than reduce e.230717.2 a- n16 b- 24HCEDC/HB 112 and eliminate, the illicit market for cannabis.

A person u [ appointed to the cannabis regulatory advisory committee shall .229324.1 - 16 - not hold any ownership interest or investment in a licensed person pursuant to the Cannabis Regulation Act;

and e t 17 (5) one member for each of the following w l n d 18 groups or professional qualifications, appointed by the e= t= 1719 superintendent:

wa l ni da 18e r 20 (a) a cannabis policy advocacy =a =t 19m am l21 organization;

id ar e r22 20 (b) a labor organization;

ac te ms mk 2123 (c) a qualified patient;

de ra en 22b 24 (d) a state or local agency with cu e[ s k 23 relevant expertise as the director and the superintendent deem e.230717.2 a- n17 b- 24HCEDC/HB 112 appropriate;

u [ (e) an Indian nation, tribe or pueblo .229324.1 - 17 - with relevant expertise as the director and the superintendent deem appropriate;

and (m) previous experience as a cannabis e t 17 retailer, cannabis producer or cannabis manufacturer and who is w l n d 18 a nonvoting member.

e= t= 1719 H.

The cannabis regulatory advisory committee shall wa l ni da 18e r 20 elect from among its members a chair and such other officers as =a =t 19m am l21 it deems necessary.

The committee shall meet at the call of id ar e r22 20 the chair, the director or the superintendent.

A majority of ac te ms mk 2123 members currently serving constitutes a quorum for the conduct de ra en 22b 24 of business.

Members shall serve at the pleasure of the cu e[ s k 23 superintendent.

e.230717.2 a- n18 b- 24HCEDC/HB 112 I.

Public voting members of the cannabis regulatory u [ advisory committee are entitled to receive per diem and mileage .229324.1 - 18 - as provided for state employees pursuant to the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

[and] (3) undertake studies and conduct courses of e t 17 instruction for division employees that will improve the w l n d 18 operations of the division and advance its purposes;

and e= t= 1719 (4) receive and maintain information and data wa l ni da 18e r 20 from the department of public safety and the federal bureau of =a =t 19m am l21 investigation relating to licensing disqualifications based on id ar e r22 20 criminal history." ac te ms mk 2123 SECTION 3.

Section 26-2C-3.1 NMSA 1978 (being Laws 2024, de ra en 22b 24 Chapter 38, Section 5) is amended to read:

cu e[ s k 23 "26-2C-3.1.

CRIMINAL HISTORY BACKGROUND CHECKS--PROCESSES e.230717.2 a- n19 b- 24HCEDC/HB 112 AND PROCEDURES.-- u[A. [ A.

.229324.1 - 19 - (1) "director" means a person who serves on the corporate board of directors of a corporation licensed by the division as a cannabis establishment;

(2) "member and manager" includes those persons who are members in or managers of a limited liability company licensed by the division as a cannabis establishment and who are responsible for the operations of the limited 8 liability company;

(3) "officer" means a president, one or more vice presidents, a secretary, a treasurer or a secretary- treasurer or a member of the executive committee, if different 14 from these named officers, of a corporation licensed by the division as a cannabis establishment;

and (4) "partner" means a person who is a co-owner 15e t 17 of a business licensed by the division as a cannabis establishment.w l n d 18 establishment.] = = 19 A.

To investigate the suitability of an applicant a l i a for the medical cannabis program or commercial cannabis e r 20 a t 17activity, B.the division shall have access to criminal history m m 21 d r e 22 records information furnished by the department of public c e s k 23 safety and the federal bureau of investigation, subject to any e a n b 24 restrictions imposed by federal law.

ToIf investigate the suitabilitydivision ofconsiders anu applicant[ wthe lcriminal nhistory drecord 18of forall thecontrolling medicalpersons cannabisof programan or.230717.2 commercial- cannabis20 =- =HCEDC/HB 19112 activity,applicant, the division shall havealso accessconsider to criminal history a l i a records information furnishedprovided by the departmentapplicant ofabout publicthe ecriminal rhistory 20record, aincluding tevidence safety and the federal bureau of investigation,rehabilitation, subjectcharacter toreferences anyand meducational machievements. 21 d restrictions imposed by federal law.

IfB. the division considers r e 22 c e s k 23 an applicant's criminal history record, the division shall also e a n b 24 consider information provided by the applicant about the u [ criminal history record, including evidence of rehabilitation, .229324.1 - 20 - character references and educational achievements.

All controlling persons of an applicant for a license to conduct commercial cannabis activity shall undergo a state and federal criminal history records check, and the controlling persons shall submit an electronic set of fingerprints to the department of public safety for that purpose.

The department of public safety shall conduct a check of state records and forward the fingerprints to the federal bureau of investigation for a national criminal history records check to determine the existence and content of a record of convictions and arrests in this state or other law enforcement 15 jurisdictions and to generate a criminal history records check in accordance with rules of the department of public safety and e t 17 regulations of the federal bureau of investigation.

The w l n d 18 department of public safety may acquire a name-based criminal = = 19 history records check for all controlling persons of an a l i a applicant or a licensee who have twice submitted to a e r 20 a t fingerprint-based criminal history record check and whose m m 21 d r e 22 fingerprints are unclassifiable.

The department of public c e s k 23 safety shall review the information obtained from the criminal e a n b 24 history records check and shall compile and provide that u [ information to the division.

The division shall use the .230717.2 - 21 - HCEDC/HB 112 information resulting from the fingerprint-based criminal history records check to investigate and determine whether an applicant is qualified to hold a cannabis license.

AnCriminal applicanthistory forinformation areceived licensefrom tothe conductdepartment commercialof cannabispublic activitysafety shallor undergothe a state and federal criminalbureau historyof recordsinvestigation check,that andis thenot applicantalready shalla submitmatter an electronic set of fingerprints to the department of public safetyrecord forshall: that purpose.

The department of public safety shall conduct a check of state records and forward the fingerprints 8 to the federal bureau of investigation for a national criminal history records check to determine the existence and content of a record of convictions and arrests in this state or other law enforcement jurisdictions and to generate a criminal history records check in accordance with rules of the department of public safety and regulations of the federal bureau of investigation.

The department of public safety may acquire a 15 name-based criminal history records check for an applicant or a licensee who has twice submitted to a fingerprint-based e t 17 criminal history record check and whose fingerprints are w l n d 18 unclassifiable.

The department of public safety shall review = = 19 the information obtained from the criminal history records a l i a check and shall compile and provide that information to the e r 20 a t division.

The division shall use the information resulting m m 21 d from the fingerprint-based criminal history records check to r e 22 c e s k 23 investigate and determine whether an applicant is qualified to e a n b 24 hold a cannabis license.

u [ D.

Criminal history information received from the .229324.1 - 21 - department of public safety or the federal bureau of investigation that is not already a matter of public record shall:

8 (3) not be considered a public record pursuant to the Public Records Act;

and 14 (4) not be disclosed to anyone other than public employees directly involved in the decision affecting the applicant.

e t 17 [B.] E.D.

The division and the department of public w l n d 18 safety shall adopt rules [providing the procedures to be 15= = 19 followed for submission of an applicant's biometric data to the a l i a department of public safety to conduct a state criminal history e tr 1720 a t background check and for its submission of the biometric data wm lm n21 d 18r e 22 to the federal bureau of investigation to conduct a national =c =e 19s k 23 criminal history background check for the following cannabis e a ln ib a24 establishments:

eu r[ 20 a t (1) cannabis courier;

m.230717.2 m- 2122 d- HCEDC/HB 112 (2) cannabis manufacturer;

r e 22 c e s k 23 (3) cannabis producer;

e a n b 24 (4) cannabis producer microbusiness;

u [ (5) cannabis research laboratory;

.229324.1 - 22 - (6) cannabis retailer;

8 C.

(1) if an applicant for licensure is a sole 15 proprietor business, the sole proprietor;

(2) if an applicant for licensure is a limited e t 17 partnership, each partner of the limited partnership;

w l n d 18 (3) if the applicant for licensure is a 15= = 19 limited liability company, each member and manager of the a l i a limited liability company;

e tr 1720 a t (4) if the applicant for licensure is a wm lm n21 d 18r e 22 corporation, each director and officer of the corporation;

and =c =e 19s k 23 (5) any controlling person of the applicant e a ln ib a24 for licensure, as defined in Section 26-2C-2 NMSA 1978.

eu r[ 20 a t D.

The division shall use the information from the m.230717.2 m- 2123 d- HCEDC/HB 112 criminal history background check to evaluate the applicant's r e 22 c e s k 23 qualifications for licensure.

e a n b 24 E.

Arrest record information received from the u [ federal bureau of investigation and the department of public .229324.1 - 23 - safety shall be confidential, shall not be considered a public record pursuant to the Public Records Act and shall not be disclosed to persons not directly involved in the decision affecting the applicant] to carry out the provisions of this section." SECTION 4.

Section 26-2C-7 NMSA 1978 (being Laws 2021 (1st S.S.), Chapter 4, Section 7, as amended) is amended to 8 read:

CANNABIS ACTIVITY LICENSING--APPLICATION-- 14 ISSUANCE AND DENIAL OF A LICENSE--SUSPENSION AND REVOCATION.-- A.

In carrying out its commercial cannabis activity e t 17 licensing duties, the division shall:

w l n d 18 (1) [no later than September 1, 2021] accept 15= = 19 and [begin processing] process license applications;

[for a l i a cannabis producers, cannabis producer microbusinesses and any e tr 1720 a t person properly licensed and in good standing as a licensed wm lm n21 d 18r e 22 cannabis producer pursuant to the Lynn and Erin Compassionate =c =e 19s k 23 Use Act;

e a ln ib a24 (2) no later than January 1, 2022, accept and eu r[ 20 a t begin processing license applications for all license types;

m.230717.2 m- 2124 d- HCEDC/HB 112 (3) if a cannabis producer or cannabis r e 22 c e s k 23 producer microbusiness] (2) require as a condition of elicensing afor nany btype 24of licensingcannabis producer or cannabis producer microbusiness that the applicant demonstrate that the applicant has u [ a legal right to a commercial water supply, water rights or .229324.1 - 24 - other source of water sufficient to meet the water needs as determined by the division related to the license as evidenced by documentation from the office of the state engineer of a valid water right or from a water provider that the use of water for cannabis production is compliant with that water provider's rules;

and [(4)] (3) require as a condition of licensing 8 for [anyany type of]of a cannabis producer [oror manufacturer license require][require] that the applicant [to] submit a plan to use, or 15 demonstrate to the division that the applicant cannot feasibly use, energy or water reduction opportunities, including:

e t 17 (a) [for a cannabis producer] drip w l n d 18 irrigation and water collection;

= = 19 (b) natural lighting and energy 15a l i a efficiency measures;

and e r 20 a t (c) renewable energy generation.

em tm 1721 d r e 22 B.

An application for licensure shall be signed by wc le ns dk 1823 the applicant or, if the applicant is a corporation or other =e =a 19n b 24 legal entity, signed by an officer or other person with legal au l[ i a authority to sign documents for the corporation or other legal e.230717.2 r- 2025 a- tHCEDC/HB 112 entity.

Once the division deems an application complete, the m m 21 d division has ninety days to issue or deny a license r e 22 c e s k 23 application.

e a n b 24 C.

The division shall deny an application for an u [ initial license or renewal if the application does not include .229324.1 - 25 - information required by the division or the applicant does not meet the requirements of the Cannabis Regulation Act or rules promulgated in accordance with that act.

The division may refuse to issue, suspend or revoke a license in accordance with the Uniform Licensing Act of any person who does not meet the qualifications for licensure, who is not in compliance with the Cannabis 8 Regulation Act or rules promulgated in accordance with that act 14 or for whom one or more of the following are substantially related to the qualifications, functions or duties of the applicant's or licensee's business in New Mexico:

e t 17 (1) a tax lien related to cannabis activity in w l n d 18 this or another state;

= = 19 (2) a pending investigation or a felony 15a l i a indictment or conviction of the applicant or licensee or a e r 20 a t controlling person of the applicant or licensee in this state em tm 1721 d r e 22 or another state or by the federal government involving fraud, wc le ns dk 1823 deceit or embezzlement;

=e =a 19n b 24 (3) a pending investigation or a felony au l[ i a indictment or conviction of the applicant or licensee or a e.230717.2 r- 2026 a- tHCEDC/HB 112 controlling person of the applicant or licensee involving m m 21 d producing, manufacturing, distributing, selling or giving away r e 22 c e s k 23 illegal cannabis products;

e a n b 24 (4) the denial, suspension or revocation of a u [ cannabis license in another state that would have the same .229324.1 - 26 - result if occurring in New Mexico;

8 (6) a licensee or controlling person that after a notice of noncompliance issued by the division refuses 15 to follow division licensing requirements, state or local operational rules, public health and safety laws or rules or e t 17 other provisions of state law pertaining to cannabis products;

w l n d 18 or = = 19 (7) any other governmental action pending or 15a l i a taken against an applicant, licensee or controlling person that e r 20 a t in the division's determination makes the person unqualified to em tm 1721 d r e 22 be licensed or involved in a cannabis business in New Mexico.

wc le ns dk 1823 E.

Production, manufacture, distribution, sale or =e =a 19n b 24 possession of illegal cannabis product is grounds for denial, au l[ i a suspension or revocation of a license or for taking any other e.230717.2 r- 2027 a- tHCEDC/HB 112 disciplinary action allowed by law or rule of the division.

m m 21 d F.

If the division determines, after a review of r e 22 c e s k 23 pertinent circumstances provided in Subsection D of this e a n b 24 section, that the applicant, licensee or controlling person u [ otherwise meets the qualifications for licensure and that .229324.1 - 27 - issuing a license does not compromise the state's cannabis program or the public health or safety, the division shall issue the license or close the suspension or revocation case.

A conviction for which the related sentence, including any term of probation or parole, has been completed for the production, possession, use, manufacture, distribution or sale or the possession with the intent to manufacture, 8 distribute or sell cannabis is not considered substantially 14 related to the qualifications, functions or duties of a person seeking a license and shall not be the sole ground on which an application is denied.

The provisions of the Uniform Licensing e t 17 Act and the Criminal Offender Employment Act shall govern w l n d 18 consideration of criminal records required or permitted by the = = 19 Cannabis Regulation Act.

15a l i a H.

The division shall deny an application if an e r 20 a t applicant, a controlling person or the premises for which a em tm 1721 d r e 22 license is sought does not qualify for licensure pursuant to wc le ns dk 1823 the Cannabis Regulation Act.

=e =a 19n b 24 I.

The division shall not license a person who has au l[ i a had a license that was issued pursuant to the Cannabis e.230717.2 r- 2028 a- tHCEDC/HB 112 Regulation Act or the Lynn and Erin Compassionate Use Act m m 21 d revoked by the division or the department of health in the r e 22 c e s k 23 three years immediately preceding the date on which the person e a n b 24 filed a new application.

u [ J.

Unless otherwise provided in the Cannabis .229324.1 - 28 - Regulation Act, a person whose license has been revoked may reapply for a license after a period of three years.

The division may consider all of the circumstances resulting in the revocation in determining whether to issue a new license." - 29 - 712 914 1116 13 15 e t 17 w l n d 18 = = 19 a l i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .229324.1.230717.2