HB0312

HOUSE BILL 312

53rd legislature - STATE OF NEW MEXICO - second session, 2018

INTRODUCED BY

Javier Martínez and Bill McCamley and Antonio "Moe" Maestas

and Deborah A. Armstrong and Angelica Rubio

AN ACT

RELATING TO CANNABIS; ENACTING THE CANNABIS TAXATION AND REGULATION ACT; ENACTING THE CANNABIS TAX ACT; CREATING THE DIVISION OF CANNABIS CONTROL IN THE REGULATION AND LICENSING DEPARTMENT AND PROVIDING DUTIES; REVISING THE LYNN AND ERIN COMPASSIONATE USE ACT; REVISING SECTIONS OF LAW RELATED TO CANNABIS; CREATING THE CANNABIS REGULATION FUND, THE COMMUNITY GRANTS REINVESTMENT FUND AND THE COMMUNITY GRANTS REINVESTMENT PROGRAM; PROVIDING AND REVISING PENALTIES; REPEALING SECTION 30-31-25.1 NMSA 1978 (BEING LAWS 1981, CHAPTER 31, SECTION 2, AS AMENDED); MAKING AN APPROPRIATION; AUTHORIZING RECONCILIATION OF MULTIPLE AMENDMENTS TO THE SAME SECTION OF LAW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 38 of this act may be cited as the "Cannabis Taxation and Regulation Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Cannabis Taxation and Regulation Act:

A. "advertisement":

(1) means a statement or a depiction intended to induce the sale of an item and that is displayed in printed material or on a sign or other outdoor display or presented in a radio, television or other media broadcast or in digital media; and

(2) does not include:

(a) a sign or outdoor display or other statement permanently affixed to a licensed premises that is intended to induce the sale of a cannabis item produced or sold on the premises;

(b) a label affixed to a cannabis item or the covering, wrapper or container of a cannabis item; or

(c) an editorial or other material printed in a publication when the publication of the editorial or material was not paid for by a licensee and was not published by or at the direction of a licensee;

B. "advertising" means the publication or dissemination of an advertisement;

C. "cannabis":

(1) means all parts of the plant Cannabis sativa Linnaeus, whether growing or not; the seeds of the plant; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture or preparation of the plant, its seeds or its resin; and

(2) does not include:

(a) the mature stalks of the plant; fiber produced from the stalks; oil or cake made from the seeds of the plant; any other compound, manufacture, salt, derivative, mixture or preparation of the mature stalks, fiber, oil or cake; or the sterilized seed of the plant that is incapable of germination; or

(b) the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink or another product;

D. "cannabis consumption area" means an area within a cannabis retailer's licensed premises where cannabis items may be consumed;

E. "cannabis courier" means a person who is licensed by the division only to transport usable cannabis and cannabis items directly to consumers;

F. "cannabis establishment" means a licensed:

(1) cannabis courier;

(2) cannabis testing laboratory;

(3) cannabis manufacturer;

(4) cannabis microbusiness;

(5) cannabis nursery;

(6) cannabis producer;

(7) cannabis retailer; or

(8) another type of licensee whose operations are provided for by the division in accordance with the Cannabis Taxation and Regulation Act;

G. "cannabis extract":

(1) means a product obtained by separating resins from cannabis by solvent extraction using solvents other than vegetable glycerin, such as butane, hexane, isopropyl alcohol, ethanol or carbon dioxide; and

(2) does not include the weight of any other ingredient combined with cannabis extract to prepare topical or oral administrations, food, drink or another product;

H. "cannabis flowers" means only the flowers of a cannabis plant;

I. "cannabis items" means cannabis, cannabis products and cannabis extracts;

J. "cannabis leaves" means only the leaves of a cannabis plant;

K. "cannabis testing laboratory" means a person who is licensed by the division to perform tests of cannabis items to analyze the strength or purity of the items;

L. "cannabis manufacturer" means a person who is licensed by the division to:

(1) produce cannabis;

(2) manufacture cannabis items;

(3) package and transport cannabis items;

(4) have cannabis items tested by a cannabis testing laboratory; and

(5) sell and transport cannabis items to other cannabis establishments;

M. "cannabis microbusiness" means a person licensed by the division to:

(1) produce cannabis in an area that is less than ten thousand square feet in size;

(2) manufacture cannabis items;

(3) package and transport cannabis items;

(4) have cannabis items tested by a cannabis testing laboratory; and

(5) sell and transport or courier the cannabis items to other cannabis establishments and to consumers;

N. "cannabis nursery" means a person licensed by the division to produce only clones of cannabis plants, immature plants, seeds and other agricultural products used specifically for the planting, propagation and cultivation of cannabis;

O. "cannabis producer" means a person who is licensed by the division only to produce cannabis;

P. "cannabis product":

(1) means a product that contains cannabis or cannabis extracts, including edible or topical products that may also contain other ingredients; and

(2) does not include the weight of any other ingredient combined with cannabis or cannabis extracts to prepare topical or oral administrations, food, drink or another product;

Q. "cannabis retailer" means a person who is licensed by the division to sell and courier cannabis items to a consumer in this state;

R. "commercial cannabis activity":

(1) means the cultivation, production, possession, manufacture, storing, testing, labeling, transportation, couriering and sale of cannabis and cannabis items; and

(2) does not include activities related to the medical cannabis program;

S. "consumer" means a person who purchases, acquires, owns, possesses or uses a cannabis item for a purpose other than resale;

T. "controlling person":

(1) means an officer, board member or other natural person who has a financial or voting interest of ten percent or greater in a cannabis establishment; and

(2) does not include a bank or licensed lending institution;

U. "courier" means to transport usable cannabis or cannabis items directly to a consumer;

V. "department" means the regulation and licensing department;

W. "division" means the division of cannabis control of the department;

X. "evidence-based drug education program" means a research- and scientific evidence-based education program that has been thoroughly tested and has been shown to significantly reduce problematic use of substances such as nicotine, alcohol or drugs;

Y. "financial consideration":

(1) means the value that is given or received, directly or indirectly, through sales, barter, trade, fees, charges, dues, contributions or donations; and

(2) does not mean the value in homegrown cannabis produced or homemade cannabis items manufactured by another person;

Z. "homegrown" or "homemade" means grown or made by a person for purposes that are not dependent or conditioned upon the provision or receipt of financial consideration;

AA. "household" means a housing unit and includes any place in or around the housing unit at which an occupant of the housing unit produces, manufactures, keeps or stores homegrown cannabis or homemade cannabis items;

BB. "housing unit" means a house, an apartment, a mobile home, a group of rooms or a single room that is occupied as separate living quarters in which an occupant lives and eats separately from any other person in the building who does not occupy the same housing unit and which unit includes direct access from the outside of the building or through a common hall;

CC. "immature cannabis plant" means a cannabis plant that has no observable flowers or buds;

DD. "license" means a license issued pursuant to the Cannabis Taxation and Regulation Act;

EE. "licensed premises" means a location that is licensed pursuant to the Cannabis Taxation and Regulation Act and includes:

(1) all enclosed public and private areas at the location that are used in the business operated pursuant to a license and includes offices, kitchens, restrooms and storerooms;

(2) all areas outside of a building that the department has specifically licensed for the production, manufacturing, wholesale sale or retail sale of cannabis items; and

(3) with respect to a location that the department has specifically licensed for the production of cannabis outside of a building, the entire unit of land that is created by subsection or partition of land that the licensee owns, leases or has a right to occupy;

FF. "licensee" means a person who holds a license;

GG. "licensee representative" means an owner, director, officer, manager, employee, agent or other representative of a licensee, to the extent that that person acts in a representative capacity;

HH. "local jurisdiction" means a municipality, home rule municipality or a county;

II. "manufacture":

(1) means to compound, blend, extract, infuse or otherwise prepare a cannabis item; and

(2) does not include producing the cannabis contained in a cannabis item;

JJ. "marketing" means the act of promoting or selling a cannabis item or cannabis-related products or services and includes the sponsorship of entertainment or athletic events, product placement in film or television productions and the development of products designed to appeal to a particular demographic;

KK. "mature cannabis plant" means a cannabis plant that is not an immature cannabis plant;

LL. "medical cannabis" means cannabis items used by a qualified patient in accordance with the Lynn and Erin Compassionate Use Act;

MM. "medical cannabis program" means the regulated system allowing for the beneficial use of medical cannabis as established in the Lynn and Erin Compassionate Use Act;

NN. "medical cannabis registry" means the system by which the department of health, pursuant to the Lynn and Erin Compassionate Use Act, receives applications for registry identification cards; approves and denies applications; issues and renews registry identification cards; and maintains files related to applicants for and recipients of registry identification cards;

OO. "person" means an individual or a firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver or any other legal or commercial entity;

PP. "produce" means any activity involving the planting, growing, harvesting, drying, curing, grading or trimming of cannabis;

QQ. "public place" means a place to which the general public has access and includes hallways, lobbies and other parts of apartment houses and hotels that do not constitute rooms or apartments designed for actual residence; highways; streets; schools; places of amusement; parks; playgrounds; and places used in connection with public passenger transportation;

RR. "qualified patient" means a New Mexico resident who has been diagnosed by a practitioner as having a debilitating medical condition and has received written certification and a registry identification card as part of the medical cannabis program;

SS. "usable cannabis" means dried cannabis flowers and dried cannabis leaves and any mixture or preparation of those flowers or leaves; and

TT. "volatile solvent" means a solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures.

SECTION 3. [NEW MATERIAL] DIVISION OF CANNABIS CONTROL-- DUTIES--RULEMAKING--ADVISORY COMMITTEE.--

A. The division is subject to the Administrative Procedures Act.

B. The division shall regulate and administer, and may collect fees in connection with the administration of:

(1) commercial cannabis activity and licensing related to the activity; and

(2) the medical cannabis program, except for the medical cannabis registry.

C. Not later than July 1, 2019, the division shall promulgate rules necessary for the division to carry out its duties provided in the Cannabis Taxation and Regulation Act, and those rules shall include:

(1) procedures for the issuance, renewal, suspension and revocation of a license;

(2) the limit, if any, on the number of distinct types of licenses a person may hold;

(3) the total number of licenses the division may issue and renew each year. In determining the number of licenses to issue, the division shall consider:

(a) the number, location and population of local jurisdictions that have restricted the operation of cannabis retailers and cannabis microbusinesses that sell cannabis;

(b) the market demand for cannabis and medical cannabis;

(d) the use and misuse of cannabis items by underage and adult persons; and

(e) the illegal diversion of cannabis items out of the state;

(4) a schedule of fees applicable to application for and issuance of a new or renewal license;

(5) qualifications for licensure that are directly and demonstrably related to the operation of a cannabis establishment;

(6) security requirements for a cannabis establishment;

(7) requirements related to:

(a) inspection and monitoring of a cannabis establishment;

(b) a cannabis establishment's recordkeeping and tracking of cannabis from seed until it is sold;

(c) prevention of the sale or diversion of cannabis items in commercial cannabis activity to a person under the age of twenty-one; and

(d) labeling of cannabis items packaged, sold or distributed by a cannabis establishment;

(8) a provision regarding whether a licensee who sells cannabis items may sell any other products;

(9) regulations on a licensee's advertisement and marketing of cannabis items and on how a licensee may display cannabis items for sale;

(10) civil penalties applicable to violations of rules promulgated by the division in accordance with this section;

(11) procedures that promote and encourage full participation in the cannabis industry governed by the Cannabis Taxation and Regulation Act by representatives of communities that have been disproportionately harmed by the enforcement of cannabis prohibitions in law and policy, including harms from disproportionate rates of related interactions with law enforcement officers, arrests, incarceration and collateral consequences;

(12) rules developed in consultation with the department of environment to establish:

(a) health and safety standards applicable to the cultivation of cannabis and the manufacture of cannabis items;

(b) standards for quality control, inspection and testing of cannabis items;

(d) which additives and ingredients are approved for and prohibited from inclusion in cannabis items; and

(13) rules developed in consultation with the New Mexico department of agriculture and the department of environment to establish:

(a) standards for the use of pesticides in the manufacture of cannabis, including the maximum allowances for pesticides and other foreign material such as hair, insects or other similar adulterants, in harvested cannabis;

(b) environmental protections that apply to all licensees;

(c) protocols to ensure licensees' compliance with state laws governing environmental impacts, natural resource protection, water quality, water supply, hazardous materials, pesticide use and wastewater discharge; and

(d) occupational health and safety standards for persons working in the cannabis industry.

D. Not later than January 1, 2019, the division shall:

(1) establish a medical cannabis subsidy program by which the department of health shall make distributions of a portion of cannabis tax revenue to qualified patients; and

(2) promulgate rules to govern the medical cannabis subsidy program.

E. Not later than September 1, 2018, the division shall convene an advisory committee to advise the division on the development of standards and rules pursuant to the Cannabis Taxation and Regulation Act, including best practices and guidelines that protect public health and safety while ensuring a regulated environment for commercial cannabis activity that does not impose unreasonable barriers so as to perpetuate, rather than reduce and eliminate, the illicit market for cannabis. The advisory committee members shall be appointed by the director of the division for two-year terms and shall include representatives:

(1) of the cannabis industry;

(2) of cannabis policy advocacy organizations;

(3) of labor organizations;

(4) who are medical cannabis patients;

(5) from state or local agencies with relevant expertise as the director deems appropriate;

(6) with expertise in public health;

(7) with expertise in regulating commercial activity for adult-use intoxicating substances; and

(8) with expertise in other relevant areas as the director deems appropriate.

F. Beginning January 1, 2020, the advisory committee shall publish and provide to the legislature an annual report detailing its activities and recommendations made to the division during the preceding year and noting whether the division implemented any of the recommendations. The report shall include a recommendation on whether the legislature should adjust the cannabis excise tax based on the following considerations:

(1) demand for cannabis items;

(2) undercutting the illicit cannabis market;

(3) preventing the cannabis market from undercutting the medical cannabis market;

(4) preventing cannabis use by a person younger than twenty-one years of age; and

(5) preventing cannabis use disorder.

SECTION 4. [NEW MATERIAL] LICENSING--LIMITATIONS.--

A. The division shall begin issuing licenses no later than January 1, 2020.

B. The department shall administer a licensing program for commercial cannabis activity provided for in the Cannabis Taxation and Regulation Act and for the medical cannabis program provided for in the Lynn and Erin Compassionate Use Act, which shall include licenses for:

(1) cannabis couriers;

(2) cannabis manufacturers;

(3) cannabis microbusinesses;

(4) cannabis nurseries;

(5) cannabis producers;

(6) cannabis retailers;

(7) cannabis testing laboratories; and

(8) any other activity or person as deemed necessary by the division.

C. The division shall include a clear designation on all licenses that indicates whether the license is for commercial cannabis activity or activity related to medical cannabis or both.

D. If a cannabis establishment is licensed for both commercial cannabis activity and activity related to medical cannabis, the division shall require that at least thirty-three percent of the total value of the establishment's inventory is composed of medical cannabis items.

E. The division may designate subcategories of licenses based on:

(1) the size of a business; or

(2) for cannabis producers, whether the cannabis is produced indoors, outdoors or in a setting that combines natural light with other light sources.

F. A license is valid for twelve months from the date it is issued and may be renewed annually; provided, however, that until July 1, 2020, and longer if the division deems it necessary, the division may issue a temporary license that is valid for a period of less than twelve months.

G. The division shall not issue any other license provided for in this section to a cannabis testing laboratory licensee.

H. The division shall allow only a cannabis retailer or a cannabis microbusiness to operate a cannabis consumption area.

I. The division shall not issue a license to a person who cannot demonstrate continuous residency in New Mexico for at least two years prior to the date on which the person submits a license application. If an applicant is an entity, all controlling persons in the entity shall be required to demonstrate continuous residency in New Mexico for two years prior to the date on which the entity submits its license application.

SECTION 5. [NEW MATERIAL] LICENSING--APPLICATION--ISSUANCE AND DENIAL OF A LICENSE.--

A. In carrying out its licensing duties, the division shall:

(1) no later than July 1, 2019, begin accepting and processing license applications;

(2) issue a license, or a written notice detailing why an application was denied, no later than ninety days following the day on which the application was submitted to the division;

(3) in evaluating applications, consider how to achieve racial, ethnic, gender and geographic diversity among licensees; and

(4) actively encourage submission of and prioritize applications submitted by persons:

(a) who propose to use captured or natural solar energy or recycled water to produce cannabis or otherwise in the business licensed;

(b) who propose to use an employee profit-sharing business model or are organized using a worker-owned cooperative business structure or as a social benefit corporation; or

(c) whose maximum household income is equal to or less than two hundred percent of the federal poverty guidelines established by the federal department of health and human services.

B. The division may deny an application for a new or renewed license if:

(1) the applicant has violated any provisions of the Cannabis Taxation and Regulation Act or a rule promulgated pursuant to that act;

(2) the applicant's application does not include all information required by the division;

(3) issuance of the license would lead to monopolization of the cannabis or medical cannabis industry in the state or would unreasonably restrain competition in those industries;

(4) the applicant or a controlling person in the applicant's entity has been convicted of an offense that is substantially related to the qualifications, functions or duties of the applicant entity's business; provided, however, that if the division determines that the controlling person and the applicant entity are otherwise qualified for a license and issuing a license to the applicant entity would not compromise public safety, the division shall conduct a thorough review of the conviction, including the nature of the offense, surrounding circumstances and any evidence of the controlling person's rehabilitation following the conviction, and based on that review, determine whether the applicant entity should be issued a license;

(5) the applicant or a controlling person in the applicant's entity has been penalized for conduct that violated the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act; or

(6) the applicant or a controlling person in the applicant's entity has had a license revoked by the division in the three years immediately preceding the date on which the application was filed.

C. For the purposes of Subsection B of this section:

(1) the following are considered substantially related to the qualifications, functions or duties of a business seeking a license:

(a) a felony conviction involving fraud, deceit or embezzlement;

(b) a felony conviction for hiring, employing or otherwise using a person younger than eighteen years of age to: 1) prepare for sale, transport or carry a controlled substance; or 2) sell, give away or peddle a controlled substance to any person; and

(2) a conviction for which the related sentence, including any term of probation or parole, is completed for the possession, use, manufacture, distribution or dispensing or the possession with the intent to manufacture, distribute or dispense a controlled substance is not considered substantially related to the qualifications, functions or duties of a business seeking a license and shall not be the sole ground on which an application is denied.

D. The division shall deny an application if an applicant, a controlling person in an applicant's entity or the premises for which a license is sought does not qualify for licensure under the Cannabis Taxation and Regulation Act.

SECTION 6. [NEW MATERIAL] LICENSING FEES.--

A. The division shall establish application and licensing fees applicable to licenses for commercial cannabis activity and activity related to medical cannabis. The fees shall be:

(1) reasonably calculated to cover the cost of administering and enforcing the programs established in the Cannabis Taxation and Regulation Act and the Lynn and Erin Compassionate Use Act, including the administration of the medical cannabis registry by the department of health; and

(2) scaled to reflect the size of a business seeking or renewing a license.

B. The division shall deposit all fees collected pursuant to the Cannabis Taxation and Regulation Act in the cannabis regulation fund.

SECTION 7. [NEW MATERIAL] LOCAL CONTROL.--

A. A local jurisdiction may:

(1) adopt reasonable time, place and manner regulations that do not conflict with the Cannabis Taxation and Regulation Act;

(2) adopt reasonable health and safety-related regulations on the production of homegrown cannabis; provided, however, that a violation of the regulations shall constitute a civil offense;

(3) prohibit, in accordance with the Cannabis Taxation and Regulation Act, the operation of a cannabis retailer or a cannabis microbusiness that sells cannabis items; and

(4) allow for the smoking, vaporizing and ingesting of cannabis items within a cannabis consumption area on the premises of a cannabis retailer or cannabis microbusiness if:

(a) access to the cannabis consumption area is restricted to persons twenty-one years of age and older;

(b) cannabis consumption is not visible from any public place or from outside the cannabis consumption area; and

(c) the cannabis retailer or cannabis microbusiness is located three hundred feet or more from a school that provides instruction at any level from kindergarten through twelfth grade, a daycare center or a youth center that was in existence at the time the retailer or microbusiness was licensed.

B. A local jurisdiction shall not:

(1) prevent transportation or courier of cannabis items on public roads by a licensee that transports cannabis items in compliance with the Cannabis Taxation and Regulation Act;

(2) completely prohibit the operation of any category of license other than a cannabis retailer and cannabis microbusinesses; or

(3) prohibit the personal production of cannabis or cannabis items made without the use of volatile substances for personal use provided for in the Cannabis Taxation and Regulation Act.

SECTION 8. [NEW MATERIAL] LOCAL OPTION ELECTION--EFFECT OF LOCAL OPTION.--A municipality with a population greater than five thousand according to the most recent federal decennial census, whether or not the county in which that municipality is situated has held an election provided for in this section, or a county in the state may prohibit the operation of a cannabis retailer or a cannabis microbusiness that sells cannabis items upon the following terms and conditions:

A. at any time after the effective date of the Cannabis Taxation and Regulation Act, the registered qualified electors of the municipality or county may petition the governing body by filing one or more petitions in the appropriate office to hold an election for the purpose of determining whether to prohibit the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items in the municipality or county. If the aggregate of the signatures of such electors on all the petitions equals or exceeds five percent of the number of registered voters of the municipality or county, the governing body shall call an election within seventy-five days of the verification of the petition. The date of the filing of the petition shall be the date of the filing of the last petition that brings the number of signatures up to the required five percent; provided, however, that the governing body shall refuse to recognize the petition if more than three months have elapsed between the date of the first signature and the filing of the last petition necessary to bring the number of signatures on the petition up to five percent;

B. the election shall be called, conducted, counted and canvassed substantially in the manner provided by law for general elections within the county or special municipal elections within the municipality, except as otherwise provided in this section;

C. the votes at the election shall be counted, returned and canvassed as provided for in the case of general elections within the county or special municipal elections within the municipality;

D. except as otherwise provided in this section, contests, recounts and rechecks shall be permitted as provided for in the case of candidates for county office in general elections or as provided for in the case of special municipal elections within the municipality. Applications for contests, recounts or rechecks may be filed by any person who voted in the election, and service shall be made upon the county clerk or municipal clerk as the case may be;

E. if the majority of all of the votes cast at the election are cast in favor of the prohibition of the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items in the county or municipality, the chair of the governing body shall declare by order entered upon the records of the county or municipality that the county or municipality has approved the prohibition and shall notify the department of the election results;

F. no election held pursuant to this section shall be held within forty-two days of any primary, general, municipal or school district election. If, within sixty days from the verification of any petition as provided in Subsection A of this section, a primary, general, municipal or school election is held, the governing body may call an election for a day not less than sixty days after the primary, general, municipal or school election;

G. if an election is held pursuant to this section in a county that contains within its limits a municipality of more than five thousand persons according to the most recent federal decennial census, it is not necessary for the registered qualified electors in the municipality to file a separate petition asking for a separate or different vote on the question of whether to prohibit the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items. The election in the county shall be conducted so as to separate the votes in the municipality from those in the remaining parts of the county. If the majority of the voters in the county, including the voters in the municipality, vote to prohibit the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items, the county shall not allow the prohibited operations; but if the majority of the votes in the municipality are in favor of allowing the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items, the municipality shall have allowed the approved operations in the municipality. Nothing contained in this subsection shall prevent any municipality from having a separate election under the terms of this section; and

H. any county or municipality that has voted to prohibit the operations of a cannabis retailer or a cannabis microbusiness that sells cannabis items may vote to discontinue the prohibition and to allow the previously prohibited operations in that county or municipality; the discontinuance shall become effective on the ninetieth day after the local option election is held as provided for in this subsection.

SECTION 9. [NEW MATERIAL] LICENSEE PROTECTIONS.--

A. Conduct by a licensee or a licensee representative that is allowed pursuant to a license and conduct by a person who allows property to be used by a licensee or a licensee representative for conduct allowed pursuant to a license is lawful, not a violation of state or local law and is not a basis for seizure or forfeiture of any property or assets under state or local law.

B. A state or local government shall not impose a criminal, civil or administrative penalty on a licensee or a licensee representative or on a person who allows property to be used by a licensee or a licensee representative pursuant to a license, solely for conduct allowed pursuant to a license.

SECTION 10. [NEW MATERIAL] PROTECTION OF UNDERAGE PERSONS--TRAFFICKING--PENALTIES.--

A. A person who is not a licensee and who is eighteen years of age or older shall not intentionally distribute a cannabis item to a minor who is two or more years younger than the person. A person who violates this subsection is guilty of a fourth degree felony and shall be sentenced pursuant to Section 31-18-15 NMSA 1978.

B. A licensee shall not employ a person younger than twenty-one years of age.

C. Except as allowed in the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act, a licensee shall not sell a cannabis item to a person younger than twenty-one years of age. A licensee who violates this subsection shall be fined an amount not greater than one thousand dollars ($1,000) and sentenced to:

(1) thirty hours of community service for a first violation;

(2) forty hours of community service for a second violation; and

(3) sixty hours of community service for a third or subsequent violation.

D. The establishment of all of the following facts by a licensee prosecuted for a violation of Subsection C of this section shall constitute a defense:

(1) that the purchaser falsely represented in writing; by producing a driver's license bearing the purchaser's photograph; by producing a photographic identification card issued by the motor vehicle division of the taxation and revenue department; or by producing a similar identification card issued pursuant to the laws of this state, another state, the federal government or the government of an Indian nation, tribe or pueblo that the person was twenty-one years of age or older;

(2) that the purchaser's appearance was such that an ordinary, prudent person would believe that the purchaser was twenty-one years of age or older; and

(3) that the sale was made in good faith, relying upon the purchaser's false written representation, driver's license or identification card produced as provided in Paragraph (1) of this subsection, and with the reasonable belief that the purchaser was actually twenty-one years of age or older.

E. Nothing in this section shall be construed or interpreted to prevent:

(1) the division from enforcing its rules against a licensee;

(2) a state agency from enforcing a law or regulation that does not conflict with the Cannabis Taxation and Regulation Act or rules promulgated pursuant to that act; or

(3) a local jurisdiction from enforcing a local ordinance that does not conflict with the Cannabis Taxation and Regulation Act or rules promulgated pursuant to that act.

F. Notwithstanding the provisions of Subsections A and C of this section, a person who is not a licensee and who is eighteen years of age or older shall not intentionally traffic cannabis. A person who violates this subsection, if the amount of cannabis trafficked is:

(1) two ounces or less, shall be subject to a civil penalty of fifty dollars ($50.00);

(2) more than two ounces but one pound or less, shall be subject to a civil penalty of two hundred fifty dollars ($250);

(3) more than one pound but five pounds or less, is guilty of a petty misdemeanor and, notwithstanding the provisions of Section 31-19-1 NMSA 1978, shall be sentenced to a fine in an amount not less than five hundred dollars ($500) and not more than one thousand dollars ($1,000);

(4) more than five pounds but twenty-five pounds or less, is guilty of a misdemeanor and, notwithstanding the provisions of Section 31-19-1 NMSA 1978, shall be sentenced to a fine in an amount not less than one thousand dollars ($1,000) and not more than ten thousand dollars ($10,000); and

(5) more than twenty-five pounds, is guilty of a fourth degree felony and, notwithstanding the provisions of Section 31-18-15 NMSA 1978, shall be sentenced to a basic sentence of imprisonment of twelve months and to the payment of a fine in an amount not less than twenty-five thousand dollars ($25,000) and not more than seventy-five thousand dollars ($75,000).

G. For the purposes of this section, "traffic" means the:

(1) distribution, sale, barter or giving away of cannabis; or

(2) possession with intent to distribute, sell, barter or give away cannabis.

SECTION 11. [NEW MATERIAL] DISTRIBUTION AND TRANSPORT.--The Cannabis Taxation and Regulation Act shall not be construed to authorize a licensee to transport or distribute, or cause to be transported or distributed, cannabis items outside the state, unless authorized by federal law.

SECTION 12. [NEW MATERIAL] COURIERING.--

A. Only a cannabis retailer, cannabis microbusiness or cannabis courier may courier cannabis items.

B. A consumer who requests courier service shall maintain a physical or electronic copy of the courier request for the duration of time that the consumer possesses the cannabis item that was purchased and received by courier and shall make the copy available upon request by the division or a law enforcement officer.

SECTION 13. [NEW MATERIAL] PACKAGING AND LABELING.--

A. Before sale or couriering of a cannabis item, the cannabis item shall be labeled and placed in a resealable, child-resistant package.

B. Packages and labels for cannabis items shall not be designed to be appealing to a child.

C. Labels shall include:

(1) for a package containing only cannabis flower, the net weight of cannabis in the package;

(2) identification of the licensee or licensees that produced or manufactured the cannabis item, the date on which the cannabis was cultivated, the type of cannabis item and the date on which the cannabis item was manufactured and packaged;

(3) a list of pharmacologically active ingredients;

(4) for cannabis products, a list of all ingredients and a disclosure of nutritional information for the product or cannabis extract, disclosed in the same manner required under federal law for nutritional labeling for food for human consumption; and

(5) a warning, if nuts or other known allergens are used in the item or in its manufacture.

SECTION 14. [NEW MATERIAL] CANNABIS PRODUCTS.--

A. Cannabis products shall:

(1) not be designed to appeal to children or in such a way that the products could be easily confused with commercially sold candy or foods that do not contain cannabis;

(2) be produced and sold with a standardized dosage of cannabinoids not to exceed ten milligrams tetrahydrocannabinol per serving;

(3) be delineated or scored into standardized serving sizes, if the cannabis product contains more than one serving and is an edible cannabis product in solid form;

(4) be homogenized to ensure uniform disbursement of cannabinoids throughout the product;

(5) be manufactured and sold under health and sanitation standards established by the division for the preparation, storage, handling and sale of food products; and

(6) be provided to customers with sufficient information to enable the informed consumption of the product, including information on the potential effects of the product and directions on how to consume the cannabis product.

B. Cannabis or cannabis extracts included in a cannabis product that is manufactured in compliance with applicable law are not considered to be an adulterant under state law.

SECTION 15. [NEW MATERIAL] CANNABIS MANUFACTURERS AND TESTING LABORATORIES--DEPARTMENT OF ENVIRONMENT--RULEMAKING.--

A. The department of environment shall promulgate rules to govern the licensing of a cannabis manufacturer and a cannabis testing laboratory. Licenses to be issued are as follows:

(1) "cannabis manufacturing level 1" for a site that manufactures cannabis extracts using nonvolatile solvents or no solvents;

(2) "cannabis manufacturing level 2" for a site that manufactures cannabis extracts using volatile solvents; and

(3) "cannabis testing laboratory" for a licensee that tests cannabis items. A cannabis testing laboratory licensee shall have the licensee's facilities or devices used to test cannabis items licensed according to rules promulgated by the department of environment. A laboratory licensee shall not own or have ownership interest in a non-laboratory facility licensed pursuant to the Cannabis Taxation and Regulation Act.

B. Except as otherwise provided by law, a cannabis item shall not be sold by a licensee unless a representative sample of the cannabis item has been tested by a cannabis testing laboratory to determine:

(1) whether the chemical profile of the sample conforms to the labeled content of compounds, including:

(a) tetrahydrocannabinol;

(b) tetrahydrocannabinolic acid;

(d) cannabidiolic acid;

(e) terpenes;

(f) cannabigerol; and

(g) cannabinol; and

(2) that the presence of the following contaminants does not exceed harmful levels:

(a) residual solvents or chemicals, including explosive gases such as butane, propane and hydrogen, and poisons, toxins or carcinogens such as methanol, methylene chloride, acetone, benzene, toluene and trichloroethylene;

(b) foreign material, including hair, insects or other similar adulterants; and

(c) microbiological impurity, including total aerobic microbial count; total yeast mold count; pseudomonas aeruginosa; aspergillus species; staphylococcus aureus; aflatoxin B1, B2, G1 or G2; or ochratoxin A.

C. Residual levels of volatile organic compounds shall not exceed harmful levels.

D. The testing required by this section shall be performed in a manner consistent with general requirements for the competence of testing and calibrations activities, including sampling, using standard methods to ensure conformity, competence and impartiality to test cannabis items. E. Any pre-sale inspection, testing transfer or transportation of cannabis items pursuant to this section shall conform to a chain of custody protocol and any other requirements imposed by the division in accordance with the Cannabis Taxation and Regulation Act.

SECTION 16. [NEW MATERIAL] TESTING CANNABIS ITEMS.--

A. A cannabis testing laboratory's testing of cannabis items shall comply with the requirements set forth in applicable law and rules.

B. The division shall develop rules and procedures to:

(1) ensure that testing of cannabis items occurs prior to distribution to cannabis retailers or cannabis microbusinesses;

(2) specify how often licensees shall test cannabis items;

(3) specify which entities bear the cost of testing cannabis and medical cannabis; and

(4) require destruction of a harvested batch of cannabis or of cannabis items if the testing samples from the batch or items indicate noncompliance with applicable health and safety standards promulgated by the division, unless remedial measures can bring the cannabis or cannabis items into compliance with the standards.

SECTION 17. [NEW MATERIAL] ADVERTISING AND MARKETING RESTRICTIONS.--

A. The division shall promulgate rules that explicitly:

(1) prohibit the advertisement and marketing of cannabis items:

(a) on broadcast television, cable or radio;

(b) that is false, deceptive, or misleading;

(d) that depicts consumption by children or other persons younger than twenty-one;

(e) that is designed in any way to appeal to a person younger than twenty-one;

(f) that is within two hundred feet of the perimeter of school grounds, a playground, a child care center, a public park or a library;

(g) that is in public transit vehicles or stations;

(h) that is in the form of an unsolicited internet pop-up; or

(i) that is on publicly owned or operated property; and

(2) require:

(a) all advertisements and marketing to accurately and legibly identify the licensee responsible for its content; and

(b) print and digital communications advertisements to be placed only where the audience is reasonably expected to be twenty-one years of age or older, as determined by reliable, current audience composition data.

B. Upon a determination by the New Mexico attorney general that the use of cannabis, other than as provided for in the Lynn and Erin Compassionate Use Act, is lawful in the state under federal law:

(1) Subparagraph (a) of Paragraph (1) of Subsection A of this section shall cease to be in effect; and

(2) Subparagraph (b) of Paragraph (2) of Subsection A of this section shall include broadcast television, cable and radio advertisements.

SECTION 18. [NEW MATERIAL] CONTRACTS.--A contract related to operation of a license is enforceable, and a contract entered into by a licensee or a licensee representative for conduct allowed pursuant to a license or entered into by a person who allows property to be used by a licensee or a licensee representative for conduct allowed pursuant to a license, shall not be deemed unenforceable on the basis that the conduct allowed pursuant to the license is prohibited by federal law.

SECTION 19. [NEW MATERIAL] PROVISION OF PROFESSIONAL SERVICES.--An attorney, accountant, insurance agent, real estate agent, security guard or other person engaged in a profession subject to state licensure shall not be subject to disciplinary action by a professional association, a state professional board or a state licensing entity because the professional provides professional services or assistance to prospective or licensed cannabis establishments or another person in connection with activity that the professional reasonably believes complies with the Cannabis Taxation and Regulation Act and rules promulgated pursuant to that act.

SECTION 20. [NEW MATERIAL] MEDICAL CANNABIS PROVISIONS UNAFFECTED.--Nothing in the Cannabis Taxation and Regulation Act shall be construed to:

A. limit a privilege or right of a qualified patient or a primary caregiver participating in the medical cannabis program or a person issued a permit to operate as a medical cannabis licensed producer or to be a director, officer or employee of a medical cannabis licensed producer;

B. allow a medical cannabis licensed producer to distribute cannabis to a person who is not a qualified patient without first obtaining a cannabis retailer or cannabis microbusiness license from the division; or

C. allow a medical cannabis licensed producer to purchase cannabis items in a manner or from a source not authorized under the Lynn and Erin Compassionate Use Act without first obtaining a cannabis retailer or cannabis microbusiness license from the division.

SECTION 21. [NEW MATERIAL] PROTECTIONS FOR THE USE OF CANNABIS.--A person or a licensee shall not be subject to arrest, prosecution, penalty, civil liability or disciplinary action by a business or professional licensing entity and shall not be denied any right or privilege solely for conduct allowed pursuant to the Cannabis Taxation and Regulation Act. Except by court order, state and local law enforcement agencies shall not cooperate with or provide assistance to the United States government, or any federal agency thereof, in enforcing the federal Controlled Substances Act solely for conduct that complies with the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act. The New Mexico supreme court and any disciplinary or character and fitness committees established by that court are considered business or professional licensing entities for the purposes of this section.

SECTION 22. [NEW MATERIAL] PROTECTIONS FROM DISCRIMINATION FOR THE USE OF CANNABIS OR MEDICAL CANNABIS.--

A. A school shall not refuse to enroll or otherwise penalize a person solely for conduct allowed pursuant to the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act, unless failing to do so would cause the school to lose a monetary or licensing-related benefit under federal law or regulation.

B. A landlord shall not refuse to lease property to or to otherwise penalize a person solely for conduct allowed pursuant to the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act, unless failing to do so would cause the landlord to lose a monetary or licensing-related benefit under federal law or regulation.

C. Notwithstanding Subsection B of this section, an individual or private entity may prohibit or restrict any of the actions or conduct otherwise allowed under Sections 25 and 26 of the Cannabis Taxation and Regulation Act on that individual's or private entity's privately owned property.

D. For the purposes of medical care, including organ transplants, a qualified patient's use of medical cannabis pursuant to the Lynn and Erin Compassionate Use Act shall be considered the equivalent of the use of any other medication under the direction of a physician and does not constitute the use of an illicit substance or otherwise disqualify a qualified patient from medical care.

E. A person shall not be denied custody of or visitation or parenting time with a child, and there is no presumption of neglect or child endangerment, for conduct allowed under Sections 25 and 26 of the Cannabis Taxation and Regulation Act or under the Lynn and Erin Compassionate Use Act, unless the person's behavior creates an immediate danger to the safety of the child as established by clear and convincing evidence. For the purposes of this section, a determination that behavior creates an "immediate danger" shall not be based solely on whether, when or how often a person uses cannabis or medical cannabis.

SECTION 23. [NEW MATERIAL] EMPLOYMENT PROTECTIONS.--

A. Unless an employer establishes by a preponderance of the evidence that an employee's lawful use of cannabis has impaired the ability to perform the employee's job responsibilities, it shall be unlawful to take an adverse employment action against the employee based on either:

(1) conduct allowed under Sections 25 and 26 of the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act; or

(2) the employee's positive drug test for cannabis components or metabolites.

B. For the purposes of this section, an employer may consider an employee's ability to perform the employee's job responsibilities to be impaired when the employee manifests specific articulable symptoms while working that decrease or reduce the employee's performance of the duties or tasks of the employee's job.

C. Nothing in this section shall:

(1) restrict an employer's ability to prohibit or take adverse employment action against an employee for the possession or use of intoxicating substances during work hours; or

(2) require an employer to commit any act that would cause the employer to be in violation of federal law or that would result in the loss of a federal contract or federal funding.

D. As used in this section, "adverse employment action" means refusing to hire or employ a person; barring or discharging a person from employment; requiring a person to retire from employment; or discriminating against an employee in compensation or in terms, conditions or privileges of employment.

SECTION 24. [NEW MATERIAL] PROTECTIONS FOR A PERSON UNDER STATE SUPERVISION.--A person who is serving a period of probation or parole or who is in the custody or under the supervision of the state or a local government pending trial or as part of a community supervision program shall not be penalized for conduct allowed under Sections 25 and 26 of the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act.

SECTION 25. [NEW MATERIAL] PERSONAL USE OF CANNABIS.--

A. Notwithstanding any other provision of law, the following conduct is lawful for a person who is twenty-one years of age or older and shall not constitute grounds for detention, search or arrest of a person or for a violation of probation or parole, and cannabis items that relate to the conduct are not contraband or subject to seizure or forfeiture pursuant to the Controlled Substances Act or the Forfeiture Act:

(1) possessing, using, being under the influence of, displaying, purchasing, obtaining or transporting not more than two ounces of cannabis or sixteen grams of cannabis extracts;

(2) transferring, without financial consideration, to a person who is twenty-one years of age or older not more than two ounces of cannabis or sixteen grams of cannabis extracts;

(3) possessing two ounces of cannabis and sixteen grams of cannabis extracts within the person's private residence;

(4) making, manufacturing, keeping, storing or transferring without remuneration to a person who is twenty-one years of age or older homemade cannabis extract or cannabis products containing not more than two ounces of cannabis or sixteen grams of cannabis extracts;

(5) with respect to homegrown cannabis, possessing, planting, cultivating, harvesting, drying, manufacturing or transporting not more than six mature cannabis plants and six immature cannabis plants and possessing the cannabis produced by the plants;

(6) transporting homegrown cannabis, mature or immature cannabis plants or cannabis products as described in Paragraphs (2) and (4) of this subsection when the person is moving the person's residence to another location;

(7) smoking, ingesting or otherwise consuming cannabis or cannabis items;

(8) possessing, using, displaying, purchasing, obtaining, manufacturing, transporting or giving away to a person twenty-one years of age or older cannabis paraphernalia; and

(9) assisting another person who is twenty-one years of age or older in, or allowing property to be used in, any of the acts described in Paragraphs (1) through (8) of this subsection.

B. Paragraphs (8) and (9) of Subsection A of this section are intended to meet the requirements of 21 U.S.C. Section 863(f) by authorizing, under state law, any person in compliance with this section to manufacture, possess or distribute cannabis paraphernalia.

C. Except as provided in Subsection D of this section, none of the following shall, individually or in combination with each other, constitute reasonable articulable suspicion of a crime:

(1) the odor of cannabis or cannabis extracts or of burnt cannabis or cannabis extracts;

(2) the possession of or the suspicion of possession of cannabis without evidence of quantity in excess of two ounces;

(3) the possession of multiple containers of cannabis without evidence of quantity in excess of two ounces;

(4) the possession of or the suspicion of possession of cannabis extracts without evidence of quantity in excess of sixteen grams;

(5) the possession of multiple containers of cannabis extracts without evidence of quantity in excess of sixteen grams; or

(6) the possession of cannabis or cannabis extracts in proximity to any amount of cash or currency without evidence of cannabis quantity in excess of two ounces or cannabis extracts quantity in excess of sixteen grams.

D. Subsection C of this section shall not apply when a law enforcement officer is investigating whether a person is operating or in physical control of a vehicle or watercraft while intoxicated, under the influence of or impaired by alcohol or a drug or any combination thereof in violation of Section 17-2-29 or 66-8-102 NMSA 1978.

SECTION 26. [NEW MATERIAL] PERSONAL CULTIVATION OF CANNABIS.--

A. Personal cultivation of cannabis as provided for in Section 25 of the Cannabis Taxation and Regulation Act is subject to the following restrictions:

(1) a person shall plant, produce, harvest, dry or manufacture plants in accordance with a local ordinance that does not conflict with the Cannabis Taxation and Regulation Act;

(2) the living plants and any cannabis produced by the plants in excess of two ounces shall be kept within the person's private residence, or upon the grounds of that private residence, in a locked space and shall not be visible by normal unaided vision from a public place; and

(3) not more than six mature plants and six immature plants may be produced per person; provided, however, that no more than twelve mature plants may be present in one household.

B. A local jurisdiction shall not prohibit a person from producing homegrown cannabis as provided for in Section 25 of the Cannabis Taxation and Regulation Act.

SECTION 27. [NEW MATERIAL] LIMITS ON PERSONAL CONSUMPTION--PENALTIES.--

A. Nothing in Section 25 or 26 of the Cannabis Taxation and Regulation Act shall be construed to:

(1) allow a person to:

(a) smoke cannabis or cannabis items in a public place, except in a cannabis consumption area;

(b) produce cannabis in public view; or

(2) restrict the ability of an individual or private entity to prohibit conduct otherwise allowed in Sections 25 and 26 of the Cannabis Taxation and Regulation Act on the individual's or private entity's privately owned property.

B. A person who violates:

(1) Subparagraph (a) or (c) of Paragraph (1) of Subsection A of this section shall be subject to a civil penalty of fifty dollars ($50.00); and

(2) Subparagraph (b) of Paragraph (1) of Subsection A of this section shall be subject to a civil penalty of twenty-five dollars ($25.00).

C. For purposes of this section, "smoke":

(1) means to inhale, exhale, burn or carry any lighted or heated device or pipe, or any other lighted or heated cannabis item intended for inhalation, whether natural or synthetic, in any manner or in any form; and

(2) does not include the use of an electronic smoking device that creates an aerosol or vapor.

SECTION 28. [NEW MATERIAL] UNLICENSED SALES OF CANNABIS--PENALTIES.--

A. Except as allowed in the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act, it is unlawful for a person without a license to intentionally distribute cannabis items.

B. A person under eighteen years of age who violates Subsection A of this section shall be subject to:

(1) a fine of one hundred dollars ($100);

(2) attendance at a four-hour evidence-based drug education program; or

(3) four hours of community service.

C. A person eighteen years of age or older who violates Subsection A of this section is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.

SECTION 29. [NEW MATERIAL] CANNABIS NEAR A SCHOOL--PENALTY.--Except as allowed in the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act, a person shall not possess or intentionally distribute any amount of a cannabis item within one thousand feet of a school, daycare center or youth center while children are present at the school, daycare center or youth center, unless the person is in or upon the grounds of a private residence or a cannabis consumption area. A person who violates this section is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.

SECTION 30. [NEW MATERIAL] UNLAWFUL POSSESSION OF CANNABIS--PENALTIES.--Except as allowed in the Lynn and Erin Compassionate Use Act:

A. a person eighteen years of age or older and younger than twenty-one years of age shall not possess cannabis items. A person who violates this subsection shall be subject to:

(1) a fine of seventy-five dollars ($75.00);

(2) attendance at a four-hour evidence-based drug education program; or

(3) four hours of community service;

B. a person younger than eighteen years of age shall not possess cannabis items. A person who violates this subsection shall be subject to:

(1) a fine of fifty dollars ($50.00);

(2) attendance at a four-hour evidence-based drug education program; or

(3) four hours of community service; and C. or as allowed in the Cannabis Taxation and Regulation Act, a person twenty-one years of age or older shall not possess more than two ounces of cannabis outside a private residence or more than sixteen grams of cannabis extracts outside a private residence. A person who violates this subsection with respect to:

(1) between two and eight ounces of cannabis or between sixteen and sixty-four grams of cannabis extracts shall be subject to a fine of two hundred fifty dollars ($250); or

(2) more than eight ounces of cannabis or more than sixty-four grams of cannabis extracts shall be guilty of a petty misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.

SECTION 31. [NEW MATERIAL] UNLICENSED PRODUCTION OF CANNABIS--PENALTIES.--Except as allowed in the Lynn and Erin Compassionate Use Act:

A. a person younger than twenty-one years of age shall not produce cannabis. A person who violates this subsection shall be subject to:

(1) a fine of fifty dollars ($50.00); or

(2) attendance at a four-hour evidence-based drug education program or four hours of community service;

B. a person eighteen years of age or older and younger than twenty-one years of age shall not produce cannabis. A person who violates this subsection shall be subject to a civil penalty of fifty dollars ($50.00); and

C. or as allowed in the Cannabis Taxation and Regulation Act, a person twenty-one years of age or older shall not produce more than six mature cannabis plants and six immature cannabis plants. A person who violates this subsection shall be subject to a civil penalty of two hundred fifty dollars ($250).

SECTION 32. [NEW MATERIAL] UNLICENSED MANUFACTURING OF CANNABIS EXTRACTS--PENALTY.--Except as permitted by the Lynn and Erin Compassionate Use Act, it is unlawful for any person to use volatile solvents to manufacture cannabis extracts without a license issued pursuant to the Cannabis Taxation and Regulation Act or the Lynn and Erin Compassionate Use Act. A person who violates this section shall be subject to a civil penalty of two hundred fifty dollars ($250).

SECTION 33. [NEW MATERIAL] DESTRUCTION OF ARREST AND CONVICTION RECORDS--PROCEDURE.--

A. If a person is charged with any offense provided in Sections 28 through 32 of the Cannabis Taxation and Regulation Act, whether or not the person is convicted, all records held by a court, or an agency of the state or a local government, that relate to the person's arrest or conviction shall be automatically destroyed two years after the date of the person's conviction or the date of the person's arrest if there was no conviction. If the person is or was a juvenile at the time of the arrest or conviction, the records shall be retained for two years or until the person is eighteen years of age, whichever comes first, and shall then be destroyed. The records shall also be removed from any statewide criminal databases.

B. After destruction of records pursuant to Subsection A of this section, a court, an agency of the state or a local government shall treat the case as if it never occurred, and all index references to the case shall be deleted. The court or agency shall respond to an inquiry regarding the case that no record exists with respect to the referenced person with respect to that case.

SECTION 34. [NEW MATERIAL] DESTRUCTION OF ARREST AND CONVICTION RECORDS--PROCEDURE--RETROACTIVE.--

A. Records held by a court, an agency of the state or a local government that relate to a person's arrest or conviction for trafficking cannabis in violation of Section 30-31-20 NMSA 1978, distribution of cannabis, possession with intent to distribute cannabis in violation of Section 30-31-22 NMSA 1978 or possession of cannabis in violation of Section 30-31-23 NMSA 1978 shall not be kept beyond two years from the date of the person's conviction or from the date of the person's arrest if there was no conviction. If the person was a juvenile at the time of the arrest or conviction, the records shall be retained until the offender is eighteen years of age and shall then be destroyed. The records shall also be removed from any statewide criminal databases.

B. If a person whose records would be subject to destruction pursuant to Subsection A of this section is incarcerated for an offense listed in that subsection at the time the person's records would be destroyed, the two-year record retention period shall begin upon the person's release from incarceration.

C. For the purpose of this section, "records" includes records of arrests resulting in a criminal proceeding and records relating to other offenses charged in the accusatory pleading, whether the defendant was acquitted or the charges were dismissed.

SECTION 35. [NEW MATERIAL] RECALL OR DISMISSAL OF SENTENCES--INCARCERATED PERSONS.--

A. A corrections facility, a county jail or a juvenile corrections facility in which a person is currently serving a sentence for a conviction, whether by trial or by open or negotiated plea, for an offense that would not have resulted in the person's conviction or would have resulted in a lesser offense if the Cannabis Taxation and Regulation Act had been in effect at the time of the offense, shall notify the court that the convicted person's case should be reopened to consider possible recall or dismissal of the person's sentence.

B. A court shall reopen a case pursuant to Subsection A of this section and recall the person's sentence or dismiss the person's sentence because it is legally invalid, unless the court determines that doing so would pose an unreasonable risk of danger to public safety.

C. A person who is resentenced pursuant to this section shall be given credit against the person's new sentence for time already served.

D. A person who is resentenced pursuant to this section shall not be sentenced to a term longer than the person's original sentence and shall not have any charges reinstated that were originally dismissed pursuant to a negotiated plea agreement.

E. A person who has completed the person's sentence for a conviction, whether by trial or open or negotiated plea, who would not have been guilty of an offense or who would have been guilty of a lesser offense if the Cannabis Taxation and Regulation Act had been in effect at the time of the offense may file an application before the court that convicted the person to have the conviction dismissed and sealed because the prior conviction is now legally invalid or redesignated as an infraction. The court shall redesignate the conviction as an infraction or dismiss and seal the conviction as legally invalid because of the enactment of the Cannabis Taxation and Regulation Act unless the court makes a finding that the conviction is not legally invalid or was not redesignated as an infraction pursuant to that act.

F. Nothing in this section is intended to diminish or abrogate any rights or remedies otherwise available to a person who was convicted of or incarcerated for an offense.

G. The provisions of this section shall apply equally to juvenile delinquency adjudications and convictions of a juvenile person if the juvenile would not have been guilty of an offense or would have been guilty of a lesser offense as provided in the Cannabis Taxation and Regulation Act.

SECTION 36. [NEW MATERIAL] WRIT OF MANDAMUS.--Any person may commence a legal action for a writ of mandamus to compel the division to perform its duties pursuant to the Cannabis Taxation and Regulation Act.

SECTION 37. [NEW MATERIAL] CANNABIS REGULATION FUND.--

A. The "cannabis regulation fund" is created in the state treasury. The fund consists of fees collected by the division pursuant to the Cannabis Taxation and Regulation Act and the medical cannabis program administered by the division and money otherwise accruing to the fund. Any unexpended or unencumbered balance remaining at the end of any fiscal year shall revert to the general fund.

B. The division shall administer the fund, and money in the fund is appropriated to the division to support the division in its duties established in the Cannabis Taxation and Regulation Act and the medical cannabis program. Money from the fund shall not be used for capital expenditures.

C. Money in the fund shall be disbursed on warrants signed by the secretary of finance and administration pursuant to vouchers signed by the superintendent of regulation and licensing or the superintendent's authorized representative.

SECTION 38. [NEW MATERIAL] COMMUNITY GRANTS REINVESTMENT FUND--COMMUNITY GRANTS REINVESTMENT PROGRAM.--

A. The "community grants reinvestment fund" is created in the state treasury. The fund consists of appropriations, other money deposited in the fund and money otherwise accruing to the fund. The department of health shall administer the fund, and money in the fund is subject to appropriation to the department of health for the community grants reinvestment program as described in this section. Any unexpended or unencumbered balance remaining at the end of any fiscal year shall not revert to the general fund. Money in the fund shall be disbursed on warrants signed by the secretary of finance and administration pursuant to vouchers signed by the secretary of health or the secretary's authorized representative.

B. The community grants reinvestment program shall be established and operated by an executive steering committee in collaboration with the department of health to provide grants to qualified community-based nonprofit organizations for the purpose of reinvesting in communities disproportionately affected by past federal and state drug policies by supporting job placement, mental health treatment, substance use disorder treatment, navigation of government programs, legal services to address barriers faced by formerly incarcerated persons and linkages to medical care and women's health services. The program may also include provision of grants for:

(1) prevention, early intervention and outreach services; risk surveys; and education for youth, families, caregivers, schools, primary care health providers, behavioral health and substance use disorder service providers, community and faith-based organizations, foster care providers, juvenile and family courts and others working to recognize and reduce risks related to substance use and the early signs of problematic use and of substance use disorders;

(2) schools to develop and support evidence-based substance use educational programs designed to prevent and reduce substance use and improve school retention and performance by supporting students who are at risk of dropping out of school and promoting alternatives to suspension or expulsion that focus on school retention, remediation and professional care. Schools with higher-than-average dropout rates should be prioritized for grants for this purpose;

(3) programs for outreach, education and treatment for homeless youth and out-of-school youth with substance use disorders;

(4) access and linkage to care provided by county behavioral health programs for youth and their families and caregivers who have a substance use disorder or who are at risk for developing a substance use disorder;

(5) youth-focused substance use disorder treatment programs that are culturally and gender competent, trauma-informed and evidence-based and that provide a continuum of care that includes screening and assessment for substance use disorder as well as mental health care, early intervention, active treatment, family involvement, case management, overdose prevention, prevention of communicable diseases related to substance use, relapse management for substance use and other co-occurring behavioral health disorders, vocational services, literacy services, parenting classes, family therapy and counseling services, medication-assisted treatments, psychiatric medication, psychotherapy and other related services;

(6) to the extent permitted by law and where indicated, interventions that utilize a two-generation approach to addressing substance use disorders with the capacity to treat youth and adults together, including support for the development of family-based interventions that address substance use disorders and related problems within the context of families of all types and their children;

(7) programs to assist individuals, as well as families and friends of drug-using young people, to reduce the stigma associated with substance use, including being diagnosed with a substance use disorder or seeking substance use disorder services. This includes peer-run outreach and education to reduce stigma, anti-stigma campaigns and community recovery networks;

(8) workforce training and wage structures that increase the hiring pool of behavioral health staff with substance use disorder prevention and treatment expertise, provide ongoing education and coaching that increases substance use treatment providers' core competencies and train providers on promising and evidenced-based practices;

(9) construction of community-based youth treatment facilities; and

(10) contracts with county behavioral health programs for the provision of services described in this subsection.

C. A qualified community-based nonprofit organization may apply for a grant from the community grants reinvestment fund. Applications shall be reviewed by the grant application review committee, composed of members appointed to two-year terms by the secretary of health or the secretary's designee in collaboration with the director of the division. The committee shall review applications and make recommendations to the secretary of health regarding the design, efficacy and viability of grant applications. In making its recommendations, the committee shall prioritize proposals that provide:

(1) community-based job skills services;

(2) community-based job placement services;

(3) adult education services; or

(4) other community-based supportive services.

D. The community grants reinvestment program shall:

(1) periodically evaluate the programs that receive grants to determine the effectiveness of those programs and self-evaluate the program's activities; and

(2) be governed and administered by an executive steering committee appointed by the secretary of health that includes a balanced and diverse membership from relevant state and local government entities and community- based job skills and job placement service providers. The committee shall have expertise in job placement; homelessness and housing; behavioral health and substance abuse treatment; community reentry for formerly incarcerated persons; ending mass incarceration; and effective rehabilitative treatment for adults and juveniles.

SECTION 39. [NEW MATERIAL] SHORT TITLE.--Sections 39 through 48 of this act may be cited as the "Cannabis Tax Act".

SECTION 40. [NEW MATERIAL] DEFINITIONS.--As used in the Cannabis Tax Act:

A. "cannabis items" means "cannabis items" as that term is defined in the Cannabis Taxation and Regulation Act;

B. "consumer price index" means the consumer price index for all urban consumers, United States city average for all items, published by the United States department of labor;

C. "county area" means that portion of a county located outside the boundaries of any municipality, except that for H class counties, "county area" means the entire county;

D. "department" means the taxation and revenue department;

E. "governing body" means:

(1) in the case of a municipality, the city council or city commission of a city, the board of trustees of a town or village or the board of county commissioners of H class counties; or

(2) in the case of a county, the county commission of a county or the county council of an H class county; and

F. "licensee" means a person who holds a license issued pursuant to the Cannabis Taxation and Regulation Act.

SECTION 41. [NEW MATERIAL] CANNABIS HARVEST TAX.--

A. There is imposed a tax on a licensee who harvests cannabis that enters the commercial market, which may be referred to as the "cannabis harvest tax", as follows:

(1) cannabis flowers shall be taxed at a rate of sixty-two cents ($.62) per dry-weight gram; and

(2) cannabis leaves shall be taxed at a rate of ten cents ($.10) per dry-weight gram.

B. No later than April 30, 2020 and April 30 of each subsequent year, the department shall calculate the rate of the cannabis harvest tax to be imposed as of July 1 of that year. The rate of the cannabis harvest tax shall be equal to the product, rounded down to the nearest whole cent, of:

(1) for cannabis flowers, sixty-two cents ($.62) multiplied by a fraction with a numerator equal to the consumer price index for the previous calendar year and a denominator equal to the consumer price index for the most current calendar year available; and

(2) for cannabis leaves, ten cents ($.10) multiplied by a fraction with a numerator equal to the consumer price index for the previous calendar year and a denominator equal to the consumer price index for the most current calendar year available.

C. The cannabis harvest tax shall not apply to cannabis produced for personal use as provided for in the Cannabis Taxation and Regulation Act or by a qualified patient or primary caregiver in accordance with the Lynn and Erin Compassionate Use Act.

SECTION 42. [NEW MATERIAL] CANNABIS NURSERY TAX.--

A. There is imposed a tax on a licensee who produces immature cannabis plants that enter the commercial market at a rate of one dollar thirty-five cents ($1.35) per plant. The tax imposed by this section may be referred to as the "cannabis nursery tax".

B. No later than April 30, 2020 and April 30 of each subsequent year, the department shall calculate the rate of the cannabis nursery tax to be imposed as of July 1 of that year. The rate of the cannabis nursery tax shall be equal to the product, rounded down to the nearest whole cent, of one dollar thirty-five cents ($1.35) multiplied by a fraction with a numerator equal to the consumer price index for the previous calendar year and a denominator equal to the consumer price index for the most current calendar year available.

SECTION 43. [NEW MATERIAL] CANNABIS EXCISE TAX.--

A. There is imposed a cannabis excise tax on a licensee that sells cannabis items in this state on which the tax imposed by this section has not been paid. If the price paid does not represent the value of the cannabis item, the tax rate shall be applied to the reasonable value of the cannabis item at the time the item was purchased. The excise tax imposed by this section may be referred to as the "cannabis excise tax".

B. The rate of the cannabis excise tax is fifteen percent and is applied to the non-bundled price paid for the cannabis item.

C. The cannabis excise tax shall not apply to retail sales of medical cannabis items sold to a qualified patient or to a primary caregiver who presents a registry identification card issued pursuant to the Lynn and Erin Compassionate Use Act at the time of the sale.

SECTION 44. [NEW MATERIAL] MUNICIPAL CANNABIS TAX.--

A. A majority of the members of the governing body of a municipality may enact an ordinance imposing an excise tax on a cannabis retailer that sells cannabis items in the municipality on which the tax imposed by this section has not been paid. The tax imposed pursuant to this section may be referred to as the "municipal cannabis tax".

B. The rate of the municipal cannabis tax is no more than five percent, which shall be imposed in one-sixteenth percent increments and is applied to the price of the cannabis item. If the price of the cannabis item does not represent the value of the item, the tax rate shall be applied to the reasonable value of the item at the time that the item was purchased.

C. The governing body of a municipality, at the time of enacting any ordinance imposing a municipal cannabis tax, may dedicate the revenue for municipal general purposes.

D. Any ordinance enacted under the provisions of Subsection A of this section shall include an effective date of either July 1 or January 1.

E. An ordinance imposing the municipal cannabis tax shall not go into effect until after an election is held and the majority of the voters of the municipality voting in the election vote in favor of imposing the tax. The governing body shall adopt a resolution calling for an election within seventy-five days of the date the ordinance is adopted on the question of imposing the tax. The question shall be submitted to the voters of the municipality as a separate question at a regular municipal election or at a special election called for that purpose by the governing body. A special municipal election shall be called, conducted and canvassed as provided in the Municipal Election Code. If a majority of the voters voting on the question approves the ordinance imposing the municipal cannabis tax, the ordinance shall become effective in accordance with the provisions of the Cannabis Tax Act. If the question of imposing the municipal cannabis tax fails, the governing body shall not again propose the imposition of the tax for a period of one year from the date of the election.

SECTION 45. [NEW MATERIAL] COUNTY CANNABIS TAX.--

A. The majority of the members of the governing body of a county may enact an ordinance imposing an excise tax on a cannabis retailer that sells cannabis items in the county area on which the tax imposed by this section has not been paid. The tax imposed pursuant to this section may be referred to as the "county cannabis tax".

B. The rate of the county cannabis tax is no more than five percent, which shall be imposed in one-sixteenth percent increments and is applied to the price of the cannabis item. If the price of the cannabis item does not represent the value of the item, the tax rate shall be applied to the reasonable value of the item at the time that the item was purchased.

C. The governing body of a county, at the time of enacting any ordinance imposing a county cannabis tax, may dedicate the revenue for county general purposes.

D. Any ordinance enacted under the provisions of Subsection A of this section shall include an effective date of either July 1 or January 1.

E. An ordinance imposing the county cannabis tax shall not go into effect until after an election is held and the majority of the qualified electors of the county area voting in the election vote in favor of imposing the tax. The governing body shall adopt a resolution calling for an election within seventy-five days of the date that the ordinance is adopted on the question of imposing the tax. The question may be submitted to the qualified electors and voted upon as a separate question at any special election called for that purpose by the governing body. The election on the question shall be called, held, conducted and canvassed in substantially the same manner as provided by law for general elections. If the question of imposing a county cannabis tax fails, the governing body shall not again propose a county cannabis tax for a period of one year after the election.

SECTION 46. [NEW MATERIAL] DATE PAYMENT DUE.--The taxes imposed pursuant to the Cannabis Tax Act are to be paid on or before the twenty-fifth day of the month following the month in which the taxable event occurs.

SECTION 47. [NEW MATERIAL] ADMINISTRATIVE CHARGE.--The department may deduct an amount not to exceed three percent of the proceeds of the municipal cannabis tax and county cannabis tax as a charge for the administrative costs of collection, which amount shall be retained by the department for use in administration of those taxes.

SECTION 48. [NEW MATERIAL] INTERPRETATION OF ACT--ADMINISTRATION AND ENFORCEMENT OF TAX.--The department shall:

A. interpret the provisions of the Cannabis Tax Act; and

B. administer and enforce the collection of the cannabis harvest tax, cannabis nursery tax, cannabis excise tax, municipal cannabis tax and county cannabis tax.

SECTION 49. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] DISTRIBUTION.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to:

A. the department of health, in an amount equal to two percent of the net receipts attributable to the taxes imposed in the Cannabis Tax Act, to support qualified patients participating in the medical cannabis program in accordance with the Lynn and Erin Compassionate Use Act who also participate in the medical cannabis subsidy program;

B. the board of regents of the university of New Mexico, in fiscal years 2020 through 2030, in an amount of five hundred thousand dollars ($500,000), for research and analysis of the effect of the implementation of the Cannabis Taxation and Regulation Act and to make any related recommendations to the legislature and the governor regarding amendments to that act. A report of the research and analysis shall be published every two years through 2030 and shall include analysis of:

(1) impacts on public health, health costs associated with cannabis use and whether cannabis use is associated with an increase or decrease in the use of alcohol or other drugs;

(2) the impact of treatment for maladaptive cannabis use and the effectiveness of different treatment programs;

(3) public safety issues related to cannabis use and the effectiveness of the packaging and labeling requirements and advertising and marketing restrictions on the prevention of underage access to and use of cannabis items;

(4) cannabis use rates, maladaptive use rates for adults and youth and diagnosis rates of cannabis-related substance use disorders;

(5) cannabis market prices; illicit market prices; tax structures and rates; and how to best tax cannabis based on potency and the structure and function of licensed cannabis businesses;

(6) whether additional protections are needed to prevent unlawful monopolies or anti-competitive behavior from occurring in the nonmedical cannabis industry and, if so, recommendations as to the most effective measures for preventing that behavior;

(7) the economic impacts in the private and public sectors, including job creation, workplace safety and revenues;

(8) criminal justice impacts, including impacts on law enforcement and public resources, short- and long-term consequences of involvement in the criminal justice system and state and local government agency administrative costs and revenue;

(9) whether the regulatory agencies tasked with implementing and enforcing the Cannabis Taxation and Regulation Act are doing so consistent with the purposes of that act and whether other agencies might do so more effectively;

(10) environmental issues related to cannabis production and the criminal prohibition of cannabis production; and

(11) the geographic location, structure and function of licensed cannabis businesses and demographic data, including race, ethnicity and gender of license holders;

C. the department of public safety, in fiscal years 2020 through 2022, in an amount of five hundred thousand dollars ($500,000), to establish and adopt protocols:

(1) to determine whether a driver is operating a vehicle while impaired, including impairment by the use of cannabis items; and

(2) that set forth best practices to assist law enforcement agencies. The department of public safety may hire personnel and contract with other entities to establish the protocols provided for in this subsection; and

D. to the community grants reinvestment fund in an amount equal to twenty percent of the net receipts attributable to the taxes imposed in the Cannabis Tax Act to establish and operate the community grants reinvestment program."

SECTION 50. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] TRANSFER--REVENUES FROM MUNICIPAL CANNABIS

TAX AND COUNTY CANNABIS TAX.--

A. A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality for which the department is collecting a municipal cannabis tax imposed by that

municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the net receipts attributable to the municipal cannabis tax, less any deduction for administrative costs determined and made by the department pursuant to the Cannabis Tax Act.

B. A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county for which the department is collecting a county cannabis tax imposed by that county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the net receipts attributable to the county cannabis tax, less any deduction for

administrative costs determined and made by the department pursuant to the Cannabis Tax Act."

SECTION 51. Section 7-1-2 NMSA 1978 (being Laws 1965, Chapter 248, Section 2, as amended) is amended to read:

"7-1-2. APPLICABILITY.--The Tax Administration Act applies to and governs:

A. the administration and enforcement of the following taxes or tax acts as they now exist or may hereafter be amended:

(1) Income Tax Act;

(2) Withholding Tax Act;

(3) Venture Capital Investment Act;

(4) Gross Receipts and Compensating Tax Act and any state gross receipts tax;

(5) Liquor Excise Tax Act;

(6) Local Liquor Excise Tax Act;

(7) any municipal local option gross receipts tax;

(8) any county local option gross receipts tax;

(9) Special Fuels Supplier Tax Act;

(10) Gasoline Tax Act;

(11) petroleum products loading fee, which fee shall be considered a tax for the purpose of the Tax Administration Act;

(12) Alternative Fuel Tax Act;

(13) Cigarette Tax Act;

(14) Estate Tax Act;

(15) Railroad Car Company Tax Act;

(16) Investment Credit Act, rural job tax credit, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs and Research and Development Tax Credit Act, Film Production Tax Credit Act, Affordable Housing Tax Credit Act and high-wage jobs tax credit;

(17) Corporate Income and Franchise Tax Act;

(18) Uniform Division of Income for Tax Purposes Act;

(19) Multistate Tax Compact;

(20) Tobacco Products Tax Act; [and]

(21) the telecommunications relay service surcharge imposed by Section 63-9F-11 NMSA 1978, which surcharge shall be considered a tax for the purposes of the Tax Administration Act; and

(22) the Cannabis Tax Act;

B. the administration and enforcement of the following taxes, surtaxes, advanced payments or tax acts as they now exist or may hereafter be amended:

(1) Resources Excise Tax Act;

(2) Severance Tax Act;

(3) any severance surtax;

(4) Oil and Gas Severance Tax Act;

(5) Oil and Gas Conservation Tax Act;

(6) Oil and Gas Emergency School Tax Act;

(7) Oil and Gas Ad Valorem Production Tax Act;

(8) Natural Gas Processors Tax Act;

(9) Oil and Gas Production Equipment Ad Valorem Tax Act;

(10) Copper Production Ad Valorem Tax Act;

(11) any advance payment required to be made by any act specified in this subsection, which advance payment shall be considered a tax for the purposes of the Tax Administration Act;

(12) Enhanced Oil Recovery Act;

(13) Natural Gas and Crude Oil Production Incentive Act; and

(14) intergovernmental production tax credit and intergovernmental production equipment tax credit;

C. the administration and enforcement of the following taxes, surcharges, fees or acts as they now exist or may hereafter be amended:

(1) Weight Distance Tax Act;

(2) the workers' compensation fee authorized by Section 52-5-19 NMSA 1978, which fee shall be considered a tax for purposes of the Tax Administration Act;

(3) Uniform Unclaimed Property Act (1995);

(4) 911 emergency surcharge and the network and database surcharge, which surcharges shall be considered taxes for purposes of the Tax Administration Act;

(5) the solid waste assessment fee authorized by the Solid Waste Act, which fee shall be considered a tax for purposes of the Tax Administration Act;

(6) the water conservation fee imposed by Section 74-1-13 NMSA 1978, which fee shall be considered a tax for the purposes of the Tax Administration Act; and

(7) the gaming tax imposed pursuant to the Gaming Control Act; and

D. the administration and enforcement of all other laws, with respect to which the department is charged with responsibilities pursuant to the Tax Administration Act, but only to the extent that the other laws do not conflict with the Tax Administration Act."

SECTION 52. Section 7-1-6.15 NMSA 1978 (being Laws 1983, Chapter 211, Section 20, as amended by Laws 2015, Chapter 89, Section 1 and by Laws 2015, Chapter 100, Section 1) is amended to read:

"7-1-6.15. ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO MUNICIPALITIES OR COUNTIES.--

A. The provisions of this section apply to:

(1) any distribution to a municipality pursuant to Section 7-1-6.4, 7-1-6.36 or 7-1-6.46 NMSA 1978;

(2) any transfer to a municipality with respect to any local option gross receipts tax or municipal cannabis tax imposed by that municipality;

(3) any transfer to a county with respect to any local option gross receipts tax or county cannabis tax imposed by that county;

(4) any distribution to a county pursuant to Section 7-1-6.16 or 7-1-6.47 NMSA 1978;

(5) any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;

(6) any transfer to a county with respect to any tax imposed in accordance with the Local Liquor Excise Tax Act;

(7) any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;

(8) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978; and

(9) any distribution to a municipality of compensating taxes pursuant to Section 7-1-6.55 NMSA 1978.

B. Before making a distribution or transfer specified in Subsection A of this section to a municipality or county for the month, amounts comprising the net receipts shall be segregated into two mutually exclusive categories. One category shall be for amounts relating to the current month, and the other category shall be for amounts relating to prior periods. The total of each category for a municipality or county shall be reported each month to that municipality or county. If the total of the amounts relating to prior periods is less than zero and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality or county, then the following procedures shall be carried out:

(1) all negative amounts relating to any period prior to the three calendar years preceding the year of the current month, net of any positive amounts in that same time period for the same taxpayers to which the negative amounts pertain, shall be excluded from the total relating to prior periods. Except as provided in Paragraph (2) of this subsection, the net receipts to be distributed or transferred to the municipality or county shall be adjusted to equal the amount for the current month plus the revised total for prior periods; and

(2) if the revised total for prior periods determined pursuant to Paragraph (1) of this subsection is negative and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality or county, the revised total for prior periods shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the municipality or county shall be equal to the amount for the current month.

C. The department shall recover from a municipality or county the amount excluded by Paragraph (2) of Subsection B of this section. This amount may be referred to as the "recoverable amount".

D. Prior to or concurrently with the distribution or transfer to the municipality or county of the adjusted net receipts, the department shall notify the municipality or county whose distribution or transfer has been adjusted pursuant to Paragraph (2) of Subsection B of this section:

(1) that the department has made such an adjustment, that the department has determined that a specified amount is recoverable from the municipality or county and that the department intends to recover that amount from future distributions or transfers to the municipality or county;

(2) that the municipality or county has ninety days from the date notice is made to enter into a mutually agreeable repayment agreement with the department;

(3) that if the municipality or county takes no action within the ninety-day period, the department will recover the amount from the next six distributions or transfers following the expiration of the ninety days; and

(4) that the municipality or county may inspect, pursuant to Section 7-1-8.9 NMSA 1978, an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application.

E. No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall begin recovering the recoverable amount from a municipality or county as follows:

(1) the department may collect the recoverable amount by:

(a) decreasing distributions or transfers to the municipality or county in accordance with a repayment agreement entered into with the municipality or county; or

(b) except as provided in Paragraphs (2) and (3) of this subsection, if the municipality or county fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the municipality or county following expiration of the ninety-day period in increments as nearly equal as practicable and sufficient to recover the amount;

(2) if, pursuant to Subsection B of this section, the secretary determines that the recoverable amount is more than fifty percent of the average distribution or transfer of net receipts for that municipality or county, the secretary:

(a) shall recover only up to fifty percent of the average distribution or transfer of net receipts for that municipality or county; and

(b) may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance; and

(3) if, after application of a refund claim, audit adjustment, correction of a mistake by the department or other adjustment of a prior period, but prior to any recovery of the department pursuant to this section, the total net receipts of a municipality or county for the twelve-month period beginning with the current month are reduced or are projected to be reduced to less than fifty percent of the average distribution or transfer of net receipts, the secretary may waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance.

F. No later than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall provide the municipality or county adequate opportunity to review an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application, pursuant to Section 7-1-8.9 NMSA 1978.

G. On or before September 1 of each year beginning in 2016, the secretary shall report to the state board of finance and the legislative finance committee the total recoverable amount waived pursuant to Subparagraph (b) of Paragraph (2) and Paragraph (3) of Subsection E of this section for each municipality and county in the prior fiscal year.

H. The secretary is authorized to decrease a distribution or transfer to a municipality or county upon being directed to do so by the secretary of finance and administration pursuant to the State Aid Intercept Act or to redirect a distribution or transfer to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement of the municipality or county and the New Mexico finance authority. Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a municipality or county, the secretary shall decrease or redirect the next designated distribution or transfer, and succeeding distributions or transfers as necessary, by the amount of the state distributions intercept authorized by the secretary of finance and administration pursuant to the State Aid Intercept Act or by the amount of the state distribution intercept authorized pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement with the New Mexico finance authority. The secretary shall transfer the state distributions intercept amount to the municipal or county treasurer or other person designated by the secretary of finance and administration or to the New Mexico finance authority pursuant to written agreement to pay the debt service to avoid default on qualified local revenue bonds or meet other local revenue bond, loan or other debt obligations of the municipality or county to the New Mexico finance authority. A decrease to or redirection of a distribution or transfer pursuant to this subsection that arose:

(1) prior to an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department takes precedence over any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, which may be made only from the net amount of the distribution or transfer remaining after application of the decrease or redirection pursuant to this subsection; and

(2) after an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department shall be subordinate to any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section.

I. Upon the direction of the secretary of finance and administration pursuant to Section 9-6-5.2 NMSA 1978, the secretary shall temporarily withhold the balance of a distribution to a municipality or county, net of any decrease or redirected amount pursuant to Subsection H of this section and any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, that has failed to submit an audit report required by the Audit Act or a financial report required by Subsection F of Section 6-6-2 NMSA 1978. The amount to be withheld, the source of the withheld distribution and the number of months that the distribution is to be withheld shall be as directed by the secretary of finance and administration. A distribution withheld pursuant to this subsection shall remain in the tax administration suspense fund until distributed to the municipality or county and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the municipality or county upon direction of the secretary of finance and administration.

J. As used in this section:

(1) "amounts relating to the current month" means any amounts included in the net receipts of the current month that represent payment of tax due for the current month, correction of amounts processed in the current month that relate to the current month or that otherwise relate to obligations due for the current month;

(2) "amounts relating to prior periods" means any amounts processed during the current month that adjust amounts processed in a period or periods prior to the current month regardless of whether the adjustment is a correction of a department error or due to the filing of amended returns, payment of department-issued assessments, filing or approval of claims for refund, audit adjustments or other cause;

(3) "average distribution or transfer amount" means the following amounts; provided that a distribution or transfer that is negative shall not be used in calculating the amounts:

(a) the annual average of the total amount distributed or transferred to a municipality or county in each of the three twelve-month periods preceding the current month;

(b) if a distribution or transfer to a municipality or county has been made for less than three years, the total amount distributed or transferred in the year preceding the current month; or

(c) if a municipality or county has not received distributions or transfers of net receipts for twelve or more months, the monthly average of net receipts distributed or transferred to the municipality or county preceding the current month multiplied by twelve;

(4) "current month" means the month for which the distribution or transfer is being prepared; and

(5) "repayment agreement" means an agreement between the department and a municipality or county under which the municipality or county agrees to allow the department to recover an amount determined pursuant to Paragraph (2) of Subsection B of this section by decreasing distributions or transfers to the municipality or county for one or more months beginning with the distribution or transfer to be made with respect to a designated month. No interest shall be charged."

SECTION 53. Section 7-9-73.2 NMSA 1978 (being Laws 1998, Chapter 95, Section 2 and Laws 1998, Chapter 99, Section 4, as amended) is amended to read:

"7-9-73.2. DEDUCTION--GROSS RECEIPTS TAX AND GOVERNMENTAL GROSS RECEIPTS TAX--PRESCRIPTION DRUGS--OXYGEN--OXYGEN SERVICES--MEDICAL CANNABIS.--

A. Receipts from the sale of prescription drugs [and], oxygen [and], oxygen services provided by a licensed medicare durable medical equipment provider and medical cannabis that is purchased in accordance with the Lynn and Erin Compassionate Use Act may be deducted from gross receipts and governmental gross receipts.

B. For the purposes of this section, "prescription drugs" means insulin and substances that are:

(1) dispensed by or under the supervision of a licensed pharmacist or by a physician or other person authorized under state law to do so;

(2) prescribed for a specified person by a person authorized under state law to prescribe the substance; and

(3) subject to the restrictions on sale contained in Subparagraph 1 of Subsection (b) of 21 USCA 353."

SECTION 54. Section 9-16-4 NMSA 1978 (being Laws 1983, Chapter 297, Section 20, as amended) is amended to read:

"9-16-4. DEPARTMENT ESTABLISHED.--There is created in the executive branch the "regulation and licensing department". The department shall not be a cabinet department. The department shall consist of but not be limited to [six] the following divisions [as follows]:

A. the administrative services division;

B. the construction industries division;

C. the financial institutions division;

D. the securities division;

E. the manufactured housing division; [and]

F. the alcohol and gaming division; and

G. the division of cannabis control."

SECTION 55. Section 26-2B-1 NMSA 1978 (being Laws 2007, Chapter 210, Section 1) is amended to read:

"26-2B-1. SHORT TITLE.--[Sections 1 through 7 of this act] Chapter 26, Article 2B NMSA 1978 may be cited as the "Lynn and Erin Compassionate Use Act" in honor of Lynn Pierson and Erin Armstrong."

SECTION 56. Section 26-2B-7 NMSA 1978 (being Laws 2007, Chapter 210, Section 7) is amended to read:

"26-2B-7. [REGISTRY IDENTIFICATION CARDS] DEPARTMENT RULES--DUTIES--REGISTRY IDENTIFICATION CARDS.--

A. No later than October 1, 2007, and after consultation with the advisory board, the department shall promulgate rules in accordance with the State Rules Act to implement the purpose of the Lynn and Erin Compassionate Use Act. The rules shall:

(1) govern the manner in which the department will consider applications for registry identification cards and for the renewal of identification cards for qualified patients and primary caregivers;

(2) define the amount of cannabis that is necessary to constitute an adequate supply, including amounts for topical treatments;

(3) identify criteria and set forth procedures for including additional medical conditions, medical treatments or diseases to the list of debilitating medical conditions that qualify for the medical use of cannabis. Procedures shall include a petition process and shall allow for public comment and public hearings before the advisory board;

(4) set forth additional medical conditions, medical treatments or diseases to the list of debilitating medical conditions that qualify for the medical use of cannabis as recommended by the advisory board;

[(5) identify requirements for the licensure of producers and cannabis production facilities and set forth procedures to obtain licenses;

(6) develop a distribution system for medical cannabis that provides for:

(a) cannabis production facilities within New Mexico housed on secured grounds and operated by licensed producers; and

(b) distribution of medical cannabis to qualified patients or their primary caregivers to take place at locations that are designated by the department and that are not within three hundred feet of any school, church or daycare center;

(7)] (5) determine additional duties and responsibilities of the advisory board; and

[(8)] (6) be revised and updated as necessary.

B. The department shall issue registry identification cards to a patient and to the primary caregiver for that patient, if any, who submit the following, in accordance with the department's rules:

(1) a written certification;

(2) the name, address and date of birth of the patient;

(3) the name, address and telephone number of the patient's practitioner; and

(4) the name, address and date of birth of the patient's primary caregiver, if any.

C. The department shall verify the information contained in an application submitted pursuant to Subsection B of this section and shall approve or deny an application within thirty days of receipt. The department may deny an application only if the applicant did not provide the information required pursuant to Subsection B of this section or if the department determines that the information provided is false. A person whose application has been denied shall not reapply for six months from the date of the denial unless otherwise authorized by the department.

D. The department shall issue a registry identification card within five days of approving an application, and a card shall expire one year after the date of issuance. A registry identification card shall contain:

(1) the name, address and date of birth of the qualified patient and primary caregiver, if any;

(2) the date of issuance and expiration date of the registry identification card; and

(3) other information that the department may require by rule.

E. A person who possesses a registry identification card shall notify the department of any change in the person's name, address, qualified patient's practitioner, qualified patient's primary caregiver or change in status of the qualified patient's debilitating medical condition within ten days of the change.

F. Possession of or application for a registry identification card shall not constitute probable cause or give rise to reasonable suspicion for a governmental agency to search the person or property of the person possessing or applying for the card.

G. The department shall maintain a confidential file containing the names and addresses of the persons who have either applied for or received a registry identification card. Individual names on the list shall be confidential and not subject to disclosure, except:

(1) to authorized employees or agents of the department as necessary to perform the duties of the department pursuant to the provisions of the Lynn and Erin Compassionate Use Act;

(2) to authorized employees of state or local law enforcement agencies, but only for the purpose of verifying that a person is lawfully in possession of a registry identification card; or

(3) as provided in the federal Health Insurance Portability and Accountability Act of 1996."

SECTION 57. Section 30-31-2 NMSA 1978 (being Laws 1972, Chapter 84, Section 2, as amended) is amended to read:

"30-31-2. DEFINITIONS.--As used in the Controlled Substances Act:

A. "administer" means the direct application of a controlled substance by any means to the body of a patient or research subject by a practitioner or the practitioner's agent;

B. "agent" includes an authorized person who acts on behalf of a manufacturer, distributor or dispenser. It does not include a common or contract carrier, public warehouseperson or employee of the carrier or warehouseperson;

C. "board" means the board of pharmacy;

D. "bureau" means the narcotic and dangerous drug section of the criminal division of the United States department of justice, or its successor agency;

E. "controlled substance" means a drug or substance listed in Schedules I through V of the Controlled Substances Act or rules adopted thereto;

F. "counterfeit substance" means a controlled substance that bears the unauthorized trademark, trade name, imprint, number, device or other identifying mark or likeness of a manufacturer, distributor or dispenser other than the person who in fact manufactured, distributed or dispensed the controlled substance;

G. "deliver" means the actual, constructive or attempted transfer from one person to another of a controlled substance or controlled substance analog, whether or not there is an agency relationship;

H. "dispense" means to deliver a controlled substance to an ultimate user or research subject pursuant to the lawful order of a practitioner, including the administering, prescribing, packaging, labeling or compounding necessary to prepare the controlled substance for that delivery;

I. "dispenser" means a practitioner who dispenses and includes hospitals, pharmacies and clinics where controlled substances are dispensed;

J. "distribute" means to deliver other than by administering or dispensing a controlled substance or controlled substance analog;

K. "drug" or "substance" means substances recognized as drugs in the official United States pharmacopoeia, official homeopathic pharmacopoeia of the United States or official national formulary or any respective supplement to those publications. It does not include devices or their components, parts or accessories;

[L. "hashish" means the resin extracted from any part of marijuana, whether growing or not, and every compound, manufacture, salt, derivative, mixture or preparation of such resins;

M.] L. "manufacture" means the production, preparation, compounding, conversion or processing of a controlled substance or controlled substance analog by extraction from substances of natural origin or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis and includes any packaging or repackaging of the substance or labeling or relabeling of its container, except that this term does not include the preparation or compounding of a controlled substance:

(1) by a practitioner as an incident to administering or dispensing a controlled substance in the course of the practitioner's professional practice; or

(2) by a practitioner, or by the practitioner's agent under the practitioner's supervision, for the purpose of or as an incident to research, teaching or chemical analysis and not for sale;

[N. "marijuana" means all parts of the plant cannabis, including any and all varieties, species and subspecies of the genus Cannabis, whether growing or not, the seeds thereof and every compound, manufacture, salt, derivative, mixture or preparation of the plant or its seeds. It does not include the mature stalks of the plant, hashish, tetrahydrocannabinols extracted or isolated from marijuana, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture or preparation of the mature stalks, fiber, oil or cake, or the sterilized seed of the plant that is incapable of germination;

O.] M. "narcotic drug" means any of the following, whether produced directly or indirectly by extraction from substances of vegetable origin or independently by means of chemical synthesis or by a combination of extraction and chemical synthesis:

(1) opium and opiate and any salt, compound, derivative or preparation of opium or opiate;

(2) any salt, compound, isomer, derivative or preparation that is a chemical equivalent of any of the substances referred to in Paragraph (1) of this subsection, except the isoquinoline alkaloids of opium;

(3) opium poppy and poppy straw, including all parts of the plant of the species Papaver somniferum L. except its seeds; or

(4) coca leaves and any salt, compound, derivative or preparation of coca leaves, any salt, compound, isomer, derivative or preparation that is a chemical equivalent of any of these substances except decocainized coca leaves or extractions of coca leaves that do not contain cocaine or ecgonine;

[P.] N. "opiate" means any substance having an addiction-forming or addiction-sustaining liability similar to morphine or being capable of conversion into a drug having addiction-forming or addiction-sustaining liability. "Opiate" does not include, unless specifically designated as controlled under Section 30-31-5 NMSA 1978, the dextrorotatory isomer of 3-methoxy-n-methylmorphinan and its salts, dextromethorphan. "Opiate" does include its racemic and levorotatory forms;

[Q.] O. "person" means an individual, partnership, corporation, association, institution, political subdivision, government agency or other legal entity;

[R.] P. "practitioner" means a physician, certified advanced practice chiropractic physician, doctor of oriental medicine, dentist, physician assistant, certified nurse practitioner, clinical nurse specialist, certified nurse-midwife, prescribing psychologist, veterinarian, euthanasia technician, pharmacist, pharmacist clinician or other person licensed or certified to prescribe and administer drugs that are subject to the Controlled Substances Act;

[S.] Q. "prescription" means an order given individually for the person for whom is prescribed a controlled substance, either directly from a licensed practitioner or the practitioner's agent to the pharmacist, including by means of electronic transmission, or indirectly by means of a written order signed by the prescriber, bearing the name and address of the prescriber, the prescriber's license classification, the name and address of the patient, the name and quantity of the drug prescribed, directions for use and the date of issue and in accordance with the Controlled Substances Act or rules adopted thereto;

[T.] R. "scientific investigator" means a person registered to conduct research with controlled substances in the course of the person's professional practice or research and includes analytical laboratories;

[U.] S. "ultimate user" means a person who lawfully possesses a controlled substance for the person's own use or for the use of a member of the person's household or for administering to an animal under the care, custody and control of the person or by a member of the person's household;

[V. "drug paraphernalia" means all equipment, products and materials of any kind that are used, intended for use or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling or otherwise introducing into the human body a controlled substance, or controlled substance analog in violation of the Controlled Substances Act. It includes:

(1) kits used, intended for use or designed for use in planting, propagating, cultivating, growing or harvesting any species of plant that is a controlled substance or controlled substance analog or from which a controlled substance can be derived;

(2) kits used, intended for use or designed for use in manufacturing, compounding, converting, producing, processing or preparing controlled substances or controlled substance analogs;

(3) isomerization devices used, intended for use or designed for use in increasing the potency of any species of plant that is a controlled substance;

(4) testing equipment used, intended for use or designed for use in identifying or in analyzing the strength, effectiveness or purity of controlled substances or controlled substance analogs;

(5) scales or balances used, intended for use or designed for use in weighing or measuring controlled substances or controlled substance analogs;

(6) diluents and adulterants, such as quinine hydrochloride, mannitol, mannite dextrose and lactose, used, intended for use or designed for use in cutting controlled substances or controlled substance analogs;

(7) separation gins and sifters used, intended for use or designed for use in removing twigs and seeds from, or in otherwise cleaning and refining, marijuana;

(8) blenders, bowls, containers, spoons and mixing devices used, intended for use or designed for use in compounding controlled substances or controlled substance analogs;

(9) capsules, balloons, envelopes and other containers used, intended for use or designed for use in packaging small quantities of controlled substances or controlled substance analogs;

(10) containers and other objects used, intended for use or designed for use in storing or concealing controlled substances or controlled substance analogs;

(11) hypodermic syringes, needles and other objects used, intended for use or designed for use in parenterally injecting controlled substances or controlled substance analogs into the human body;

(12) objects used, intended for use or designed for use in ingesting, inhaling or otherwise introducing marijuana, cocaine, hashish or hashish oil into the human body, such as:

(a) metal, wooden, acrylic, glass, stone, plastic or ceramic pipes, with or without screens, permanent screens, hashish heads or punctured metal bowls;

(b) water pipes;

(d) smoking and carburetion masks;

(e) roach clips, meaning objects used to hold burning material, such as a marijuana cigarette, that has become too small to hold in the hand;

(f) miniature cocaine spoons and cocaine vials;

(g) chamber pipes;

(h) carburetor pipes;

(i) electric pipes;

(j) air-driven pipes;

(k) chilams;

(l) bongs; or

(m) ice pipes or chillers; and

(13) in determining whether an object is drug paraphernalia, a court or other authority should consider, in addition to all other logically relevant factors, the following:

(a) statements by the owner or by anyone in control of the object concerning its use;

(b) the proximity of the object, in time and space, to a direct violation of the Controlled Substances Act or any other law relating to controlled substances or controlled substance analogs;

(d) the existence of any residue of a controlled substance or controlled substance analog on the object;

(e) instructions, written or oral, provided with the object concerning its use;

(f) descriptive materials accompanying the object that explain or depict its use;

(g) the manner in which the object is displayed for sale; and

(h) expert testimony concerning its use;

W.] T. "controlled substance analog":

(1) means a substance other than a controlled substance that has a chemical structure substantially similar to that of a controlled substance in Schedule I, II, III, IV or V or that was specifically designed to produce effects substantially similar to that of controlled substances in Schedule I, II, III, IV or V. Examples of chemical classes in which controlled substance analogs are found include the following:

[(1)] (a) phenethylamines;

[(2)] (b) N-substituted piperidines;

[(3)] (c) morphinans;

[(4)] (d) ecgonines;

[(5)] (e) quinazolinones;

[(6)] (f) substituted indoles; and

[(7)] (g) arylcycloalkylamines;

[Specifically excluded from the definition of "controlled substance analog" are those] and

(2) does not include substances that are generally recognized as safe and effective within the meaning of the Federal Food, Drug and Cosmetic Act or have been manufactured, distributed or possessed in conformance with the provisions of an approved new drug application or an exemption for investigational use within the meaning of Section 505 of the Federal Food, Drug and Cosmetic Act;

[X.] U. "human consumption" includes application, injection, inhalation, ingestion or any other manner of introduction;

[Y.] V. "drug-free school zone" means a public school, parochial school or private school or property that is used for a public, parochial or private school purpose and the area within one thousand feet of the school property line, but it does not mean any post-secondary school; and

[Z.] W. "valid practitioner-patient relationship" means a professional relationship, as defined by the practitioner's licensing board, between the practitioner and the patient."

SECTION 58. Section 30-31-6 NMSA 1978 (being Laws 1972, Chapter 84, Section 6, as amended) is amended to read:

"30-31-6. SCHEDULE I.--The following controlled substances are included in Schedule I:

A. any of the following opiates, including their isomers, esters, ethers, salts, and salts of isomers, esters and ethers, unless specifically exempted, whenever the existence of these isomers, esters, ethers and salts is possible within the specific chemical designation:

(1) acetylmethadol;

(2) allylprodine;

(3) alphacetylmethadol;

(4) alphameprodine;

(5) alphamethadol;

(6) benzethidine;

(7) betacetylmethadol;

(8) betameprodine;

(9) betamethadol;

(10) betaprodine;

(11) clonitazene;

(12) dextromoramide;

(13) dextrorphan;

(14) diampromide;

(15) diethylthiambutene;

(16) dimenoxadol;

(17) dimepheptanol;

(18) dimethylthiambutene;

(19) dioxaphetyl butyrate;

(20) dipipanone;

(21) ethylmethylthiambutene;

(22) etonitazene;

(23) etoxeridine;

(24) furethidine;

(25) hydroxypethidine;

(26) ketobemidone;

(27) levomoramide;

(28) levophenacylmorphan;

(29) morpheridine;

(30) noracymethadol;

(31) norlevorphanol;

(32) normethadone;

(33) norpipanone;

(34) phenadoxone;

(35) phenampromide;

(36) phenomorphan;

(37) phenoperidine;

(38) piritramide;

(39) proheptazine;

(40) properidine;

(41) racemoramide; and

(42) trimeperidine;

B. any of the following opium derivatives, their salts, isomers and salts of isomers, unless specifically exempted, whenever the existence of these salts, isomers and salts of isomers is possible within the specific chemical designation:

(1) acetorphine;

(2) acetyldihydrocodeine;

(3) benzylmorphine;

(4) codeine methylbromide;

(5) codeine-N-oxide;

(6) cyprenorphine;

(7) desomorphine;

(8) dihydromorphine;

(9) etorphine;

(10) heroin;

(11) hydromorphinol;

(12) methyldesorphine;

(13) methyldihydromorphine;

(14) morphine methylbromide;

(15) morphine methylsulfonate;

(16) morphine-N-oxide;

(17) myrophine;

(18) nicocodeine;

(19) nicomorphine;

(20) normorphine;

(21) pholcodine; and

(22) thebacon;

C. any material, compound, mixture or preparation that contains any quantity of the following hallucinogenic substances, their salts, isomers and salts of isomers, unless specifically exempted, whenever the existence of these salts, isomers and salts of isomers is possible within the specific chemical designation:

(1) 3,4-methylenedioxy amphetamine;

(2) 5-methoxy-3,4-methylenedioxy amphetamine;

(3) 3,4,5-trimethoxy amphetamine;

(4) bufotenine;

(5) diethyltryptamine;

(6) dimethyltryptamine;

(7) 4-methyl-2,5-dimethoxy amphetamine;

(8) ibogaine;

(9) lysergic acid diethylamide;

[(10) marijuana;

(11)] (10) mescaline;

[(12)] (11) peyote, except as otherwise provided in the Controlled Substances Act;

[(13)] (12) N-ethyl-3-piperidyl benzilate;

[(14)] (13) N-methyl-3-piperidyl benzilate;

[(15)] (14) psilocybin;

[(16)] (15) psilocyn;

[(17)] (16) tetrahydrocannabinols;

[(18) hashish;

(19)] (17) synthetic cannabinoids, including:

(a) 1-[2-(4-(morpholinyl)ethyl]

-3-(1-naphthoyl)indole;

(b) 1-butyl-3-(1-napthoyl)indole;

(d) 1-pentyl-3-(1-naphthoyl)indole;

(e) 1-pentyl-3-(2-methoxyphenylacetyl) indole;

(f) cannabicyclohexanol (CP 47, 497 and homologues: 5-(1,1-dimethylheptyl)-2-[(1R,3S)

-3-hydroxycyclohexyl]-phenol (CP-47,497); and 5-(1,

1-dimethyloctyl)-2-[(1R,3S)-3-hydroxycyclohexyl]-phenol;

(g) 6aR,10aR)-9-(hydroxymethyl)

-6,6-dimethyl-3-(2-methyloctan-2-yl)-6a,7,10,

10a-tetrahydrobenzo[c]chromen-1-ol);

(h) dexanabinol, (6aS,10aS)

-9-(hydroxymethyl)-6,6-dimethyl-3-(2-methyloctan-2-yl)

-6a,7,10,10a-tetrahydrobenzo[c]chromen-1-ol;

(i) 1-pentyl-3-(4-chloro naphthoyl) indole;

(j) (2-methyl-1-propyl-1H-indol-3-yl)

-1-naphthalenyl-methanone; and

(k) 5-(1,1-dimethylheptyl)-2-(3-hydroxy cyclohexyl)-phenol;

[(20)] (18) 3,4-methylenedioxymethcathinone;

[(21)] (19) 3,4-methylenedioxypyrovalerone;

[(22)] (20) 4-methylmethcathinone;

[(23)] (21) 4-methoxymethcathinone;

[(24)] (22) 3-fluoromethcathinone; and

[(25)] (23) 4-fluoromethcathinone;

D. the enumeration of peyote as a controlled substance does not apply to the use of peyote in bona fide religious ceremonies by a bona fide religious organization, and members of the organization so using peyote are exempt from registration. Any person who manufactures peyote for or distributes peyote to the organization or its members shall comply with the federal Comprehensive Drug Abuse Prevention and Control Act of 1970 and all other requirements of law;

E. the enumeration of [marijuana] tetrahydrocannabinols or chemical derivatives of tetrahydrocannabinol as Schedule I controlled substances does not apply to the use of [marijuana] tetrahydrocannabinols or chemical derivatives of tetrahydrocannabinol by:

(1) a certified [patients] patient pursuant to the Controlled Substances Therapeutic Research Act [or by]; or

(2) a qualified [patients] patient pursuant to the provisions of the Lynn and Erin Compassionate Use Act; and

F. controlled substances added to Schedule I by rule adopted by the board pursuant to Section 30-31-3 NMSA 1978."

SECTION 59. Section 30-31-7 NMSA 1978 (being Laws 1972, Chapter 84, Section 7, as amended) is amended to read:

"30-31-7. SCHEDULE II.--

A. The following controlled substances are included in Schedule II:

(1) any of the following substances, except those narcotic drugs listed in other schedules, whether produced directly or indirectly by extraction from substances of vegetable origin, or independently by means of chemical synthesis, or by combination of extraction and chemical synthesis:

(a) opium and opiate, and any salt, compound, derivative or preparation of opium or opiate;

(b) any salt, compound, isomer, derivative or preparation thereof that is chemically equivalent or identical with any of the substances referred to in Subparagraph (a) of this paragraph, but not including the isoquinoline alkaloids of opium;

(d) coca leaves and any salt, compound, derivative or preparation of coca leaves, and any salt, compound, derivative or preparation thereof that is chemically equivalent or identical with any of these substances, but not including decocainized coca leaves or extractions that do not contain cocaine or ecgonine; and

[(e) marijuana, but only for the use by certified patients pursuant to the Controlled Substances Therapeutic Research Act or by qualified patients pursuant to the provisions of the Lynn and Erin Compassionate Use Act; and

(f)] (e) tetrahydrocannabinols or chemical derivatives of tetrahydrocannabinol, but only for the use by certified patients pursuant to the Controlled Substances Therapeutic Research Act or by qualified patients pursuant to the provisions of the Lynn and Erin Compassionate Use Act.

[Marijuana, tetrahydrocannobinols] Tetrahydrocannabinols or chemical derivatives of tetrahydrocannabinol shall be considered Schedule II controlled substances only for the purposes enumerated in the Controlled Substances Therapeutic Research Act or the Lynn and Erin Compassionate Use Act;

(2) any of the following opiates, including their isomers, esters, ethers, salts and salts of isomers, whenever the existence of these isomers, esters, ethers and salts is possible within the specific chemical designation:

(a) alphaprodine;

(b) anileridine;

(d) dihydrocodeine;

(e) diphenoxylate;

(f) fentanyl;

(g) hydromorphone;

(h) isomethadone;

(i) levomethorphan;

(j) levorphanol;

(k) meperidine;

(l) metazocine;

(m) methadone;

(n) methadone--intermediate,

4-cyano-2-dimethylamino-4, 4-diphenyl butane;

(o) moramide--intermediate,

2-methyl-3-morpholino-1, 1-diphenyl-propane-carboxylic acid;

(p) oxycodone;

(q) pethidine;

(r) pethidine--intermediate--A,

4-cyano-1-methyl-4-phenylpiperidine;

(s) pethidine--intermediate--B,

ethyl-4-phenyl-piperidine-4-carboxylate;

(t) pethidine--intermediate--C,

1-methyl-4-phenylpiperidine-4-carboxylic acid;

(u) phenazocine;

(v) piminodine;

(w) racemethorphan; and

(x) racemorphan;

(3) unless listed in another schedule, any material, compound, mixture or preparation that contains any quantity of the following substances having a potential for abuse associated with a stimulant effect on the central nervous system:

(a) amphetamine, its salts, optical isomers and salts of its optical isomers;

(b) phenmetrazine and its salts;

(d) methylphenidate; and

(4) controlled substances added to Schedule II by rule adopted by the board pursuant to Section 30-31-3 NMSA 1978.

B. Where methadone is prescribed, administered or dispensed by a practitioner of a drug abuse rehabilitation program while acting in the course of the practitioner's professional practice, or otherwise lawfully obtained or possessed by a person, such person shall not possess such methadone beyond the date stamped or typed on the label of the container of the methadone, nor shall any person possess methadone except in the container in which it was originally administered or dispensed to such person, and such container shall include a label showing the name of the prescribing physician or practitioner, the identity of methadone, the name of the ultimate user, the date when the methadone is to be administered to or used or consumed by the named ultimate user shown on the label and a warning on the label of the methadone container that the ultimate user must use, consume or administer to the ultimate user the methadone in such container. Any person who violates this subsection is guilty of a felony and shall be punished by imprisonment for not less than one year nor more than five years, or by a fine of up to five thousand dollars ($5,000), or both."

SECTION 60. Section 30-31-21 NMSA 1978 (being Laws 1972, Chapter 84, Section 21, as amended) is amended to read:

"30-31-21. DISTRIBUTION TO A MINOR.--Except as authorized by the Controlled Substances Act, no person who is eighteen years of age or older shall intentionally distribute a controlled substance to a person under the age of eighteen years. Any person who violates this section with respect to

[A. marijuana is:

(1) for the first offense, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(2) for the second and subsequent offenses, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

B. any other] a controlled substance enumerated in [Schedules] Schedule I, II, III or IV or a controlled substance analog of any controlled substance enumerated in Schedule I, II, III or IV is:

[(1)] A. for the first offense, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

[(2)] B. for the second and subsequent offenses, guilty of a first degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978."

SECTION 61. Section 30-31-22 NMSA 1978 (being Laws 1972, Chapter 84, Section 22, as amended) is amended to read:

"30-31-22. CONTROLLED OR COUNTERFEIT SUBSTANCES--DISTRIBUTION PROHIBITED.--

A. Except as authorized by the Controlled Substances Act, it is unlawful for a person to intentionally distribute or possess with intent to distribute a controlled substance or a controlled substance analog except a substance enumerated in Schedule I or II that is a narcotic drug, a controlled substance analog of a controlled substance enumerated in Schedule I or II that is a narcotic drug or methamphetamine, its salts, isomers and salts of isomers. A person who violates this subsection with respect to:

(1) [marijuana or] synthetic cannabinoids is:

(a) for the first offense, guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(b) for the second and subsequent offenses, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(c) for the first offense, if more than one hundred pounds is possessed with intent to distribute or distributed or both, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(d) for the second and subsequent offenses, if more than one hundred pounds is possessed with intent to distribute or distributed or both, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(2) any other controlled substance enumerated in Schedule I, II, III or IV or a controlled substance analog of a controlled substance enumerated in Schedule I, II, III or IV except a substance enumerated in Schedule I or II that is a narcotic drug, a controlled substance analog of a controlled substance enumerated in Schedule I or II that is a narcotic drug or methamphetamine, its salts, isomers and salts of isomers, is:

(a) for the first offense, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(b) for the second and subsequent offenses, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(3) a controlled substance enumerated in Schedule V or a controlled substance analog of a controlled substance enumerated in Schedule V is guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100) or more than five hundred dollars ($500) or by imprisonment for a definite term not less than one hundred eighty days but less than one year, or both.

B. It is unlawful for a person to distribute gamma hydroxybutyric acid or flunitrazepam to another person without that person's knowledge and with intent to commit a crime against that person, including criminal sexual penetration. For the purposes of this subsection, "without that person's knowledge" means the person is unaware that a substance with the ability to alter that person's ability to appraise conduct or to decline participation in or communicate unwillingness to participate in conduct is being distributed to that person. Any person who violates this subsection is:

(1) for the first offense, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(2) for the second and subsequent offenses, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

C. Except as authorized by the Controlled Substances Act, it is unlawful for a person to intentionally create or deliver, or possess with intent to deliver, a counterfeit substance. A person who violates this subsection with respect to:

(1) a counterfeit substance enumerated in Schedule I, II, III or IV is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; [and] or

(2) a counterfeit substance enumerated in Schedule V is guilty of a petty misdemeanor and shall be punished by a fine of not more than one hundred dollars ($100) or by imprisonment for a definite term not to exceed six months, or both.

D. A person who knowingly violates Subsection A or C of this section while within a drug-free school zone with respect to:

(1) [marijuana or] synthetic cannabinoids is:

(a) for the first offense, guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(b) for the second and subsequent offenses, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(c) for the first offense, if more than one hundred pounds is possessed with intent to distribute or distributed or both, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(d) for the second and subsequent offenses, if more than one hundred pounds is possessed with intent to distribute or distributed or both, guilty of a first degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(a) for the first offense, guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(b) for the second and subsequent offenses, guilty of a first degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(3) a controlled substance enumerated in Schedule V or a controlled substance analog of a controlled substance enumerated in Schedule V is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(4) the intentional creation, delivery or possession with the intent to deliver:

(a) a counterfeit substance enumerated in Schedule I, II, III or IV is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(b) a counterfeit substance enumerated in Schedule V is guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100) nor more than five hundred dollars ($500) or by imprisonment for a definite term not less than one hundred eighty days but less than one year, or both.

E. Notwithstanding the provisions of Subsection A of this section, distribution of a small amount of [marijuana or] synthetic cannabinoids for no remuneration shall be treated as provided in Paragraph (1) of Subsection B of Section 30-31-23 NMSA 1978."

SECTION 62. Section 30-31-23 NMSA 1978 (being Laws 1972, Chapter 84, Section 23, as amended) is amended to read:

"30-31-23. CONTROLLED SUBSTANCES--POSSESSION PROHIBITED.--

A. It is unlawful for a person intentionally to possess a controlled substance unless the substance was obtained pursuant to a valid prescription or order of a practitioner while acting in the course of professional practice or except as otherwise authorized by the Controlled Substances Act. It is unlawful for a person intentionally to possess a controlled substance analog.

B. A person who violates this section with respect to:

(1) one ounce or less of [marijuana or] synthetic cannabinoids is, for the first offense, guilty of a petty misdemeanor and shall be punished by a fine of not less than fifty dollars ($50.00) or more than one hundred dollars ($100) and by imprisonment for not more than fifteen days, and, for the second and subsequent offenses, guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100) or more than one thousand dollars ($1,000) or by imprisonment for a definite term less than one year, or both;

(2) more than one ounce and less than eight ounces of [marijuana or] synthetic cannabinoids is guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100) or more than one thousand dollars ($1,000) or by imprisonment for a definite term less than one year, or both; or

(3) eight ounces or more of [marijuana or] synthetic cannabinoids is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

C. A minor who violates this section with respect to the substances listed in this subsection is guilty of a petty misdemeanor and, notwithstanding the provisions of Sections 32A-1-5 and 32A-2-19 NMSA 1978, shall be punished by a fine not to exceed one hundred dollars ($100) or forty-eight hours of community service. For the third or subsequent violation [by a minor of this section] with respect to those substances, the provisions of Section 32A-2-19 NMSA 1978 shall govern punishment of the minor. [As used in this subsection, "minor" means a person who is less than eighteen years of age.] The provisions of this subsection apply to the following substances:

(1) synthetic cannabinoids;

(2) any of the substances listed in Paragraphs [(20)] (18) through [(25)] (23) of Subsection C of Section 30-31-6 NMSA 1978; or

(3) a substance added to Schedule I by a rule of the board adopted on or after [the effective date of this] March 31, 2011 [act] if the board determines that the pharmacological effect of the substance, the risk to the public health by abuse of the substance and the potential of the substance to produce psychic or physiological dependence liability is similar to the substances described in Paragraph (1) or (2) of this subsection.

D. Except for those substances listed in Subsection E of this section, a person who violates this section with respect to any amount of any controlled substance enumerated in Schedule I, II, III or IV, or a controlled substance analog of a substance enumerated in Schedule I, II, III or IV is guilty of a misdemeanor and shall be punished by a fine of not less than five hundred dollars ($500) or more than one thousand dollars ($1,000) or by imprisonment for a definite term less than one year, or both.

E. A person who violates this section with respect to phencyclidine as enumerated in Schedule III or a controlled substance analog of phencyclidine; methamphetamine, its salts, isomers or salts of isomers as enumerated in Schedule II or a controlled substance analog of methamphetamine, its salts, isomers or salts of isomers; flunitrazepam, its salts, isomers or salts of isomers as enumerated in Schedule I or a controlled substance analog of flunitrazepam, including naturally occurring metabolites, its salts, isomers or salts of isomers; gamma hydroxybutyric acid and any chemical compound that is metabolically converted to gamma hydroxybutyric acid, its salts, isomers or salts of isomers as enumerated in Schedule I or a controlled substance analog of gamma hydroxybutyric acid, its salts, isomers or salts of isomers; gamma butyrolactone and any chemical compound that is metabolically converted to gamma hydroxybutyric acid, its salts, isomers or salts of isomers as enumerated in Schedule I or a controlled substance analog of gamma butyrolactone, its salts, isomers or salts of isomers; 1-4 butane diol and any chemical compound that is metabolically converted to gamma hydroxybutyric acid, its salts, isomers or salts of isomers as enumerated in Schedule I or a controlled substance analog of 1-4 butane diol, its salts, isomers or salts of isomers; or a narcotic drug enumerated in Schedule I or II or a controlled substance analog of a narcotic drug enumerated in Schedule I or II is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

F. Except for a minor [as defined in Subsection C of this section], a person who violates Subsection A of this section while within a posted drug-free school zone, excluding private property residentially zoned or used primarily as a residence and excluding a person in or on a motor vehicle in transit through the posted drug-free school zone, with respect to:

(1) one ounce or less of [marijuana or] synthetic cannabinoids is, for the first offense, guilty of a misdemeanor and shall be punished by a fine of not less than one hundred dollars ($100) or more than one thousand dollars ($1,000) or by imprisonment for a definite term less than one year, or both, and for the second or subsequent offense, is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(2) more than one ounce and less than eight ounces of [marijuana or] synthetic cannabinoids is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(3) eight ounces or more of [marijuana or] synthetic cannabinoids is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

(4) any amount of any other controlled substance enumerated in Schedule I, II, III or IV or a controlled substance analog of a substance enumerated in Schedule I, II, III or IV, except phencyclidine as enumerated in Schedule III, a narcotic drug enumerated in Schedule I or II or a controlled substance analog of a narcotic drug enumerated in Schedule I or II, is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

(5) phencyclidine as enumerated in Schedule III, a narcotic drug enumerated in Schedule I or II, a controlled substance analog of phencyclidine or a controlled substance analog of a narcotic drug enumerated in Schedule I or II is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

G. For the purposes of this section, "minor" means a person who is younger than eighteen years of age."

SECTION 63. Section 30-31-28 NMSA 1978 (being Laws 1972, Chapter 84, Section 28) is amended to read:

"30-31-28. CONDITIONAL DISCHARGE FOR POSSESSION AS FIRST OFFENSE.--

A. If [any] a person, who has not previously been convicted of violating the laws of [any] a state or [any] laws of the United States relating to narcotic drugs, [marijuana] hallucinogenic or depressant or stimulant substances, is found guilty of a violation of Section [23] 30-31-23 NMSA 1978, after trial or upon a plea of guilty, the court may, without entering a judgment of guilty and with the consent of the person, defer further proceedings and place [him] the person on probation upon reasonable conditions and for a period, not to exceed one year, as the court may prescribe.

B. Upon violation of a condition of the probation, the court may enter an adjudication of guilt and proceed as otherwise provided. The court may, in its discretion, dismiss the proceedings against the person and discharge [him] the person from probation before the expiration of the maximum period prescribed from the person's probation.

C. If during the period of [his] probation the person does not violate [any of] the conditions of the probation, then upon expiration of the period the court shall discharge such person and dismiss the proceedings against [him] the person. Discharge and dismissal under this section shall be without court adjudication of guilt, but a nonpublic record shall be retained by the attorney general solely for the purpose of use by the courts in determining whether or not, in subsequent proceedings, the person qualifies under this section. A discharge or dismissal shall not be deemed a conviction for purposes of disqualifications or disabilities imposed by law upon conviction of a crime, including the penalties prescribed under this section for second or subsequent convictions or for any other purpose. Discharge and dismissal under this section may occur only once with respect to [any] a person.

D. Upon the dismissal of a person and discharge of the proceedings against [him] the person under this section, a person, if [he was] not over eighteen years of age at the time of the offense, may apply to the court for an order to expunge from all official records all recordation relating to [his] the arrest, indictment or information, trial, finding or plea of guilty, and dismissal and discharge pursuant to this section except nonpublic records filed with the attorney general. If the court determines, after hearing, that the person was dismissed and the proceedings against [him] the person discharged and that [he] the person was not over eighteen years of age at the time of the offense, it shall enter the order. The effect of the order shall be to restore the person, in the contemplation of the law, to the status [he] the person occupied before the arrest or indictment or information. No person in whose behalf an order has been entered shall be held thereafter under any provision of any law to be guilty of perjury or otherwise giving a false statement by reason of [his] the person's failures to recite or acknowledge such arrest, or indictment or information or trial in response to any inquiry made of [him] the person for any purpose."

SECTION 64. Section 30-31-34 NMSA 1978 (being Laws 1972, Chapter 84, Section 33, as amended) is amended to read:

"30-31-34. FORFEITURES--PROPERTY SUBJECT.--The following are subject to forfeiture pursuant to the provisions of the Forfeiture Act:

A. all raw materials, products and equipment of any kind, including firearms that are used or intended for use in manufacturing, compounding, processing, delivering, importing or exporting any controlled substance or controlled substance analog in violation of the Controlled Substances Act;

B. all property that is used or intended for use as a container for property described in Subsection A of this section;

C. all conveyances, including aircraft, vehicles or vessels that are used or intended for use to transport or in any manner to facilitate the transportation for the purpose of sale of property described in Subsection A of this section;

D. all books, records and research products and materials, including formulas, microfilm, tapes and data that are used or intended for use in violation of the Controlled Substances Act;

E. narcotics paraphernalia or money that is a fruit or instrumentality of the crime; and

F. notwithstanding Subsection C of this section and the provisions of the Forfeiture Act:

(1) a conveyance used by a person as a common carrier in the transaction of business as a common carrier shall not be subject to forfeiture pursuant to this section unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of the Controlled Substances Act;

(2) a conveyance shall not be subject to forfeiture pursuant to this section by reason of an act or omission established for the owner to have been committed or omitted without the owner's knowledge or consent;

(3) a conveyance is not subject to forfeiture for a violation of law the penalty for which is a misdemeanor; and

(4) a forfeiture of a conveyance encumbered by a bona fide security interest shall be subject to the interest of a secured party if the secured party neither had knowledge of nor consented to the act or omission [and

G. all drug paraphernalia as defined by Subsection V of Section 30-31-2 NMSA 1978]."

SECTION 65. TEMPORARY PROVISION--COMPILATION INSTRUCTION--RECONCILIATION.--If acts making amendments to Sections 30-31-2 and 30-31-6 NMSA 1978 are enacted by the first and second sessions of the fifty-third legislature, the provisions of those acts shall be reconciled and compiled in accordance with the provisions of Section 12-1-8 NMSA 1978, notwithstanding that the amendments were not made in the same session of the legislature.

SECTION 66. REPEAL.--Section 30-31-25.1 NMSA 1978 (being Laws 1981, Chapter 31, Section 2, as amended) is repealed.

SECTION 67. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2018.

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