Some thought it was an early Christmas in the Land of Enchantment as a business took a shaky first step to embrace New Mexico’s recreational marijuana mandate. “Santa” got a bag of coal with a cease-and-desist order and was told to stop “gifting” small amounts of cannabis to customers who made purchases at the Speak Easy, a novelty and gift shop in Las Cruces that recently opened and is not currently licensed as a dispensary.
Until next April, the infamous 420 month, no one can purchase cannabis in New Mexico without a medical marijuana card. Word traveled fast that the size of your sample at Speak Easy was reflected by how much you spent in the store. The gram amount of your cannabis sample totally depended on the dollar amount you spent. Dropping $15 would garner you a cannabis “sample” of 1.5 grams. If you spent a whopping $50, you scored a gift that weighed 3 grams. Needless to say, they were doing a brisk business.
It wasn’t long before two Cannabis Control Division (CCD) investigators visited the store and met with owners Jason Estrada and Joseph Garza. They allegedly defended the practice of gifting as lawful under New Mexico’s Cannabis Regulation Act. Estrada and Garza received a cease-and-desist order from CCD that demanded the business cease that activity but did not levy any penalties or order a halt to other business operations. The store closed to evaluate its legal options.
The CCD is a division of the state Regulation and Licensing Department and is in the process of promulgating the framework for legal cannabis sales. The statute allows individuals to share cannabis with adults, but “without financial consideration,” and this includes trade or indirect sales. Speak Easy’s practice of gifting amounted to illegal trafficking, the CCD maintained. This is a potential fourth-degree felony that could jeopardize a future application to be a licensed cannabis retailer. Speak Easy was circumventing the law by trading cannabis for purchases of other items, the CCD said.
The CCD cease-and-desist order argued, “The quantity of the ‘gift’ cannabis is directly bound to the dollar value of the non-cannabis product purchased, thus, ‘financial consideration’ (i.e. monetary value) has been established for each cannabis product being distributed by Speak Easy.” The order demanded that Speak Easy stop providing cannabis products to customers or face enforcement actions that could include criminal charges.
State Regulation and Licensing Department Deputy Superintendent John Blair said in a statement, the state’s cannabis regulators “will not tolerate any individuals or businesses who violate the Cannabis Regulation Act or otherwise diminish the integrity of the adult-use cannabis industry in New Mexico. All New Mexicans should be on notice that violations of the Cannabis Regulation Act will be met with swift, strong action from the state.”
Attorney Matt Madrid—who represents Speak Easy—said, “We do believe there is some ambiguity in the law.” Madrid added in a statement, “At the same time, the way the administrative process takes place is different than the criminal process.” Madrid maintained that, “At no time were the management or employees of Speak Easy under the impression they were violating any laws or regulations, and the real issue is that the New Mexico act does not specifically address the practice that has commonly been called ‘gifting’ in other states.” Madrid pointed out that a section of the state law prohibits giving away cannabis products, but there is also a section that allows for the transfer of products without financial consideration. “It is an unsettled area of law not specifically addressed in the Act,” Madrid said.
Blair disagreed, noting that in order for people to be getting cannabis from Speak Easy, they are being required to make a purchase. “There is an exchange of money. There is a transaction, and that is not legal,” Blair said.
Madrid insisted that the guidance on “gifting” is not clear in the wording of New Mexico’s Cannabis Regulation Act. He said the business would comply with the state’s order while “all available options are being considered. Not only does the N.M. Act fail to address ‘gifting,’ but legal opinions from across the nation support the position that ‘gifting’ is not illegal unless specifically prohibited,” Madrid declared. He explained the order itself cannot be appealed, as it was issued by a regulatory body and not by a court.
The business yielded to the CCD and has complied with the cease-and-desist order and reopened “in full compliance” with the state’s order saying, “It was not the intent of Speak Easy to circumvent the laws of New Mexico, and we apologize to our customers and the community for any confusion this situation has caused. As the cannabis industry evolves in New Mexico, there will be many challenges and changes; Speak Easy looks forward to being legally involved at every level and continuing to provide high-quality products to our customers. The practice commonly referred to as ‘gifting’ will not occur on our premises; however, we are still able to assist the community with CBD products and merchandise.”
The state did not levy any penalties against Speak Easy, saying under the law people 21 and older can legally give cannabis to one another. But where there is money involved in the transaction, it is deemed a sale and not a gift and, therefore, illegal. The New Mexico recreational cannabis law decriminalizes public possession of up to 2 ounces of cannabis, 16 grams of extract or up to 800 milligrams of edible cannabis. Portions of the legalization law took effect on June 29. It remains prohibited under federal law, which classifies cannabis as a Schedule One narcotic.
Don’t plan on running down to the local cannabis shop and leaving with weed just yet. And remember it’s legal—but you can’t go for a stroll smoking a joint. “Consumption areas” where it may be served and consumed aren’t up and running yet. Consuming cannabis anywhere else in public could get you a $50 ticket. Maybe when Rudolph’s nose turns green, gifting cannabis will become legal.