Water, Equity and Cannabis Production: Implications for Acequias

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by Paula Garcia, NMAA Executive Director & Jaimie Park, NMAA Policy Coordinator

Hemp plants in a New Mexico field

Following the 2021 statewide legalization of recreational cannabis in New Mexico, it is important that acequias be prepared for potential cannabis production in their communities. While the future remains uncertain, we should consider two potential scenarios:

SCENARIO #1: First, imagine New Mexico in ten years after recreational cannabis legalization, where our policymakers and communities have been successful in fostering a socially just, equitable cannabis economy in which small-scale growers and small businesses are thriving. Because of robust water protections and social equity mandates in the law, New Mexico grows a cannabis industry that provides economic opportunities for land-based local producers and small businesses, as well as a healthy product for both medicinal and recreational use. New Mexico had the foresight to make it possible for small-scale businesses to get established with access to capital.

Imagine driving through rural New Mexico and seeing small-scale cannabis operations alongside fields of locally grown food. Farmers work cooperatively to produce, process, and market their product and have developed high-quality, small-scale cannabis crops that earn them a good livelihood. Because of the profitability of cannabis, more farmers stay on the land and also grow food for their local communities. The population of rural communities has stabilized after decades of outmigration. Rural farmers have a fair shot at making an income from cannabis.

Palas and signs to “Protect Acequias” on display at the NM State Capitol

SCENARIO #2: Second, imagine New Mexico in ten years after recreational cannabis legalization without water protections and social equity mandates. In their rush to gain tax revenue from the cannabis industry, policymakers hastily enacted legislation and rules that prioritized a quick start up for the industry despite concerns of rural communities, acequias, and social justice advocates. The corporations who were already established had the advantage of scale and successfully advocated for large-scale production. Because a variety of these producers, both small and large, opposed water protections, the new cannabis economy resulted in a raid on New Mexico’s water with promulgation of new rules that undermined over a century of water laws that protected existing water rights.

Out of desperation for water, cannabis producers of all sizes got variances to drill wells, obtain water leases through unlawful means, and otherwise undermine New Mexico’s water laws. Lack of start-up capital for local producers and small businesses benefited out-of-state corporations moving into New Mexico, who gained substantial advantages over New Mexico residents. After ten years, New Mexico has an oligopoly of out-of-state corporations who have seized control of the cannabis market, along with vast areas of farmland and water rights. Cannabis is legal, but it is corporate-grown.  Acequia communities have been overrun by outside corporations to grow cannabis and outmigration of land-based families has accelerated, replaced by low-wage workers residing in urban areas commuting to rural New Mexico, tending to corporate cannabis.

MORE BACKGROUND ON RECENT CANNABIS POLICY MAKING : The Regulation and Licensing Department (“RLD”) and the Cannabis Control Division (“CCD”) completed two hearings in summer 2021 on cannabis producer regulations to implement the Cannabis Regulation Act (“CRA”), with final adoption at the end of August 2021.

Earlier this year, New Mexico was at a crossroads in how to proceed with cannabis legalization. Policymakers had good intentions to make legal cannabis available for medicinal and recreational uses, as well as to decriminalize cannabis possession and to expunge records of those convicted in the past. However, it took extraordinary effort by acequias, land grants, and social equity advocates to get some important language in the CRA regarding water and social equity. These were important gains, but the CRA could have been much stronger. Specifically, stronger social equity provisions would have ensured that New Mexico residents who are small-scale producers or small-business owners would have had access to vital start-up capital and technical assistance.

The Cannabis Producer Regulations went into effect at the end of August. NMAA proposed several friendly amendments to the draft regulations with the following objectives in mind: (1) prevent illegal uses of water, (2) hold license applicants and licensees accountable for the amount of water used in production operations, and (3) ensure that small growers have the opportunity to benefit from the cannabis economy.

Though NMAA is pleased that several of our proposed friendly amendments were incorporated into the final rules, we remain vigilant regarding the application of these rules, particularly with regard to a new variance rule allowing cannabis producer license applicants and licensees to request non-compliance with an RLD/CCD regulation. NMAA’s advocacy, along with the support of numerous parciantes who provided public comments, was able to secure parameters for when a variance may be granted. Variances may not be granted if they would be contrary to requirements of the CRA (such as the requirement that cannabis producer license applicants submit proof that they have access to a legally valid source of water), or if they would have a negative environmental impact (such as impairment of a water right or degradation of water quality), or would be detrimental to public health and safety (this would also include impairment to a water right or degradation of water quality).

Further action is still needed to ensure that this new industry is as equitable as possible for acequia communities. Additional legislation is needed to address social equity, including revisiting the language in previous drafts of the CRA that included both a Community Reinvestment Fund and Social Equity Fund, which would require  that some of the tax revenue from cannabis be used to improve the quality of life and equity of New Mexicans, as well as to provide start-up capital to micro-producers and businesses.

Finally, the concerns about water rights extend beyond cannabis laws and rulemaking. The Office of the State Engineer (“OSE”) has a practice of granting “preliminary approval” on water leases, which is unlawful. The NMAA and other entities have repeatedly expressed grave concern about this practice. The demands of cannabis producers who need water now is adding urgency to this fire. As long as the OSE is granting unlawful preliminary approvals of water leasing applications – allowing the immediate use of water before a public hearing or final decision is issued – it is opening the door for illegal water uses for cannabis production.

NMAA will continue to work diligently to monitor developments, share updates with acequia leadership, and push back whenever is needed to defend the health and wealth of our beloved people, lands, and water.

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