October 21, 2019

Cannabis producer says state is pricing out smaller producers, limiting access to medicine

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Dueling press releases over medical cannabis fees show the continuing, contentious relationship between a medical cannabis producer and the New Mexico Department of Health. The producer, Ultra Health, has long argued, often in court, that state mandated plant limits for producers should be higher. 

In a press release issued last week, Ultra Health argued that even with the latest plant increase to 1,750, the state’s fee structure discourages producers from growing the maximum amount of plants. Making it harder for producers to grow the maximum amount of plants, Ultra Health argued, will impact patients.  

“Under the new fee schedule, it will be impossible for all producers to meet the 1,750 maximum and cultivate an adequate supply of medicine for patients,” the Ultra Health release read. 

The DOH recently changed fees for producers to a graduated structure. The cost per plant significantly increases for producers after 1,000. According to Ultra Health’s data, only 12 of the 34 licensed producers paid $180,000 for the maximum 1,750 plants. Most other producers paid $90,000 for 1,000 plants and some paid 40,000 for 500 plants. Combined, the 34 producers in New Mexico paid nearly $4 million for almost 40,000 plants. It’s hard to determine how much each of those plants will actually produce. 

The DOH, in their own press release, argued that the increased costs for growing cannabis is a necessary part of a continually growing Medical Cannabis Program which brings “increased regulatory overhead.” The department also argued that on average, the price per plant for producers has gone down. Previously, the department charged $200 per plant with no gradual increases. Now, producers growing up to 500 plants pay $80 per plant. Producers with 1,000 plants pay about $90 per plant and those growing the maximum 1,750 pay about $100 per plant. 

“The idea the NMDOH is trying to raise fees in a punitive manner or increase patient costs is misleading and incorrect,” Medical Cannabis Program Director Dominick Zurlo said.

According to records provided by the DOH to NM Political Report earlier this year, the department previously brought in about $2.9 million during the 2019 fiscal year from producer plant fees alone. That accounts for about 90 percent of the Medical Cannabis Program’s total revenue for the year. According to the DOH, the Medical Cannabis Program’s expenses last fiscal year cost about $3 million.

Earlier this year, the legislature eliminated fees to replace a lost or stolen medical cannabis patient card. Patients still have to pay any medical costs related to visiting and getting a medical cannabis recommendation from a qualifying medical professional. Patients who are approved to grow their own cannabis pay about $30 a year for their medical cards. 

Ultra Health’s president and CEO, Duke Rodriguez, has continually pushed the DOH, often in court, to raise plant limits, arguing that there is or soon will be a shortage of medical cannabis in New Mexico. While some producers do not report any shortages in their own stock, many dispensaries in rural parts of the state have reported empty or close to empty shelves. 

Rodriguez successfully argued in a lawsuit against the state that the previous plant limit of 450 was not enough. For most of the summer, the DOH issued a temporary plant limit of 2,500, but later issued a permanent limit of 1,750 plants per producer. 

Now Rodriguez and two other medical cannabis producers are suing the state again, arguing the new amount is still not enough to supply the more than 70,000 patients in New Mexico. Complicating the issue further, a state judge recently sided with Rodriguez and ruled that the DOH has to issue medical cannabis patient cards to those who qualify, regardless of where they live. That means the number of patients in the program could grow exponentially. 

Gov. Michelle Lujan Grisham, along with the DOH, is set to take that issue to the state Court of Appeals.

Correction: A previous version incorrectly stated the total amount producers collectively paid for plants.