July 23, 2020

New group of petitioners challenging NM DOH medical cannabis rules

The list of medical cannabis companies filing legal complaints against the New Mexico Department of Health continues to grow. 

This week, two more medical cannabis producers, a cannabis manufacturer, a cannabis testing laboratory and a patient licensed to grow medical cannabis filed petitions in state district court asking a judge to annul rules adopted by the DOH earlier this month. That’s in addition to the two other medical cannabis producers who filed petitions against the state last week. 

Also notable is the list of attorneys representing the medical cannabis companies, as it includes two current legislators, a former commissioner with the state’s Public Regulation Commission, a former attorney general candidate and a former congressional candidate, all from across the state’s political spectrum. 

Medical cannabis producer Ultra Health was the first company to file a petition last week and is represented in part by Brian Egolf, a Democrat who also serves as the state’s Speaker of the House.

On Tuesday, former PRC commissioner Jason Marks, also a Democrat, filed a separate petition on behalf of his clients, Scepter Lab, one of two testing laboratories in the state, and medical cannabis manufacturer Vitality Extracts. 

Then on Thursday, Jacob Candelaria, who serves as a Democratic state senator, filed a petition on behalf of medical cannabis producer and manufacturer G&G Genetics. Also joining the initial case on Thursday was medical cannabis patient and licensed cannabis grower Heath Grider, represented by former Libertarian attorney general candidate Blair Dunn and Jared Vander Dussen, who recently lost in a three-way primary for the Republican nomination in New Mexico’s First Congressional District. 

All of the petitioners are asking for generally the same thing: for a judge to invalidate rules recently promulgated by the Department of Health, which oversees the state’s Medical Cannabis Program. 

The new petitioners, like the initial petitioners, argue that many of the new rules regarding cannabis testing, labeling and growing are “arbitrary and capricious.”

But the new petitioners are also adding to the list of concerns.  

Increased testing, increased prices

Marks, who is representing Scepter Lab and Vitality Extracts in a case of their own, argued in his petition that the department’s new testing standards are not based on actual data or research, but instead based on language borrowed from other states — particularly states with less arid climates that New Mexico. 

One of the new rules is that medical cannabis must be tested for mycotoxins or naturally occurring toxic substances that come from certain types of fungi. 

Marks argued that out of more than 15,000 tests conducted in New Mexico since the rule was implemented, none came back positive for mycotoxins. 

He added that tests for mycotoxin testing on a national level produced a relatively small amount of positives but that those results were likely from “climates more likely to lead to mycotoxin production than New Mexico’s.”

Marks also argued that testing standards for heavy metals and pesticides were not based on true research. Heavy metals, Marks wrote, are only introduced through soil and water and that testing water systems and soil used to grow medical cannabis would be the better way to detect heavy metals. The DOH only tests for about a dozen pesticides, Marks argued, and ignores the myriad of other chemicals growers might use. 

The cost of testing is another issue Marks’ clients take issue with. The new rules increased the sample size required for testing, but Marks argued that the sample size should be left up to the laboratory doing the testing. 

“By specifying larger quantities, the Department is wasting medicine and increasing costs,” Marks wrote. 

He said overall there are “substantial costs” for cannabis testing laboratories “which will ultimately be borne by patients in the form of higher medicine prices.”

Candelaria, whose client, G&G Genetics, joined in the initial petition, also argued in his filing that the new testing standard will lead to increased prices for patients. 

“Most importantly, the Department of Health did not adequately or sufficiently evaluate the effect that its new testing regime will have on the price of medical cannabis to qualified patients,” Candelaria wrote. “Nor did the Department of Health give adequate weight to the inevitable increase in the price of medical cannabis when considering this Rule.”

Increased testing standards, combined with the state’s 1,750 plant limit for producers, Candelaria argued, is to blame for higher medical cannabis prices in New Mexico when compared to Arizona and Colorado. 

“Against this backdrop, the Department of Health provided only a back-of-the-napkin, hypothetical analysis of how its revised testing regime will affect the market price of medical cannabis and thereby restrict access to medical cannabis for lower-income, medically fragile New Mexicans,” Candelaria wrote. 

Candelaria also wrote that his client takes issue with a new rule that would allow DOH officials to randomly test products already on the shelf, without compensating the company for a lost product. 

Plant segregation

Grider, represented by Dunn and Vander Dussen, lives in Portales and grows industrial hemp as a way to supplement his income and support his family, according to his petition. Grider is also a medical cannabis patient and has a Personal Production License (PPL), or a license to grow his own medical cannabis. But part of DOH’s rule changes specify that hemp cannot be grown at the same facility as cannabis. Hemp and cannabis are the same plant, but hemp by definition contains less than .3 percent of THC, which is the psychoactive substance in cannabis. Hemp is legal in New Mexico and regulated by both the state’s Department of Agriculture and the state’s Environment Department. Grider’s attorney’s argued in their petition that the DOH cannot dictate where hemp is grown as it is the purview of other departments. Further, his lawyers argued, the new rules restrict Grider from both making money from hemp and growing his own medical cannabis.  

“Depriving patients of the benefits of a personal production license unless they forego their statutory right to engage in hemp production pursuant to a permit from the Department of Agriculture is not just arbitrary and capricious; it is completely unmoored from logic and fairness,” the petition reads. 

Last week, First Judicial District Judge Bryan Biedscheid approved the petition filed by the two initial petitioners, cannabis producers Ultra Health and Pecos Valley Production, and gave the DOH 30 days to respond. 

A DOH spokesman previously told NM Political Report that no one from the department would discuss pending litigation.