NM Cannabis regulators lift cease and desist order from producer

A New Mexico cannabis company that was ordered to cease operations at one of its Santa Fe facilities can now resume its operation. 

According to a letter from Cannabis Control Division Director Kristen Thomson to cannabis company Sacred Garden, state regulators lifted a previously issued cease and desist order on April 27.  

“Sacred Garden has remedied, or has initiated appropriate plans to remedy, all violations cited by the CCD related to imminent hazards to public health and to Sacred Garden employees,” Thomson wrote. 

The cease and desist order was issued by the Cannabis Control Division on March 24, after two reported instances of mold found on products from Sacred Garden and division staff reportedly found conditions that would pose a risk to the public at the Santa Fe facility. 

Days after the Cannabis Control Division issued the cease and desist letter to Sacred Garden, the cannabis producer filed a request for an injunction to counter the division’s order. Initially, a Santa Fe state district judge ordered the division to allow Sacred Garden to sell manufactured products, such as extracts and edible products, until the Santa Fe facility was deemed safe to fully reopen. In a subsequent hearing, the judge criticized the Cannabis Control Division for not articulating a clear path to compliance. Sacred Garden’s lawyer accused the division of adding additional requirements to remove the cease and desist order between hearings. 

During the initial hearing, the lawyer for the division said an inspector could go back to the Sacred Garden facility in a week to verify the safety issues had been fixed. But during the next hearing, the division’s attorney said Sacred Garden would need to find an air quality specialist to ensure there were no excessive mold spores in the facility.  

The judge gave the Cannabis Control Division about a week to come up with and complete a testing regime that would produce results by last week.

NM judge orders cannabis regulators, producer to agree on testing ‘regimen’

A New Mexico cannabis producer asked to halt a majority of its operations by the Cannabis Control Division after reports of mold is still barred from selling its cannabis flower, for at least another week. In a hearing on Wednesday, Santa Fe state district judge Bryan Biedscheid ordered cannabis regulators and cannabis producer Sacred Garden to try and come up with an agreeable way to move forward in the ongoing case by the end of the day on Thursday. 

Biedscheid said he was not going to rule on a motion filed by Sacred Garden asking for an injunction to allow the company to continue selling dried cannabis flower. But Biedscheid did call on the state’s Regulation and Licensing Department and its Cannabis Control Division to actively work with Sacred Garden to come up with an acceptable testing “regimen” that can be completed by next week. 

“The department cannot continue to sit back. And this is the perception of this court, that it is sitting back and waiting for it to be presented, in some fashion, with results it finds satisfactory,” Biedscheid said. “It must take action to see that its concerns are addressed in a way that does not cause unnecessary delay, and other irrevocable harm to the plaintiff.”

The ongoing legal dispute stems from a cease and desist letter the Regulation and Licensing Department sent Sacred Garden just days before legal adult-use sales were to begin in New Mexico.

Conflicting views on when or if NM is headed for a medical cannabis shortage

Cannabis producers in New Mexico have their collective eyes on daily sales numbers to determine what sort of demand there will be moving forward a week after recreational-use sales started. 

The New Mexico Cannabis Control Division reported more than $5.2 million in combined medical and recreational-use cannabis sales and more than 87,000 transactions in the first three days. The division is expected to release more numbers Friday morning. 

In addition to the hype of first-time adult-use sales, the state’s cannabis industry will likely face a spike in sales on April 20, or 4/20, which is usually the biggest day of the year for cannabis sales. While some producers told NM Political Report that they are set for the weeks and months to come, one of the state’s largest cannabis companies predicts the state is headed for a “severe shortage” of cannabis, and soon.  

“I say we’re 20 days out on the low end, about 25 on the high end,” Ultra Health President and CEO Duke Rodriguez said. 

State law defines a cannabis shortage as a situation when supply is “substantially” less than the three month period leading up to the effective date of the Cannabis Control Act. 

But Rodriguez, who has long warned about an impending shortage and has advocated for an unlimited cannabis production limit, said the cannabis shortage he is warning about is different than the statutory definition. Rodriguez said the shortage will likely emerge as limited supplies of certain products or cannabis cultivars. He also said that those types of shortages will impact large businesses like his and trickle down to smaller businesses, who likely can’t weather reduced sales, which will ultimately impact those who rely on cannabis as medicine.

Judge orders state to allow cannabis producer to sell some products after reports of mold

A legal battle has emerged between a New Mexico cannabis business and the agency tasked with regulating cannabis production and sales after state regulators reportedly found mold in some of the company’s products. 

The day before legal adult-use cannabis sales began, cannabis producer Sacred Garden filed a request for a temporary restraining order and preliminary injunction in state court, asking a judge to effectively override a cease and desist order issued by the state’s Cannabis Control Division. 

First Judicial District Court Judge Bryan Biedscheid, during a hearing on Tuesday, ordered the Cannabis Control Division to allow Sacred Garden to sell manufactured products, which both parties agreed would not have been affected by the mold that was reportedly found. 

Biedscheid said on Tuesday that “the appropriate court order” he could issue at the time was to allow Sacred Garden to sell manufactured products that are “thought to be safe by virtue of the process involved.”

Biedscheid also took issue with the reason that regulators had not been back to Sacred Garden’s facility to determine if the reported mold problem had been resolved. Kevin Graham, deputy general counsel for the New Mexico Regulation and Licensing Department, which oversees the Cannabis Control Division, initially told Biedscheid that the division cannot send a qualified inspector to Sacred Garden’s facility until early next week. 

“One of the reasons we said we needed until Monday in order to be able to come back out to the facility was that we have one staff member who’s particularly qualified to assist in that type of examination,” Graham told Biedscheid. “He’s out of town on vacation, which, you know, employees get to take some time off every once in a while.”

Sacred Garden’s attorney, David Foster, told Biedscheid that the facility that the division shut down is key to the company’s operation. Because state regulators froze the company’s access to the state’s tracking software and 95 percent of Sacred Garden’s supply comes from that facility, Foster said, the entire company is at risk of shutting down.    

“They’re about to be out of product to sell, I would say by tomorrow at the latest,” Foster said. 

Biedscheid gave the Cannabis Control Division another day to review an updated independent test from Sacred Garden and said he wanted to balance public safety with the prosperity of the cannabis business.   

“We’ve got two issues here,” Biedscheid said. “One is speed to mitigate any harm to this company, in terms of a determination and an open-ended ‘Well, maybe things will work out when people come back from vacation,’ in the current environment isn’t cutting it.”

Biedscheid gave Graham until Thursday morning to respond to the latest test Sacred Garden commissioned and said he was prepared to schedule another timely hearing if needed. 

“I’m not comfortable saying that I’m going to override the department, and it’s going to go to retail,” Biedscheid said.

First day of NM legal cannabis sales surpasses $2 million

Friday marked the first day of legal, recreational-use cannabis sales in New Mexico, nearly a year after Gov. Michelle Lujan Grisham signed the Cannabis Regulation Act. 

Lujan Grisham spoke with reporters in Albuquerque at Everest Apothecary, a cannabis dispensary. She said she was “excited” to see New Mexico finally take part in a legal adult-use cannabis industry.  

“Today is like the fruition of a ton of work by a lot of incredible people making sure that New Mexicans have access to recreational adult-use cannabis in exactly the way they want and it’s a huge economic opportunity for the state and I’m feeling terrific,” Lujan Grisham said. Lujan Grisham told reporters on Friday that she estimates the state could see about $50 million in cannabis tax revenue in a year.  

Victor Reyes, the deputy superintendent of the New Mexico Regulation and Licensing Department, which oversees the Cannabis Control Division, praised the department’s staff for preparing for recreational-use sales in about 10 months.  

“We stood up a brand new industry for our state in less than a year,” Reyes told NM Political Report. “That is something that other states couldn’t even think about doing, and we did it because we knew that it was important from our values perspective, to make sure that recreational cannabis was legalized and done so quickly.”

According to The Cannabis Control Division, total sales on Friday surpassed the $2 million mark as of 5 p.m. 

While the Cannabis Regulation Act limits some restrictions from municipalities and counties, local governments can and have passed ordinances specifying allowable operating hours for cannabis retail businesses. In Santa Fe, for example, dispensaries were allowed to open as early as 7 a.m. and cannabis retailers could open their doors at 10 a.m., but one southern New Mexico city saw legal cannabis sales start just after midnight.

Some Southern NM cannabis producers face conundrum with testing facility locations

Cannabis companies around the state are preparing their storefronts and bolstering their crops for the start of recreational-use cannabis sales, which will start on Friday. And while a majority of storefronts are expected to be in the Albuquerque and Santa Fe metro areas, some businesses in the southern part of the state might get held up in an important process of preparing cannabis for sales: testing. 

State law requires that the New Mexico Regulation and Licensing Department develop testing standards for commercially sold cannabis. The department’s Cannabis Control Division developed rules and regulations that require all cannabis being sold go through a series of tests that look for things like fungus, pesticides and to verify the potency level. 

But for cannabis growers in Las Cruces, it’s nearly impossible to transport cannabis products to a testing facility without the risk of federal agents seizing those products and, in some cases, any cash that is found. There are currently only two state-approved cannabis testing labs in New Mexico. One is in Albuquerque and the other is in Santa Fe.

What the failed cannabis clean up bill means

Largely overshadowed by legislation addressing crime and voting rights during this year’s 30-day Legislative session, a cannabis law clean-up bill failed to make its way to the governor’s desk. 

SB 100, sponsored by Sen. Linda Lopez, D-Albuquerque, would have made a series of changes to the Cannabis Regulation Act, which went into effect last June. Those changes included clarifying tax language, allowing certain cannabis businesses to wholesale their products, among other things. One of the more significant changes though was a proposed production increase for smaller cannabis businesses. The bill was praised by those already active in the state’s cannabis industry as well as industry newcomers. 

But early in the committee process, a new change to the Cannabis Control Act emerged: water. The amount of water the new cannabis industry might use has been a big concern for many and part of the Cannabis Regulation Act requires that cannabis cultivators verify they have legal access to water.

Acequia Association, state water office hope to see changes to cannabis clean-up bill in the final hours of legislative session

After nearly an hour-long debate Monday night about water rights and cannabis, the New Mexico Senate removed a water right verification provision from what has been presented as a cannabis law clean-up bill. Even with compromise language regarding legal water access added on the Senate floor, one water advocacy group and a state water official say the bill could prove problematic if passed in its current form. 

The bill didn’t originally aim to change any water requirements in the state’s Cannabis Regulation Act, which legalized cannabis last year. But, after debate in a Senate committee and a subsequent debate on the Senate floor, lawmakers eliminated a requirement that cannabis growers verify they have legal access to water as a condition of state licensure. 

The current version of SB 100, sponsored by Sen. Linda Lopez, D-Albuquerque, includes language that allows the state’s Regulation and Licensing Department and its Cannabis Control Division to revoke a license “if a licensee is using water to which the licensee does not have a legal right.” 

On Tuesday morning, the New Mexico Acequia Association issued a statement of frustration.  

“We are disappointed that water protections enacted in 2021 have been gutted,” association president Paula Garcia said. “Having water rights verified as part of the licensing process is essential to good water management.”

The Legislature added the requirement to prove legal access to water to the Cannabis Regulation Act during the 2021 special legislative session after a push from the Acequia Association. During debate on the bill, in both a committee hearing and on the Senate floor, Sen. Cliff Pirtle, R-Roswell, argued that proving water rights during the cannabis business application process would create an unnecessary barrier to entry and added that it is already illegal to use water without proper approval from the state for any type of agricultural use. 

John Romero, who oversees the state’s Water Resources Allocation Program, which is part of the state’s Office of the State Engineer, previously told NM Political Report that his office would have a hard time finding illegal water use among cannabis growers without a requirement that growers verify water access on the front end of the process.

Senate passes cannabis law changes, adds new water rights language

The New Mexico Senate approved a bill late Monday night that aims to clean up language of the state’s Cannabis Regulation Act, increase production limits for small cannabis companies and allow those smaller companies to wholesale cannabis to and from other cannabis businesses. 

The most significant changes SB 100 proposes are increasing plant limits for cannabis microbusinesses from 200 to 1,000, allowing those types of businesses to buy, sell and transport cannabis from other companies and allow medical cannabis companies that were previously required to be registered as nonprofits to become for-profit companies. 

After an amendment in a committee hearing the day before, nearly all of the debate on the Senate floor was devoted to water issues, even though the original bill did not address any changes related to water.    

Earlier this week, a Senate committee approved an amendment that stripped a water right verification section from the Cannabis Regulation Act. 

During a Senate Judiciary Committee, Sen. Cliff Pirtle, R-Roswell, proposed removing the section, calling it “unnecessary red tape.”

“There’s one instance of a constituent of mine that was trying to get licensed and they tried to transfer ownership into a separate business so that it didn’t put his farm into liability,” Pirtle said on Sunday. “And it became problematic to prove who has the legal right, who’s supposed to have it, who’s leasing from whom.”

Sen. Katy Duhigg, D-Albuquerque, who works as a cannabis attorney, agreed with Pirtle. 

“We have hamstrung this industry with the approach that we took to water in the bill last year,” Duhigg said on Sunday. “I think we got it wrong, frankly, last year, with what we did with water.” 

Sen. Linda Lopez, D-Albuquerque, unsuccessfully tried to further amend the bill to include what she said was a compromise in verifying legal water access. Her amendment, she argued, would only require that a cannabis company “demonstrate” that it has legal access to water. But after about an hour of debate, her amendment failed on a 19-20 vote, with a number of Democrats voting against it. 

Most of the pushback on the amendment came from Pirtle who reiterated his comments from the previous day, arguing that it’s already illegal to use water for any agricultural use without legal access to it. 

“You have a water right or you don’t have a water right,” Pirtle said.

Senate committee approves cannabis law changes

The New Mexico Senate Judiciary Committee on Sunday moved a cannabis clean-up bill forward with a 6-3 vote. 

SB 100 aims to amend the Cannabis Regulation Act by doing several things, including increasing production limits for cannabis microbusinesses from 200 to 1,000 and allowing microbusinesses to wholesale products. 

During the committee hearing, Regulation and Licensing Superintendent Linda Trujillo told committee members that increasing production limits for cannabis microbusinesses will help to ensure there is enough medical cannabis in the state for the patients that rely on it. She said her department and its Cannabis Control Division originally planned on all cannabis producers subscribing to the maximum number of plants. The department recently issued an emergency rule change that raised plant limits for most producers from 10,000 to 20,000. 

“The analysis was based on all [producers] just biting at the bit and waiting to go up to the amount of 10,000,” Trujillo said. “Come to find out they weren’t because the cost was too high.”

Trujillo added that with only a handful of producers maxing out their supply limit, medical cannabis supplies could be threatened. Further, she said, raising production limits for larger producers posed an equity problem for microproducers, whose production limits are written into law and not department rules. 

“Now when you start comparing a business that can do 20,000, in comparison to a business that can do 200, there is just no equity there, there really is just no equity there, it’s almost impossible to compete like that,” Trujillo said. 

Republican committee members unsuccessfully tried to add amendments that would limit which types of companies microbusinesses can engage in wholesale transactions with and remove language that allows non-profit cannabis companies to become for-profit companies.