NM Cannabis Control Division considers requiring union agreements as part of licensure

As part of the process to set up a recreational-use cannabis industry in New Mexico, the state’s Regulation and Licensing Department and it’s Cannabis Control Division held a public rulemaking hearing on Wednesday regarding residual solvents in cannabis manufacturing and requiring employers to work with labor unions. The proposal to require cannabis businesses to enter into a labor peace agreement with a labor union, as a condition of state licensure, did not receive much support during the hearing. 

Out of the handful of people who testified during the hearing, only one person spoke about allowable solvents used to manufacture cannabis extracts and only one person spoke in favor of the labor peace agreement proposal. 

The labor agreement proposal, if approved by RLD Superintendent Linda Trujillo, would require employers to enter into an agreement with a “bonafide labor organization that is actively engaged in representing or attempting to represent the applicant’s employees,” and that agreement would have to be “an ongoing material condition of licensure.”

But the proposal would also prohibit a labor union from organizing protests against the company. 

“For purposes of this section, a labor peace agreement between a cannabis establishment and a bona fide labor organization includes protecting the state’s interests by, at a minimum, prohibiting the labor organization from engaging in picketing, work stoppages, or boycotts against the cannabis establishment,” the proposal reads. 

Timo Serna, who said he was in favor of requiring labor agreements during his testimony and that he plans on opening a cannabis microbusiness with the hopes of expanding, argued that prohibiting strikes and walk-outs strips the rules of any effectiveness. 

“That basically takes away all the power that the employees have and being a part of a union becomes largely symbolic, because all that’s governing that is pieces of paper at that point,” Serna said. “There’s nothing else that is going to ensure that employees’ voices are going to be heard.”

Besides the one comment on solvents, all of the other participants argued that mandating a labor union agreement as a condition of licensure is a regulatory over-step by the department. 

Duke Rodriguez, the CEO and president of Ultra Health, one of the state’s more prolific medical cannabis producers, argued that not only is a required labor agreement an overstep but that it is illegal and hinted that it would likely open the department to a lawsuit.  

“This mandate is punitive to a new industry,” Rodriguez said. “How would other industry professionals respond if labor peace agreements were mandated for every license RLD currently manages? There would be an uproar.”

Rodriguez added that Ultra Health is “committed to workplace well-being” and that starting next year the company will start paying its 300 employees at least $15 per hour. 

Kristina Caffrey, a lawyer for Ultra Health also spoke about the legality of mandating labor agreements.

Legislative committee gives state finance authority the greenlight for cannabis business loans

An interim legislative committee on Tuesday approved a state-run loan program for small cannabis businesses. The decision was approved by the New Mexico Finance Authority Oversight committee with a 9-2 vote. 

The program will be overseen by the state’s finance authority and will be funded by the Economic Development Revolving Fund. According to a presentation from the authority’s CEO Marquita Russell, there will be about $5 million from the revolving fund made available for qualifying businesses. Each loan, Russell told lawmakers on Tuesday, would be limited to $250,000 and terms would be limited to five years. Applicants to the loan program would need at least a conditional approval for a cannabis microbusiness from the state’s Regulation and Licensing Department with a business plan that shows three years of financial projections.

Emails show exchanges between plaintiffs, employees and RLD that helped lead to whistleblower suit

Next week, a New Mexico state district judge is slated to hear arguments for and against a group of state employees adding a Whistleblower Protection Act claim to an already pending lawsuit against the state’s Regulation and Licensing Department. 

The initial suit, filed by four Cannabis Control Division employees, claims that the department and the Cannabis Control Division violated a state personnel code by moving their work location from Albuquerque to Santa Fe. Included in the four employees’ new complaint are claims of retaliation and alleged inaction by the department when the employees reported what they said was an illegal cannabis grow operation. 

The hearing is scheduled for Dec. 1. Now, after reviewing documents obtained through a public records request, NM Political Report has learned which company RLD and its Cannabis Control Division deemed the company to be in compliance after being accused of having too many plants. On July 12, 2021, RLD received a tip, via email, that medical cannabis producer Budding Hope was growing “over 6,000 plants illegally.” The person who sent the email, whose name was redacted by the department, followed up twice within a week with more specifics.

Second in command at RLD leaving

After just several months serving as second in command of the New Mexico Regulation and Licensing Department, John Blair announced on Tuesday that he is leaving his position as the deputy superintendent of the department. 

In addition to regulating many industries in the state, RLD most recently took on regulation of cannabis after the Cannabis Regulation Act went into effect in June. 

In an email announcement, Blair praised Gov. Michelle Lujan Grisham for the opportunity to help set up the Cannabis Control Division and his former colleagues for the work they have done. 

“I’m grateful to Governor Lujan Grisham for allowing me to serve in her administration and to help her both legalize adult-use cannabis and stand up the regulatory and licensing framework for this emerging industry,” Blair wrote. “It’s been my great honor to be a part of Team RLD and to work with the dedicated public servants I’ve been lucky enough to call colleagues and friends.”

Blair didn’t specify why he was leaving but said he would announce what’s next for him in the coming weeks. 

Blair has worked numerous political and policy jobs including numerous years for U.S. Sen. Martin Heinrich’s office and for New Mexico Secretary of State Maggie Toulouse Oliver. Morse recently Blair ran for office to replace U.S. Sen. Ben Ray Lujan when Lujan left his previous U.S. House seat to run for Senate. 

NM Political Report received numerous tips since last week that Blair was preparing to leave his position and that former Lujan Grisham staffer Victor Reyes will take Blair’s spot. An RLD spokesperson confirmed that Reyes will take over as deputy superintendent of RLD. “The entire team at the Cannabis Control Division is sad to be saying goodbye to Deputy Superintendent John Blair, but we wish him all the best in his next adventure,” RLD spokesperson Heather Brewer told NM Political Report.

The clock is ticking for new cannabis producers

As New Mexico regulators comb through applications for cannabis businesses and craft further rules and regulations, some industry hopefuls as well as industry veterans are starting to get nervous about timing. 

By law, the New Mexico Regulation and Licensing Department must start issuing cannabis production licenses by Jan. 1, 2022. On April 1, 2022, recreational-use cannabis establishments are expected to open their doors. But, according to some cannabis producers, that timing makes things difficult. Some who are still waiting for their applications to be approved said it would be impossible to start selling cannabis products on the first day if they are not licensed before the start of next year. 

For Alyssa Pearson and her partners who are planning on starting a vertically integrated cannabis establishment, the idea of being ready to stock shelves on April 1 is daunting. Pearson, who is in the process of moving back to her home state of New Mexico, has been watching the new industry unfold from afar.

Growing Forward: Consumption areas

While the New Mexico Regulation and Licensing Department is working towards finalizing rules and regulations for cannabis businesses, local governments around the state are also doing some fine-tuning of their respective zoning laws. 

The state’s new Cannabis Regulation Act prohibits municipalities and counties from limiting things like the distance between a cannabis establishment and schools, but also allows those local governments some leeway in zoning ordinances. The City of Albuquerque for example was able to limit the density of cannabis establishments through its zoning plan. 

Most of the types of establishments cities and counties are taking into consideration had predecessors under the state’s medical cannabis law. But other types of businesses, like cannabis consumption areas, are a new concept to local governments. 

The Bernalillo County Zoning Commission, for example, recently approved a proposal that would ban outdoor cannabis consumption areas. The proposal still has to go through the Bernalillo County Board of Commissioners before it becomes official, but Erica Rowland has been front and center trying to educate officials on why indoor-only consumption lounges may not be a good idea. Rowland spoke against the proposal at the last zoning meeting and told Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, that she aims to open a sort of cannabis country club.      

“What I’m looking for is really to embrace the cannabis lifestyle that we have become so accustomed to as being patients,” Rowland said. 

Rowland likened forcing cannabis consumption areas indoors to forcing users “back in the cannabis closet.”

The idea of cannabis consumption areas is not as new as many think.

Employees seek to add whistleblower complaint to existing suit against NM cannabis regulators

Four state employees who initially filed a lawsuit against the New Mexico Regulation and Licensing Department over where they were assigned to work have asked the judge in the case to allow more claims to be added. The four plaintiffs filed a motion last week to amend their suit to include allegations that RLD and its Cannabis Control Division violated the state’s Whistleblower Protection Act. Matilde Colomo, Matthew Peralta, Martinik Gonzales and Jude Vigil claim, in their proposed amended complaint, that their bosses violated state law by ignoring concerns raised by employees regarding an illegal cannabis grow, moldy cannabis and an edible cannabis product that allegedly caused a consumer to have an “adverse reaction.”  

The judge in the case still must approve the filing of the amended complaint for it to move forward and according to the new filing, RLD opposes the motion. 

The four employees previously worked for the state Department of Health’s Medical Cannabis Program until Gov. Michelle Lujan Grisham signed the Cannabis Regulation Act, which essentially led to the four plaintiffs moving to RLD. The four employees alleged in the initial complaint that they were forced to report to Santa Fe three times a week, whereas they worked in Albuquerque under DOH. Now they are asking the court to consider additional allegations against the state. 

According to the four plaintiffs, about two weeks after they were told they would have to report to a new office, RLD received a “consumer complaint” about mold in a cannabis product.

NM Cannabis Control Division employees sue agency over assigned work location

As the New Mexico Regulation and Licensing Department prepares to issue licenses to cannabis businesses, court records show they are also facing a lawsuit by some of the employees tasked with daily operations. 

In July, about a month after the state’s Cannabis Regulation Act went into effect, four RLD employees filed a civil complaint against the department, alleging that the employees were forced to start working in Santa Fe instead of Albuquerque, where the lawsuit says they have worked for years. 

The four employees were among a larger group of staff that were moved from the Department of Health’s Medical Cannabis Program to the RLD’s Cannabis Control Division as part of the new law that legalized adult-use cannabis. 

According to state records, Matilde Colomo and Jude Vigil are both listed as compliance officers, Matthew Peralta is listed as an environmental science specialist and Martinik Gonzales is listed as an administrative operations manager. 

According to the complaint, the four employees are “being forced to transfer their daily work operation from Albuquerque to Santa Fe and are being forced to do so against their will.”

“All Plaintiffs have experienced mental distress and anguish over being forced to commute to Santa Fe against their wishes and against their job terms,” the complaint reads. 

A spokesperson for RLD said the Cannabis Control Division does not comment on pending litigation, but reiterated that both the department and the division are working towards setting up a cannabis industry.  

“The CCD’s mission is to stand up and support a thriving medical cannabis program and adult-use cannabis industry in New Mexico,” RLD spokesperson Heather Brewer said. “The CCD staff is working hard to provide quality customer service and timely technical assistance to maximize the economic opportunities the cannabis industry will create for businesses, communities and our state.”

All four employees, according to the complaint, had already been working in Albuquerque under DOH, but were informed in June that the Albuquerque workspace was “inadequate to house the new Cannabis Control Division,” and that it was “determined” that the new division staff would need to be in one location. 

The suit claims that in moving staff from Albuquerque, RLD violated a State Personnel Office rule regarding intra-agency transfers. 

The rule in question states that employees are allowed to be transferred “without the employee’s consent to a position in the same classification within the same geographic location, which is 35 miles from the boundaries of the community in which the employee is employed or if the established requirements state that willingness to accept a change of geographic location is a condition of employment.”

Santa Fe is about 60 miles north of Albuquerque. 

According to the complaint, the four employees objected to the move and requested to work remotely from their respective homes, but were still “forced to report to the Santa Fe Office.”

The complaint asks a state district court judge to issue an injunction or temporary restraining order to halt the move until the issue can be resolved in court. RLD has until late next week to formally respond to the complaint.

NM medical cannabis producers warn of cannabis shortage ‘crisis’

As New Mexico prepares for its new recreational-use cannabis industry, two cannabis producers are warning of an impending crisis if state regulators do not lift a moratorium on expanding existing medical cannabis production. 

After the New Mexico Regulation and Licensing Department and its Cannabis Control Division announced a halt on approval of new facilities until further rules are finalized, two legacy producers, who rarely see eye to eye on regulations, said they are both worried about supply when adult-use sales begin next year. 

Earlier this year, Nicole Bazzano, the acting deputy director of business operations for the Cannabis Control Division, sent a letter to medical cannabis producers informing them that any new production facilities would have to wait until after September. 

“The [Cannabis Regulation Act] prohibits the [Cannabis Control Division] from accepting any new applications on or after June 29, 2021, for additional premises until related rules have been finalized,” Bazzano wrote. “As such, the [Cannabis Control Division] will not be processing applications for additional premises submitted June 29, 2021 or later, until rules for the corresponding license types are finalized.”

Duke Rodriguez, who is the president and CEO of prominent cannabis company Ultra Health, said that a pause on increasing production facilities will only worsen shortages he has been warning of for years.  

“We’re going to have a crisis,” Rodriguez said. “Mathematically we cannot avoid it.”

Rodriguez has long said that New Mexico, particularly in rural areas, was already experiencing cannabis supply shortages because of rules and regulations that cap the number of plants for cultivators. 

Rodriguez said the data his company has compiled shows that New Mexico could run out of cannabis completely just several days after recreational-use sales begin. He said allowing medical cannabis producers to expand operations as a way of bolstering supply is only part of the solution and that it may be too late to completely avoid a crisis. That’s partly, he said, because the New Mexico Department of Health’s Medical Cannabis Program capped production to 450 plants per producer for years.

NM starts accepting cannabis cultivation license applications

Nearly 400 companies started the process of applying for a license to grow cannabis in the first several hours the New Mexico Regulation and Licensing Department started accepting applications. 

According to an RLD representative, of the 344 applications that were started, 226 of them were for a microbusiness license, which is a type of production license to grow no more than 200 plants. 

According to RLD, five applications were submitted as complete, but had not been verified as complete. One of those completed applications, according to RLD, was a test application submitted by an existing medical cannabis producer. Existing medical cannabis producers went through the application process earlier this summer.  

In a statement RLD Superintendent Linda Trujillo said the department is committed to setting up a program “in ways that support businesses, consumers and communities.”

“The Cannabis Control Division is committed to making the licensing process as easy as possible while upholding the law and ensuring the integrity of New Mexico’s cannabis industry,” Trujillo said. “We look forward to working with licensees to stand up an industry we can all be proud of.”

The application is currently only open for cultivation, but the department and the Cannabis Control Division has to come up with rules and regulations for manufacturers, curriers, retailers and cannabis testing by January 1, 2022. 

According to a press release from RLD, integrated businesses, or those that include multiple aspects of cannabis business, will need to apply for each part of their business separately, but any fees paid for individual licenses will be applied to the total fee that would normally be applied to an integrated license application. 

The Cannabis Control Act, which legalized non-medical cannabis use in New Mexico requires that cultivation licenses be issued no later than January 1, 2022 and that retail sales begin no later than April 1, 2022. 

More information on requirements and the application process can be found here.