Gov. Lujan Grisham gives OK for legislature to make some cannabis law changes

In addition to high-profile efforts to improve public safety and education, Gov. Michelle Lujan Grisham has called on lawmakers to address cannabis during the 30-day legislative session. 

Lujan Grisham issued a message on Thursday afternoon, authorizing lawmakers to add changes to the Cannabis Regulation Act to the legislative agenda. 

The governor’s message pertains to SB 100, which is sponsored by state Sen. Linda Lopez, D-Albuquerque. The bill, if passed, would increase production limits for cannabis microbusinesses, allow state regulators to require education requirements for cannabis servers, allow liquor license holders to also obtain a cannabis business license and allow some cannabis businesses to employ workers who are under 21, but over 18 years of age, as well as other changes to the law. 

The state’s Cannabis Control Division announced earlier this week that it planned to work with the governor and lawmakers to increase plant limits for cannabis microbusinesses as a way to combat expected shortages in April when sales are expected to begin. The division also announced an emergency rule change for non-microbusinesses, but production limits for smaller operations are written into statute. SB 100 proposes to increase plant limits for microbusinesses from 200 to 1,000 mature plants. The bill would also allow cannabis businesses that previously only sold medical cannabis to employ workers who are 18 years of age.

NM cannabis regulators temporarily increase production limits in an attempt to avoid shortages

With a little more than two months before recreational-use cannabis sales are expected to start, the New Mexico Cannabis Control Division issued an emergency rule change that doubles plant limits for cultivators. 

The emergency rule change, which went into effect last Thursday, increases the maximum amount of mature cannabis plants for producers from 10,000 to 20,000. 

In documents filed with the state’s Commission of Public Records, division director Kristen Thomson justified the emergency rule change. 

“The Division has considered demand estimates provided by applicants and licensees in the cannabis industry,” Thomson wrote. “Projected market demand shows that the demand for regulated cannabis will increase year-to-year as more cannabis consumers move from the illicit market to the regulated market. The supply of medical cannabis will become increasingly threatened without an adequate supply of plants.” 

Cannabis production limits have been an issue in New Mexico since nearly the inception of the state’s Medical Cannabis Program. One of the state’s more prominent cannabis producers, Ultra Health, has battled with the state in court for years over plant limits. In 2015 the New Mexico Department of Health, which oversees the Medical Cannabis Program, increased production limits from 150 to 450 mature plants, per producer.

2021 Top Stories #3: Cannabis legalized

See our entire countdown of 2021 top stories, to date, here. One of the most notable things that happened in 2021 was the legalization of recreational-use cannabis. 

The use of medical cannabis has been legal in New Mexico for more than a decade, but full legalization did not become a reality for New Mexico until earlier this year, during a special legislative session devoted mostly to legalization. Weeks before, during a regular legislative session, lawmakers were unable to come up with a version of a legalization bill that would address everyone’s concerns. Ultimately, the effort in the regular session stalled in a key Senate committee. 

But the special session proved to be a success for proponents of cannabis legalization and Gov. Michelle Lujan Grisham signed the bill into law in April. But even as it looked like legalization was on the horizon, there were still many concerns about how legalization would impact rural communities in the northern part of the state. 

Of course, New Mexico couldn’t legalize cannabis without former Gov. Gary Johnson weighing in.

Bernalillo County passes ordinance banning outdoor cannabis consumption areas

The Bernalillo County Commission unanimously approved an ordinance on Tuesday that bans outdoor cannabis consumption areas in parts of the county not already governed by the City of Albuquerque. 

An earlier version of the proposal would have made a distinction between medical and recreational-use cannabis consumption areas as well as prohibited multiple cannabis production and manufacturing in one place. The commission ultimately amended the ordinance to eliminate the distinction between the two types of cannabis use and allow integrated cannabis businesses to perform multiple operations in one location, after securing a special-use permit. 

But even with the amendments, the ordinance would still prohibit outdoor cannabis consumption areas. 

Bernalillo County Zoning Administrator Nicholas Hamm told commissioners that the intention of the legislation was to “create an environment that’s separated from the public broadly, because this is still a controlled substance, and it has some intoxicating effects, so that adults can do that within a building and behind a carbon filter.”

None of the commissioners took issue with prohibiting an outdoor consumption area, but Erica Rowland, a medical cannabis patient advocate and cannabis business license hopeful, spoke out against the consumption area portion of the proposal. Rowland praised the commission for adding a special permit option for multiple cannabis uses, but said she was worried about the consequences of requiring businesses licensed as consumption areas to keep smoking inside. “I’m very concerned with outdoor consumption not being allowed,” Rowland said. “The indoor consumption-only language is very restrictive.

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.

NM issues first cannabis cultivation license

A New Mexico-based cannabis company announced this week that it received the first cannabis cultivation license earlier this month from the New Mexico Regulation and Licensing Department. 

In a statement from president and CEO of Mother’s Meds, Tony Martinez, the company was awarded a cannabis production license by RLD on November 1, 2021. In the statement, Martinez attributed the company’s “hard work, due diligence, and adaptability,” along with the “business friendly attitude” of San Juan County for Mother’s Meds getting the first production license, outside of the 34 legacy producers that carried over from the Department of Health. 

Martinez said Mother’s Meds, which is doing business as Lava Leaf Organics, will not likely hire many employees, but instead plans to establish contracts with other professionals. 

“My least favorite part of business is placing a value on another person’s efforts and talents; this model allows people more control over their destiny and to work with us, not for us,” Martinez wrote in a statement. “I believe this will allow our community to attract and retain more talented professionals than our competitors.”

A spokesperson for the state’s Cannabis Control Division confirmed on Wednesday that the department issued Martinez’s company a license, but added that there is still a pending background check.  

“Mother’s Meds has been issued a cannabis producer’s license and that license will go into effect as soon as all background check requirements are met,” division spokesperson Heather Brewer said in a statement. “The Cannabis Control Division is excited to start issuing licenses and looks forward to public announcements and celebrations of new businesses as the Division works to stand up a thriving adult-use cannabis industry in New Mexico.” 

Martinez said his company “will continue to comply with all CCD rules and regulations.”

Martinez, along with his brother and father unsuccessfully applied for a production license through DOH in 2015. Prior to the Cannabis Regulation Act, which went into effect earlier this year, medical cannabis businesses were licensed by DOH.

Las Cruces store owner charged with felony cannabis distribution

An owner of a CBD store and gift shop in Doña Ana County pleaded not guilty earlier this week to a fourth-degree felony charge of unauthorized cannabis sales. Jason Estrada, who is one of the owners of Speak Easy in Las Cruces, filed his not guilty plea with a state magistrate court on Nov. 9, in response to the felony charge filed in September.  

Estrada is likely the first person in New Mexico to be charged with illegally selling cannabis under the recently passed Cannabis Regulation Act. 

Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, spoke with Estrada in August, just after the New Mexico Regulation and Licensing Department sent him a cease and desist letter, asking him and his partners to stop giving away cannabis with the purchase of a shirt or sticker. 

Estrada told Growing Forward that after he and his partners received the letter from RLD, they transitioned back to selling legal hemp products like CBD. 

“We 100 percent stopped and we’re just a CBD store,” Estrada said. “One of the best CBD stores in the state. I will say that as well.”

But according to court records, the Doña Ana County Sheriff’s office alleged that Speak Easy did not stop after the letter from regulators. 

According to an affidavit from Doña Ana County Metro Narcotics Agent R. Holguin, undercover agents entered Speak Easy in August and purchased three different cannabis products without purchasing a shirt. 

“The items purchased by the undercover agent(s) consisted of: 1) 5 pre rolled cigarettes containing marijuna, 2) a small container of THC wax, and 3) approximately 3.6 grams of marijuana flower,” the affidavit read. 

According to the affidavit, officers had the products tested at a state-approved cannabis testing lab and that all three products tested positive for THC, the psychoactive substance in cannabis. 

In a press release, Estrada’s lawyer, Matthew Madrid, said his client has been in full compliance with RLD’s cease and desist letter since he received it.“The decision to comply with the Cease and Desist Order was based, in large part, on communications between Speak Easy and the Cannabis Control Division,” Madrid said in the statement.

Bernalillo County considers indoor-only cannabis consumption areas

As soon as next month, the Bernalillo County Board of Commissioners will vote on a zoning ordinance change that specifically addresses cannabis establishments in the county. Since New Mexico’s Cannabis Regulation Act went into effect in June, municipalities and counties across the state have been crafting their own ordinances to regulate where, and in some cases when, cannabis establishments can operate. Related: ABQ city council rejects most of mayor’s cannabis zoning proposals

During a commission meeting on Tuesday, Bernalillo County Zoning Administrator Nicholas Hamm presented the proposal that already received unanimous support from the county zoning commission. Besides requiring a level of odor mitigation, the proposal would also prevent cannabis consumption areas from being outside. Hamm told commissioners that the idea behind prohibiting outdoor consumption, even at a licensed facility, is to keep cannabis smoke away from the general public.

Mystery surrounds the last cannabis production license DOH granted

Recreational-use cannabis dispensaries in New Mexico are slated to open their doors in about five months, if not sooner. Medical cannabis dispensaries, many of which have been in operation for years, may end up feeling the brunt of an expected run on cannabis products next year, but legacy cannabis cultivators could have an advantage over those who are still in the queue, waiting for their applications to be approved. 

While the applicants currently waiting for approval cannot start growing or manufacturing cannabis, medical cannabis cultivation companies that have been licensed for years can start ramping up production in anticipation for next year.  

Some of those businesses that are awaiting approval have also, over the years, been waiting for a chance to break into the medical cannabis industry, but were repeatedly told the state was not accepting applications for medical cannabis production, a term New Mexico regulators use for cultivation. The more than two dozen producers who have historically produced medical cannabis are often colloquially referred to as “legacy producers.” But for one producer, the term “legacy” is somewhat of a misnomer. Generation Health, along with 33 other medical cannabis producers, got a fast track through the recreational-use licensing process. The idea was that since the legacy producers were due for license renewals over the summer, they would be re-licensed through the Regulation and Licensing Department, which largely took over cannabis regulatory duties from the state’s Department of Health after the Cannabis Regulation Act went into effect on June 29, 2021. 

But Generation Health had only been licensed as a medical cannabis producer for about 24 hours before that jurisdictional switch happened.