Cannabis Control Division

Cannabis providers try to navigate a new industry

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While the New Mexico Regulation and Licensing Department scrambles to fully implement regulations for non-medical cannabis, those who plan to get into the new industry as well as those already in the medical cannabis industry are already trying to navigate proposed rules. 

With an April 2022 deadline to have a fully implemented adult-use cannabis program, RLD has posted proposed rules that will be considered on June 29, the same day the recently passed Cannabis Regulation Act goes into effect. But that also means current medical cannabis producers and those industry hopefuls are combing through the proposed rules, watching local zoning proposals and hoping to get the ear of regulators and elected officials. 

Matt Muñoz and his business partners are just several of many who are watching the process closely in order to better understand proposed rules and regulations and be prepared to hit the ground running. 

Muñoz is finishing his last few weeks of work in the University of New Mexico’s Office of Government & Community Relations while he and his business partners plan for deadlines and shape their business to comply with state regulations. During legislative sessions, Muñoz serves as a lobbyist for the university and he said that work has connected him with lawmakers as well as various department staffers. But he said not everyone has the advantage of knowing who to call with questions or concerns. 

“One of the benefits of where I’ve come from with the lobbying world is, I do have those connections,” Muñoz said. “I can help our small business figure this out, but the average New Mexican isn’t going to have that same ability that I have just because I have the connections from being at the Legislature for 10 years.”

Muñoz and his partners already registered their business, Carver Family Farms, with the New Mexico Secretary of State’s office and plan to get a cannabis microbusiness license which would allow them to grow up to 200 cannabis plants.

Cannabis Control Division

State agencies confirm medical cannabis purchase limits will not increase anytime soon

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Two New Mexico state agencies confirmed on Wednesday in a letter that medical cannabis purchase limits will not increase, as it was previously suggested last month by a group of medical cannabis producers. 

Related: NM medical cannabis patients should not expect increased purchase limits any time soon

In an official response to the group of five medical cannabis producers, New Mexico Department of Health Secretary Tracie Collins and state Regulation and Licensing Department Superintendent Linda Trujillo wrote that until commercial cannabis sales begin next year medical cannabis patients’ purchases will be limited to roughly eight ounces of cannabis in a rolling 90-day period. The Medical Cannabis Program, which is currently overseen by DOH, limits purchases to 230 units in 90-days. The program defines a unit as one gram of dried, smokable cannabis or 0.2 grams of cannabis concentrates or derivatives. 

Even after commercial cannabis sales start, Collins and Trujillo wrote, medical cannabis purchases will be constrained, but patients could still opt to buy more cannabis through commercial sales. 

“Until such time as commercial cannabis activity is permitted by the Cannabis Control Division, qualified patients will remain limited to medical purchases made pursuant to the [Lynn and Erin Compassionate Use Act], i.e., purchases in quantities that are within the 90-day adequate supply purchase limit, as specified in Section 6(K) of the [Cannabis Regulation Act],” the two wrote. 

The section of the Cannabis Regulation Act the two department heads referred to states that medical cannabis producers “shall continue to operate under rules promulgated” by DOH until RLD issues new rules. But Collins and Trujillo also said they soon plan to announce proposed rule changes for producers that could include production limits for both medical and recreational-use cannabis. 

“That rulemaking will include revisions to existing producer plant limits, although the content of the proposed rules has not yet been determined. 

Interpretation of the law

Collins and Trujillo wrote the letter in response to a letter from medical cannabis producers Ultra Health, G&G Genetics, Budding Hope, Kure and Sacred Garden, which was sent on April 14. 

The group of producers argued that on June 29, when the Cannabis Regulation Act goes into effect, medical cannabis patients should be allowed to purchase two ounces of dried cannabis, 16 grams of extract and 0.8 grams of edible cannabis at a time, as the new law states. 

With no limit on the number of purchases in a day, a patient could purchase double the amount that is allowed under the current law in a matter of eight trips to a dispensary. So, the producers reasoned, the state should consider an increase in production limits as soon as possible.

cannabis legalization

Tax expert says there could be significant revenues in cannabis legalization, some lawmakers still skeptical

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Comments and questions raised on Tuesday during an interim legislative tax policy committee point towards lengthy debates on recreational cannabis legalization in the upcoming legislative session in January. 

Richard Anklam, the president and executive director of the New Mexico Tax Research Institute, told lawmakers that states that were early in legalizing recreational-use cannabis like Colorado, Washington, Oregon and California have seen significant tax revenue increases in the past several years. Anklam, using a study from the Tax Foundation, a national think tank, said New Mexico could see roughly $70 million in excise taxes, before factoring in gross receipts taxes, if the state legalizes cannabis for recreational use. 

While not as common, Anklam said some states who have recently legalized recreational-use cannabis have developed tax models based on potency instead of by volume of what is sold. He said, the potential increase in tax revenue may not become the state’s saving grace, but that it would make a significant impact. 

“What’s the marijuana market worth? It’s worth a lot,” Anklam said. “Most states can’t fund highly significant portions of their government with it, but every little bit helps.”

Duke Rodriguez, the president and CEO of Ultra Health, a New Mexico medical cannabis production company, told lawmakers that despite the large amounts of possible tax money going to the state, current restrictions on cannabis production would not be conducive to a cannabis boom. 

Rodriguez has long been a vocal critic of the state’s Department of Health’s restrictions on how many plants producers can grow.

News

NM cannabis producer challenges new DOH rules

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A high-profile medical cannabis producer filed a petition in a state district court last week, asking a judge to invalidate rules recently put in place by the New Mexico Department of Health. 

In the petition, lawyers for cannabis producer Ultra Health argued that many of the recently adopted rules regarding plant and product testing, product labels and facility safety standards are “arbitrary and capricious.”

Last year, the state’s Medical Cannabis Program, which is part of the DOH, started the rule change process with a series of public meetings, which carried over to early this year. The rules, which range from pesticide and chemical testing to reciprocity for already approved cannabis patients from other states, went into effect earlier this month. But Ultra Health’s petition focuses on the new standards for producers, some of which the petition says would increase the financial burdens for patients. 

“Producers, who already pay well over $100,000 per year for their license and are precluded by federal law from taking any income tax deductions, will have to pay for the increased testing burden and will pass along the costs to patients,” the petition reads. 

A DOH spokesman wouldn’t say if or when the department would respond to the request to annul the new rules. 

“The Department of Health does not comment on pending litigation,” DOH spokesman David Morgan said. 

Arguably a perennial thorn in the side of the department, Ultra Health and its CEO Duke Rodriguez have filed numerous legal actions against the state over issues like the legality of displaying a cannabis plant at the state fair and increasing the number of plants producers can grow. Brian Egolf, who also serves as the state’s speaker of the House, is one of two lawyers who filed the petition.  

Testing and labels 

The new rules from the DOH spell out specific standards for testing plants for fungus, pesticides and heavy metals. But in the petition, Ultra Health’s lawyers argued that the department failed to show evidence that the safe level of contaminants is based on studies or science.  

“While Petitioner Ultra Health agrees that some testing is necessary to protect the safety of cannabis patients, DOH’s rules do not draw the necessary connection between the arbitrarily chosen testing parameters and specific measurements of patient safety,” the petition states. 

The petition also asserts that the DOH simply copied regulations from other states like Colorado and Oregon, where both medical and recreational-use cannabis are legal.

Medical Cannabis Program

Medical cannabis qualified patient clarification bill breezes through committee

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The Senate Public Affairs Committee voted in favor of a bill that would specify that only New Mexico residents can enroll in the state’s Medical Cannabis Program. 

All but one member voted to approve Sen. Jerry Ortiz y Pino’s SB 139, which Ortiz y Pino said is an attempt to “clarify” that a qualified medical cannabis patient must be a resident of New Mexico. 

Up until last year, the statutory definition of a qualified patient included the words “resident of New Mexico.” Ortiz y Pino told the committee that one of his bills last year struck those words and replaced them with “person.” He also told the panel that his intention was to establish a path towards reciprocity with other medical cannabis states.  

“Not being a lawyer, I don’t understand how that wasn’t clear,” he said. Ortiz y Pino’s bill last year, which Gov. Michelle Lujan Grisham signed into law, had a separate definition for reciprocal patients. Department of Health Secretary Kathyleen Kunkel helped to present the bill and answer questions. She told the committee that one of her bigger concerns, other than having enough medical cannabis for New Mexico patients, is that residents of Texas are getting New Mexico cannabis patient cards and taking cannabis across state lines, which is against federal law. 

“We have now essentially given license to non residents to transport a controlled substance across our state borders,” Kunkel told the committee. 

Kunkel said there are currently more than 600 patients enrolled in New Mexico’s Medical Cannabis Program who are residents of other states and one person from Mexico with a pending application. For context, there are about a dozen counties in the state with fewer patients.

Duke Rodriguez

Medical cannabis patient asks judge to allow cannabis on house arrest

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An Albuquerque-based attorney, who also serves in the state Senate, wants a judge to weigh-in on whether those on house arrest should have access to medical cannabis. 

The attorney and state lawmaker Jacob Candelaria, on behalf of his client Joe Montaño, filed a writ of mandamus, or a request for a ruling, in state district court, asking a judge to order Bernalillo County to allow those in custody to use medical cannabis if they are part of the state’s program. 

In his court filing, Candelaria argued that Montaño has a right to “adequate and reasonable medical care” while in custody. Candelaria also argued that state law says, “Medical Cannabis shall be considered the equivalent of the use of any other medication under the direction of a physician and shall not be considered to constitute the use of an illicit substance,” and therefore his client should be allowed access to his medical cannabis. 

According to New Mexico’s Lynn and Erin Compassionate Use Act, which was updated during last year’s legislative session, medical cannabis patients are protected—with some exceptions—from discrimination for using medical cannabis. When mentioning incarceration though, the law seems open to interpretation.    

“A person who is serving a period of probation or parole or who is in the custody or under the supervision of the state or a local government pending trial as part of a community supervision program shall not be penalized for conduct allowed under the Lynn and Erin Compassionate Use Act.” NM Stat § 26-2B-10

Sen. Jerry Ortiz y Pino, D-Albuquerque, sponsored the Senate bill that added sweeping changes to the state’s medical cannabis law. He previously told NM Political Report that the custody provision was aimed at those in pretrial services or those on probation or parole, and Gov. Michelle Lujan Grisham’s office agreed. 

Now Candelaria, who is also a medical cannabis patient, is challenging that thinking with the financial help of one of New Mexico’s more prominent medical cannabis producers, which is led by one of the state’s Medical Cannabis Program’s most vocal critics.

Dominick Zurlo

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.

Duke Rodriguez

Additional cannabis producer asks to intervene in lawsuit over plant count

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A potential new party to a lawsuit filed against the New Mexico Department of Health could further complicate the issue of how much medical cannabis is enough for the state. 

Medical cannabis producer R. Greenleaf has asked a state judge to allow the company to intervene in a lawsuit filed by three other medical cannabis companies that argue the state’s mandated limit on cannabis plants should be raised to better meet demands. R. Greenleaf, through its lawyer, argued that the three producers calling for a higher plant limit are not representative of the rest of the medical cannabis industry. Earlier this year, R. Greenleaf submitted its own study to the DOH and argued that producers need less than 1,500 plants to adequately supply patients with cannabis. 

The lawsuit, filed by producers Ultra Health, Sacred Garden and G & G Genetics, argues that the most recent plant limit increase did not go far enough and that the DOH did not use reliable data to reach the current plant limit of 1,750. The lawsuit says the state did not account for things like additional qualifying conditions and a recent court ruling that allows non-residents of New Mexico to become medical cannabis patients. 

“The New Mexico Department of Health and Secretary [Kathyleen] Kunkel have promulgated an administrative rule that violates a valid, un-appealed order from the First Judicial District Court,” the initial lawsuit read. “The rule also contradicts the Lynn and Erin Compassionate Use Act and defeats the purpose and fulfillment of that statute.”  

The DOH has not filed a response yet, but the request by R. Greenleaf to intervene implies a disagreement amongst producers about whether New Mexico has, or is headed towards a shortage of medical cannabis.

Quick Reads

Judge: State still can’t deny medical cannabis cards to out-of-state residents

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A judge reaffirmed his ruling that out-of-state residents are eligible for medical cannabis cards on Monday. State District Court Judge Bryan Biedscheid again ordered the state Department of Health to provide medical cannabis cards to those non-New Mexico residents who qualify for the state’s program. The state had previously provided cards to three non-residents. But it had not given cards to other non-residents not part of the initial court filing. Monday, the judge also ordered DOH to begin giving cards to other non-residents who qualify for the program.

Duke Rodriguez

Amid back and forth court filings, DOH not issuing medical cannabis cards to non-residents

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The issue of whether non-residents of New Mexico can enroll in the state’s Medical Cannabis Program is still not settled. A flurry of three motions were filed in three days in a civil case over whether non-New Mexico residents are eligible for state medical cannabis cards. The New Mexico Department of Health filed a motion last week asking a state judge to reconsider his decision to compel the state to issue medical cannabis cards to anyone with a qualifying condition, regardless of where they live. On the same day, Gov. Michelle Lujan Grisham and DOH jointly filed a motion asking a judge to stay, or hold off on, his order for DOH to issue cards to non-residents. Then, on Monday, the three petitioners who originally argued they were due medical cannabis cards even though they live outside New Mexico filed a motion calling for the program’s director to be held in contempt of court. 

The court case started in July when two Texas residents and an Arizona resident who is the CEO and president of a New Mexico medical cannabis asked a judge to force the state to issue the three petitioners medical cards.