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 judge calls for increased purchase limit for medical cannabis patients

As New Mexico’s Regulation and Licensing Department works toward finalizing rules for non-medical cannabis sales, some unfinished business remains when it comes to the state’s medical cannabis program. 

A state district judge last week ordered RLD, the New Mexico Department of Health and the governor’s office to either change their policy for medical cannabis patient purchase amounts or present a compelling argument for not doing so. 

“Respondents’ purchase limitations violate equal protection principles because they will subject New Mexicans with debilitating medical conditions who are dependent on medical cannabis to lower purchase limitations than persons who purchase cannabis from the recreational (and taxed) market,” read the writ of mandamus signed by Second Judicial District Judge Benjamin Chavez. “Respondents’ unlawful rules also attempt to impose an illegal tax on any medical cannabis purchases in violation of the Cannabis Regulation Act.”

The Cannabis Regulation Act, which went into effect on June 29 and is the framework for sales expected to start next spring, allows purchasers to buy up to two ounces of cannabis at a time. But the state’s Department of Health, which is RLD’s medical cannabis counterpart, has maintained that a DOH policy limiting medical cannabis purchases to roughly eight ounces in a 90-day period takes precedence over the new law. 

For years, New Mexico cannabis patients have been limited to 230 “units” in a rolling 90-day period. DOH rules define a unit as one gram of dried cannabis “flower” or 200 milligrams of cannabis extract or concentrate. Under the new law, however, non-medical cannabis purchases are limited to two ounces for each transaction.

NM Tax and Revenue: Lawmakers didn’t intend for cannabis tax breaks

The issue of whether taxes on medical cannabis sales in New Mexico should have been deductible prior to this year is one step closer to being heard by the state’s supreme court. 

The state Attorney General’s office filed a brief on Monday with the New Mexico Supreme Court on behalf of the New Mexico Taxation and Revenue Department that argued state lawmakers did not intend to allow gross receipts tax deductions on medical cannabis sales until this year. 

The issue stems from a request by medical cannabis producer Sacred Garden to deduct gross receipts taxes from its sales. The department denied the claim on the basis that medical cannabis is not prescribed like other medication. In New Mexico gross receipts taxes are deductible from prescription drugs and medical cannabis is not prescribed by a doctor, but instead recommended. A New Mexico Court of Appeals panel ruled in favor of Sacred Garden last January, writing that in terms of medical cannabis, the difference between a recommendation and prescription is negligible. TRD took the case to the state supreme court where it has been pending since last year.

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

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.

Existing cannabis producers get an extension on licensing deadline

New Mexico medical cannabis producers that intend to continue doing business after commercial cannabis sales begin next year will not be required to renew their license this summer, according to state officials. 

The state’s Department of Health and the Regulation and Licensing Department said in a letter that current medical cannabis producers can forgo the relicensing process that normally takes place during the summer months and wait to submit a request for licensure through Regulation and Licensing. 

The grace period for current producers is part of a transition of cannabis sales oversight. Since the inception of the state’s Medical Cannabis Program almost 15 years ago, the program has been run by DOH. But after June 29 nearly all aspects of cannabis sales, both recreational and medical use, will be overseen by RLD, with the exceptions of medical cannabis patient registry and medical cannabis patient purchase limits.  

Medical Cannabis Program Director Dominick Zurlo said in a statement that the grace period is aimed at saving current producers time and energy. 

“It makes the most sense to spare the Medical Cannabis Program’s licensed non-profit producers to not have to renew their non-profit renewal paperwork when in the weeks and months ahead, they have to prepare and submit their required administrative paperwork to be licensed to sell cannabis to the general public,” Zurlo said. 

The newly established Cannabis Control Division, under RLD, is required by statute to set up an advisory board that will have a role in promulgating rules and regulations for cannabis sales no later than Sept. 1 of this year. The Cannabis Control Division must also promulgate those rules and regulations by Sept.

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

The head of the department tasked with regulating recreational-use cannabis in New Mexico said medical cannabis patients should not expect purchase limits to be expanded, despite a letter from a group of New Mexico medical cannabis producers suggesting otherwise.  

Last week, during an interview for the collaborative podcast Growing Forward, New Mexico Regulation and Licensing Department Superintendent Linda Trujillo said until commercial cannabis sales begin next April, medical cannabis patients will still be limited to 230 units in a rolling 90-day period. The Medical Cannabis Program, overseen by the state’s Department of Health, defines a unit as one gram of smokable cannabis, or 0.2 grams of THC in extracts, derivatives or edible cannabis products. Representatives of both DOH and RLD confirmed that both agencies agree that medical cannabis purchase limits will continue to be determined by DOH. The Cannabis Regulation Act also seems to confirm that even after commercial cannabis sales start next year, medical cannabis purchase limits will be determined by the DOH. 

Earlier this month a group of five medical cannabis producers sent a letter to RLD and DOH, essentially arguing for an increase in production limits. The Cannabis Regulation Act, which goes into effect on June 29, will limit recreational-use cannabis purchases to two ounces at a time, but will not limit the number of purchases that can be made.

Medical cannabis producer loses license

The New Mexico Department of Health has officially revoked the license to grow and manufacture medical cannabis from a Santa Fe-based company that experienced an explosion last year, resulting in injuries.  

In an official determination signed by DOH Secretary Tracie Collins on Monday, the department officially revoked the license for medical cannabis producer New Mexicann based on findings from a hearing officer earlier this year. 

Collins’ final determination cited a number of violations as justification for revoking New Mexicann’s license to both grow medical cannabis and to manufacture derivatives and extracts. Those violations included failure to notify the state of what type of equipment was used for manufacturing, failing to use a “closed” extraction system and for “lifting an open extraction vessel containing an ethanol-based solution in the immediate vicinity of an active heater plate,” which ultimately caused the explosion, according to an investigation by the state.  

At least one method for extracting certain parts of cannabis plants includes using volatile solvents such as butane or ethanol. There have been numerous reports of injuries across the nation involving dangerous extraction methods, both in officially licensed facilities and home operations. New Mexicann also experienced an explosion resulting in injuries in 2015, but it is unclear what, if any, repercussions New Mexicann faced the first time. The Cannabis Regulation Act, which legalizes recreational-use cannabis and goes into effect on June 29, makes home manufacturing using volatile solvents illegal. 

New Mexicann’s license was one of 35 in the state and DOH has not opened the production or manufacturing licensing process for several years.

Conflicting views on medical cannabis as a prescription

Amid a pending New Mexico Supreme Court case concerning medical cannabis taxes, one state cabinet official seems to have a different view on whether medical cannabis recommendations from medical professionals are the same as traditional prescriptions, at least when it comes to COVID-19 vaccine priority. 

According to an email from January of this year, obtained by NM Political Report through a public records request, New Mexico Department of Health Secretary Tracie Collins believed that medical cannabis dispensary workers should be viewed similarly to pharmacists and that medical providers “prescribe medical cannabis” when it came to priority for COVID-19 vaccinations. 

This view differs greatly from an argument the state’s Taxation and Revenue Department has put forward in an ongoing legal case regarding gross receipts taxes and whether they should be allowed to be deducted from medical cannabis sales. 

Collins’ apparent view that medical cannabis recommendations are essentially the same as prescriptions came up in a series of emails between Gov. Michelle Lujan Grisham’s staff and Department of Health officials regarding where medical cannabis dispensary workers fall in terms of COVID-19 vaccination priority. The department’s deputy secretary Laura Parajon  replied to the email chain with Collins’ take. 

“Hi, sorry for yet another weighing in opinion. I consulted with Secretary Collins, and she also believes they are like pharmacists because providers do prescribe medical cannabis,” Parajon wrote. “I am adding her to the conversation.”

While the seemingly innocuous reply was in the context of vaccine priority, Collins’ reported opinion that medical professionals “prescribe” medical cannabis goes against the argument TRD has repeatedly put forth in a still pending legal case as a reason medical cannabis producers should not be allowed to deduct gross receipts taxes they paid to the state. DOH spokesman Jim Walton told NM Political Report that the context of the email conversation is important. 

“The question Deputy Secretary Parajon and Secretary Collins was asked was whether people who worked in a medical cannabis dispensary are considered to be within COVID-19 vaccination phase 1A,” Walton said.

Medical cannabis producers call for increased plant limits

Just days after New Mexico Gov. Michelle Lujan Grisham signed a recreational-use cannabis bill into law and less than 90 days before the law goes into effect, some in the existing medical cannabis industry want state officials to immediately increase the amount of cannabis they can grow. 

A group of five New Mexico medical cannabis producers sent a letter with their concerns about the rollout of recreational-use cannabis to the heads of the state’s Regulation and Licensing Department and the state’s Department of Health. The letter from the medical cannabis producers said that even after the law goes into effect, a lack of new promulgated rules could result in increased medical sales, which, the producers argued, could also mean a shortage of medical cannabis for existing patients. 

“Therefore, the undersigned producers request that DOH and RLD raise the plant limitation until the full commercial market can be phased in,” the letter reads. The group of producers calling for an increase in allowed plants include Ultra Health, which has long called for an increase in medical cannabis production limits or no limits at all, and Sacred Garden, which is currently involved in a legal battle with the state over gross receipts taxes on medical cannabis. The other three producers who signed onto the letter are G&G Genetics, Budding Hope and Kure. 

The Department of Health oversees the current Medical Cannabis Program. Regulation and Licensing will oversee all but the medical cannabis patient registry after the law goes into effect on June 29. 

In their letter, the producers reasoned that after June 29, existing Department of Health rules for purchase limits will be invalid.