cannabbis shortage

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

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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.

Quick Reads

NM Supreme Court to hear oral arguments in medical cannabis tax case

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The New Mexico Supreme Court this week scheduled oral arguments for a case regarding medical cannabis sales and gross receipts taxes. 

Lawyers for the New Mexico Attorney General’s Office and two medical cannabis businesses will have an opportunity to make their respective arguments on Feb. 28 as to whether or not medical cannabis sales should have been exempt from gross receipts taxes prior to the state’s Cannabis Regulation Act that went into effect last June. 

The issue goes back several years to when medical cannabis producer Sacred Garden asked the state’s Taxation and Revenue Department for a refund of multiple years worth of gross receipts taxes the company paid. Initially, a hearing officer ruled in favor of the state, but that ruling was eventually reversed by the New Mexico Court of Appeals. In February 2020, the state took the issue to the state supreme court, where it has been pending since. In June 2021, medical cannabis company Ultra Health joined the case as an amicus curiae, or friend of the court. 

In previous court filings, Sacred Garden and Ultra Health argued that like prescription drugs, medical cannabis should have always been exempt from the state’s gross receipts tax, which is sometimes incorrectly referred to as a sales tax.

cannabis purchase limits

NM judge rules patient cannabis purchase limits consistent with state law

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A New Mexico state judge ruled on Thursday that medical cannabis patients cannot purchase the same amount as non-patients when recreational-use sales begin. 

Second Judicial District Court Judge Benjamin Chavez, in his written ruling, dismissed a claim from a medical cannabis patient that medical cannabis patients should be afforded the same purchase limits as what is laid out in the state’s Cannabis Regulation Act, which went into effect in June. 

“Petitioner has failed to establish that he, as well as qualified patients, qualified caregivers, and reciprocal patients, have a clear legal right to purchase an additional two-ounces of medical cannabis, tax free, at this time, under the Cannabis Regulation Act,” Chavez wrote. 

Prior to the Cannabis Regulation Act, the only way to legally possess cannabis in New Mexico was to be a medical cannabis patient. 

The state’s Medical Cannabis Program has long allowed patients to purchase up to 230 units in a rolling 90-day period. A “unit,” a term created by the program, is one gram of cannabis flower or a quarter of a gram of concentrate or extract. That means a medical cannabis patient could buy up to eight ounces of cannabis flower every three months. 

The Cannabis Regulation Act, however, allows adults who are at least 21 years old to purchase up to two ounces of cannabis flower in each purchase, with no limit on the number of purchases. The new law also limits personal possession to two ounces, but there is no limit on the amount of cannabis stored at a person’s home. Essentially, once recreational-use sales begin next year, a person could hypothetically make five trips to a cannabis retail business, purchasing the maximum amount each time and have purchased two more ounces than a patient is allowed in a 90-day period. 

Chavez, in his decision, cited a portion of the Cannabis Regulation Act which states that a person 21 years of age or older can buy “not more cannabis than authorized by the Cannabis Regulation Act or the Medical Cannabis Program.” Chavez also cited a portion of the law that states medical cannabis patient rules and regulations will remain under the purview of the Medical Cannabis Program until the newly formed Cannabis Control Division creates its own rules and regulations for medical cannabis patients. 

Last month, the Medical Cannabis Program held a public hearing and presented proposed rule changes that would increase medical cannabis purchase limits to 425 units or 15 ounces of cannabis flower.

Cannabis Control Division

The clock is ticking for new cannabis producers

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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.

Cannabis Regulation Act

Medical cannabis patient asks judge to rule on purchase limits

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A New Mexico medical cannabis patient is challenging state rules for medical cannabis purchase limits. 

Jason Barker, a medical cannabis patient and advocate, filed a request in Santa Fe’s First Judicial District Court earlier this month, asking a judge to compel the state’s Medical Cannabis Program and Cannabis Control Division to allow medical cannabis patients to purchase the same amount of cannabis as commercial cannabis customers will be allowed to purchase early next year. 

Barker’s lawyer, Jacob Candelaria, is also a New Mexico state senator and has represented medical cannabis patients and producers in the past. One of Candelaria’s clients in the past has been medical cannabis producer Ultra Health, which has a history of filing lawsuits against the state over medical cannabis rules and regulations. Ultra Health’s president and CEO Duke Rodriguez told NM Political Report that the company has offered financial support for Barker’s case. 

“It’s an important patients’ rights issue in which we fully agree with Mr. Barker and his attorney, so we would be shirking our responsibility not to offer support,” Rodriguez said. “I am fully expecting we will not be the only licensed producer offering support on the matter.”

Candelaria said he could not discuss the issue of payment for his services, but stressed that his client in the matter is Barker and not Ultra Health. 

In a statement Candelaria accused the state of being more concerned with tax revenue than with medical cannabis patients’ well-being. 

“State regulators are trying to unlawfully discriminate against my client, and deny all medical cannabis patients the rights afforded to them under the Cannabis Regulation Act,” Candelaria said. “The law is clear, all medical cannabis patients may purchase at least two-ounces of medical cannabis at any one time, tax free, beginning on June 29, 2021.

gross receipts tax

Conflicting views on medical cannabis as a prescription

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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

Medical cannabis producers call for increased plant limits

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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.

medical cannabis

NM judge rules medical cannabis use allowed while on house arrest

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A New Mexico state district judge ruled this week that detainees in Bernalillo County’s house arrest program are allowed to use medical cannabis while serving out their sentence.  

In her ruling, Second Judicial District Judge Lucy Solimon wrote that Bernalillo County’s Community Custody Program (CCP) is, in effect, the same as parole. New Mexico’s Lynn and Erin Compassionate Use Act, as of 2019, allows medical cannabis patients who are on parole or probation to continue their use of medical cannabis. 

“Although CCP is not specifically mentioned in the Compassionate Use Act, [Bernalillo] County fails to demonstrate that CCP should be treated differently than probation or parole,” Solomon wrote. “Therefore, it appears as though the Compassionate Use Act does apply to defendants on CCP as it does to defendants on probation or parole. The issue of whether medical cannabis patients on house arrest can use medical cannabis goes back to 2019 when Albuquerque resident Joe Montaño was sentenced to the Community Custody Program after his seventh drunk driving conviction. Montaño, who was already a registered medical cannabis patient, previously told NM Political Report that he didn’t hide his cannabis use from his case worker during a home visit.

2021 Legislative Session

How Arizona’s cannabis legalization proposition might impact NM

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Election Day in New Mexico resulted in a slight expansion of the state’s Senate, and a very slightly reduced, but still large, House Democratic majority. But while New Mexico voters cast their votes on Tuesday, voters in neighboring Arizona voted overwhelmingly to legalize recreational-use cannabis, something the New Mexico Legislature has not been able to pull off, despite years of attempts. 

Arizona may be at least a year away from seeing any significant tax revenue from legalized cannabis, but the proposition included an expungement provision and will allow medical cannabis dispensaries to start selling it for recreational-use by next spring, just as the New Mexico Legislature is set to wrap up their regular legislative session. 

Listen: A special episode of Growing Forward

Whether social and restorative justice or tax revenue is most important seems to be a matter of opinion among proponents and advocates. But most agree that it is imperative that New Mexico lawmakers legalize recreational-use cannabis next year if they want to achieve parity with the neighboring state to the west.  

What’s at stake

In the past several years, legalization efforts have stalled in the Senate, which has been more consevative on many issues, including cannabis. Senate Majority Leader Peter Wirth of Santa Fe said he’s optimistic the Senate seats Democrats picked up on Election Day will help get a cannabis legalization bill to the governor’s desk. 

“No question our landscape has changed internally in the Senate with seven new members and voters having spoken loudly and clearly,” Wirth said. “One of the issues that I’ve been very cognizant about is not losing the opportunity to move forward with recreational cannabis.

Growing Forward

Growing Forward: Education

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In this week’s episode of Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, we take a look at education. 

Dispensary employees must reach a certain level of required certification, but what kind of knowledge should patients expect from those who are dispensing their medication? Shanon Jaramillo runs a local cannabis education and staffing agency. She said her goal is to make sure New Mexico implements a new and rigorous education program in order to make sure dispensary employees are giving the best advice to new patients who may have never used cannabis before. Her concern is that the state legalizes recreational-use cannabis without also implementing a rigorous education requirement for medical cannabis dispensary employees.   

“I’m fearful without that educational bridge, I’m fearful that the program will take on the likeness of other medical programs that we’ve seen in other states and that will start to dwindle,” Jaramillo said. 

Part of education for both patients and non-patients  is to make it clear what medical cannabis is designed to do. An often misunderstood issue with medical cannabis is that state law does not recognize it as a substance that can cure diseases or other medical conditions.