DOH and Medical Cannabis Program ordered back to court over reciprocity issue

The New Mexico Department of Health and its Medical Cannabis Program have two weeks to convince a state district court judge that the department and program should not be sanctioned for violating a court order. 

The order is the latest in a legal battle between medical cannabis producer Ultra Health and the state over who qualifies as a reciprocal medical cannabis patient. 

This summer, the Department of Health finalized rules allowing patients who are authorized to use medical cannabis in another state or jurisdiction to also buy, use and possess cannabis in New Mexico. Shortly after the rule was made final, some New Mexicans reportedly started getting certified to use medical cannabis in other states that don’t have as stringent qualifications as New Mexico. 

By September, the department and the Medical Cannabis Program issued a mandate that dispensaries only sign up would-be reciprocal patients whose identification cards match their authorization to use medical cannabis. The department and program also issued an emergency rule change, specifying that New Mexicans cannot be reciprocal patients in New Mexico. 

Ultra Health, through its attorney Jacob Candelaria, who is also a state senator, days later filed a petition asking First Judicial District Court Judge Matthew Wilson to compel the state to “stop taking actions that are beyond and contrary to their statutory authority.”

By October, Wilson ordered the state to rescind its emergency rule change and mandate barring New Mexicans from registering as a medical cannabis patient in another state and becoming reciprocal patients in the New Mexico program. 

The department and medical program immediately abided by the order and again allowed New Mexico residents to register as reciprocal patients. 

But by the end of October, the Medical Cannabis Program published a notification of a proposed rule change similar to the emergency change. Then, earlier this month, the state notified the court of its plan to appeal Wilson’s decision. Two days later, Candelaria filed a motion asking Wilson to call the state back to court and explain why they should not be sanctioned for violating the judge’s order.

NM DOH tries again to limit medical cannabis reciprocity

The New Mexico Department of Health is trying, with two different approaches, to restrict rules on medical cannabis reciprocity. 

The Department of Health’s Medical Cannabis Program posted on their website a notice of a rule change hearing, scheduled for early next month. The new rules would only authorize out-of-state residents to become reciprocal medical cannabis patients in New Mexico. That means, under the proposed rules, New Mexico residents could not get authorization to use medical cannabis from another state and then use their out-of-state authorization to purchase, possess and use medical cannabis in New Mexico. The department’s first attempt at changing the rules, through an emergency rule change in October, was thwarted by legal action filed by New Mexico medical cannabis company Ultra Health. Represented by Albuquerque-based attorney Jacob Candelaria, who is also a New Mexico state senator, Ultra Health argued that the emergency rule changes DOH was attempting to put in place went beyond the department’s authority. 

A state district court judge ruled in favor of Ultra Health and ordered DOH to continue accepting reciprocal patients regardless of whether their identification card and medical cannabis authorization came from the same jurisdiction. 

Last week, DOH filed a notice of the department’s intent to appeal the court’s decision.

NM judge orders state health department to loosen medical cannabis reciprocity rules

A district court judge in Santa Fe ruled Tuesday that reciprocal medical cannabis patients can buy, possess and use medical cannabis in New Mexico, regardless of whether their identification matches the state where their medical recommendation to use cannabis came from. 

First Judicial District Court Judge Matthew Wilson’s order will also allow New Mexicans to get a recommendation to use medical cannabis from another state and become a reciprocal patient in New Mexico. 

The ruling came after New Mexico medical cannabis producer Ultra Health filed a petition asking the court to compel the state’s Department of Health to allow anyone with a medical authorization to use medical cannabis to become a reciprocal patient. 

Ultra Health’s attorney, Jacob Candelaria, who is also a Democratic state senator and himself a medical cannabis patient, told NM Political Report that Wilson’s decision will also allow patients to seek medical authorization from another state or from a tribal jurisdiction.    

“The court held that a reciprocal patient can have a proof of authorization and an ID from different jurisdictions, because the department was trying to say that, that you could only become a reciprocal patient if you had your proof of authorization, and your ID from the same jurisdiction,” Candelaria said. 

In his ruling, Wilson said the state DOH had been honoring identification cards issued by a different jurisdiction than respective medical cannabis recommendations. But last month the DOH instructed dispensary operators to only accept identification cards and cannabis recommendations from the same jurisdiction and only recommendations in the form of a card were to be accepted. Last week the department also filed an emergency rule change enacting the guidance they gave to dispensaries weeks before.  

Wilson noted, in his ruling, that prior to the department changing their rules, many reciprocal patients came from Texas, which has a more restrictive medical cannabis program than New Mexico. But some New Mexico residents, Wilson wrote, had the option of becoming a medical cannabis patient in nearby states with even fewer restrictions than New Mexico. 

“In essence, a New Mexico resident could bypass or circumvent the more stringent requirements for becoming a ‘qualified patient’ and elect to participate in the program as a ‘reciprocal patient,’” Wilson wrote. 

DOH spokesman David Morgan told NM Political Report that the department has already complied with the court order, but would not say whether the department plans on appealing the decision. Part of Wilson’s order was also that the DOH re-enroll any reciprocal patients who were removed from the program for not complying with the department’s temporary rule change. 

“The Department of Health’s Medical Cannabis Program has complied with the order,” Morgan said.

Growing Forward: Who’s running things?

Today marks the release of the 4th episode of Growing Forward, a collaboration between NM Political Report and New Mexico PBS, thanks to a grant from the New Mexico Local News Fund. 

In today’s episode, we look at the business side of medical cannabis and talk to a couple of high-profile cannabis business owners. 

One of the most recognizable names in the state’s medical cannabis program is Darren White. 

White is a former law enforcement officer and the former head of public safety for both the City of Albuquerque and the state of New Mexico. He ended his time as Secretary of Public Safety under then-Republican Gov. Gary Johnson, after Johnson publicly said he was in favor of legalizing cannabis. 

At the time, White was staunchly opposed to legalizing cannabis and said he was even opposed to medical cannabis. But now White is the head of PurLife, one of the more prominent cannabis producers in the state. 

White told Growing Forward that he had an “eye-opening experience” after a friend suggested White try a cannabis topical to help combat chronic pain. 

“I was just wrong about it,” White said. “It really does help a lot of people and their quality of life.”

This week’s episode also explores how the state expanded the maximum number of plants producers can grow after a legal battle with another prominent producer. 

But this week’s episode also examines what it’s like to be a producer through the eyes of a female producer, in what seems to be a male-dominated industry. 

If you haven’t listened to the first three episodes, you can catch up below or search for Growing Forward at anchor.fm, Spotify, Apple Podcasts or wherever you usually get your podcasts. 

Some raise concerns about out-of-state, reciprocal patients in the time of COVID-19

Amid the COVID-19 pandemic the New Mexico Department of Health approved rules that put into practice a state law allowing medical cannabis patients from other states to buy, possess and use medical cannabis in New Mexico. 

The law was passed in 2019 as part of a massive statutory change for medical cannabis. That law also included a separate provision that many have argued would have allowed non-residents of New Mexico to become a New Mexico medical cannabis patient. 

But in 2020 lawmakers, backed by Gov. Michelle Lujan Grisham and the DOH, passed a law that made sure that only those who were medical cannabis patients in other states already could qualify for New Mexico’s program. 

They argued that allowing people from nearby states without a medical cannabis program to enroll in the New Mexico Medical Cannabis Program could invite unwanted federal scrutiny. Through legislative debate and public testimony, legislators and public health officials argued that the reciprocity provision in the 2019 law would be adequate enough to provide medicine to non-resident, medical cannabis patients spending time in New Mexico and would provide enough legitimacy to keep the federal government from intervening. 

But even now that the law reverted to only allow New Mexico residents and those already enrolled in a medical cannabis program to buy, possess and use it in the state, there seems to be a loophole of sorts that may allow exactly what the governor and state officials warned against. In 2019, the New Mexico Legislature approved a massive overhaul to the state’s medical cannabis law. The changes included protection from being fired from a job or losing parental custody just for being a medical cannabis patient.

New group of petitioners challenging NM DOH medical cannabis rules

The list of medical cannabis companies filing legal complaints against the New Mexico Department of Health continues to grow. 

This week, two more medical cannabis producers, a cannabis manufacturer, a cannabis testing laboratory and a patient licensed to grow medical cannabis filed petitions in state district court asking a judge to annul rules adopted by the DOH earlier this month. That’s in addition to the two other medical cannabis producers who filed petitions against the state last week. 

Also notable is the list of attorneys representing the medical cannabis companies, as it includes two current legislators, a former commissioner with the state’s Public Regulation Commission, a former attorney general candidate and a former congressional candidate, all from across the state’s political spectrum. 

Medical cannabis producer Ultra Health was the first company to file a petition last week and is represented in part by Brian Egolf, a Democrat who also serves as the state’s Speaker of the House. On Tuesday, former PRC commissioner Jason Marks, also a Democrat, filed a separate petition on behalf of his clients, Scepter Lab, one of two testing laboratories in the state, and medical cannabis manufacturer Vitality Extracts. 

Then on Thursday, Jacob Candelaria, who serves as a Democratic state senator, filed a petition on behalf of medical cannabis producer and manufacturer G&G Genetics. Also joining the initial case on Thursday was medical cannabis patient and licensed cannabis grower Heath Grider, represented by former Libertarian attorney general candidate Blair Dunn and Jared Vander Dussen, who recently lost in a three-way primary for the Republican nomination in New Mexico’s First Congressional District. 

All of the petitioners are asking for generally the same thing: for a judge to invalidate rules recently promulgated by the Department of Health, which oversees the state’s Medical Cannabis Program. 

The new petitioners, like the initial petitioners, argue that many of the new rules regarding cannabis testing, labeling and growing are “arbitrary and capricious.”

But the new petitioners are also adding to the list of concerns.  

Increased testing, increased prices

Marks, who is representing Scepter Lab and Vitality Extracts in a case of their own, argued in his petition that the department’s new testing standards are not based on actual data or research, but instead based on language borrowed from other states — particularly states with less arid climates that New Mexico. 

One of the new rules is that medical cannabis must be tested for mycotoxins or naturally occurring toxic substances that come from certain types of fungi. 

Marks argued that out of more than 15,000 tests conducted in New Mexico since the rule was implemented, none came back positive for mycotoxins. 

He added that tests for mycotoxin testing on a national level produced a relatively small amount of positives but that those results were likely from “climates more likely to lead to mycotoxin production than New Mexico’s.”

Marks also argued that testing standards for heavy metals and pesticides were not based on true research. Heavy metals, Marks wrote, are only introduced through soil and water and that testing water systems and soil used to grow medical cannabis would be the better way to detect heavy metals.

It could be awhile before the NM Supreme Court decides to rule on cannabis tax case, if at all

Medical cannabis producers in New Mexico will be on the hook for gross receipts taxes for the foreseeable future, or at least until the state Supreme Court decides whether it will weigh-in on the issue. 

Last week, a response filed by New Mexico cannabis producer Sacred Garden was the latest in a pending case between the producer and the state’s Taxation and Revenue Department (TRD). Earlier this month, the TRD filed a petition asking the high court to consider the case, with the hopes that it might overturn a previous state Court of Appeals decision. 

Santa Fe attorney Joe Lennihan, on behalf of Sacred Garden, argued that a review by the Supreme Court was unnecessary since the Court of Appeals already determined that medical cannabis should be viewed in a similar light as prescription drugs, which are exempt from gross receipts taxes. 

“Sales of medical marijuana are restricted to patients approved to use it and must do so under the care and supervision of a physician,” Lennihan wrote. 

Both TRD and Sacred Garden have repeatedly made their respective arguments in previous court filings and now both must wait to see if the state Supreme Court decides to weigh-in. 

For the most part, TRD has argued that since medical cannabis use is recommended, not prescribed, by a doctor, medical cannabis sales are subject to gross receipts taxes. Sacred Garden’s view on the matter is that because a 2019 update to the state medical cannabis law states that medical cannabis should be viewed in a similar light as any other prescription drug, medical cannabis producers should be exempt from the tax. The Court of Appeals ruled in favor of Sacred Garden, citing a lack of expected tax revenue in legislative financial impact reports. 

But in its request for the Supreme Court to consider the case, the TRD turned the legislative intent argument around and said that if the Legislature wanted to exempt medical cannabis from gross receipts taxes, it could have specified this by amending state tax laws. 

Gross receipts taxes, sometimes incorrectly referred to as sales taxes, are charged by the state and local municipalities for goods and services. Businesses often pass the tax along to the consumer, although they are not required to.

Judge rules non-residents can get medical cannabis cards

Out of state residents who qualify as a medical cannabis patient are now eligible to get a New Mexico medical cannabis card. 

A state district judge ruled Thursday that the New Mexico Department of Health must issue medical cannabis cards to qualified patients, regardless of where they live full-time. Thursday’s hearing was the latest in a back-and-forth between a medical cannabis producer and state officials—including Gov. Michelle Lujan Grisham—over whether a recent change in law opened the state’s program to non-residents. 

Though the judge ruled that DOH would have to start issuing cards to non-residents, the governor’s office said they aren’t giving up. 

Tripp Stelnicki, a spokesman for Lujan Grisham, said the governor’s office plans to appeal the decision, but not before he took a shot at one of the petitioners in the case, Duke Rodriguez, who is an Arizona resident and also the president and CEO of the prominent medical cannabis producer Ultra Health. “We remain of the opinion that New Mexico’s Medical Cannabis Program should not be bulldozed by an out-of-state litigant operating with his own financial interests at heart rather than those of the state’s medical program or of the many New Mexicans who depend upon it,” Stelnicki said in a statement. “Today’s decision contradicts both the intent of the legislative sponsor and the interpretation of the New Mexico Department of Health, and the state plans to appeal the decision.”

Rodriguez declined to comment on what he called a “personal attack,” but that he’s ultimately happy with the decision    

“There was a lot of good testimonies from both sides today, but I think the judge did a superb job of refining the issues down to one core issue—that if you were to remove the word cannabis from the discussion this becomes an issue of treating it like any other medical care,” Rodriguez said. 

Rodriguez is one of the three petitioners, all of whom reside primarily in other states, who asked the court to compel DOH to issue cards to non-residents. DOH did not officially deny the applications from the three petitioners, but the department placed their applications on hold until they could show a valid New Mexico identification card address. 

David Morgan, a spokesman for DOH, said the department hasn’t determined whether they will start approving applications that come from out of state residents. 

“We are considering how to proceed given the judge’s ruling and the fact that an appeal is forthcoming,” Morgan said. 

If DOH does start issuing cards to non-residents, the next question is whether the state can adequately supply patients with enough cannabis. 

Plant counts for producers has long been an issue, specifically involving Rodriguez and DOH. 

For much of the Medical Cannabis Program’s existence, producers were only allowed to have 450 plants at any given time.

State judge says DOH will have to issue medical cannabis cards to out-of-state residents

A state district court judge on Monday ordered the state’s Medical Cannabis Program to start issuing medical cannabis cards to individuals who qualify, regardless of where they live. 

The question of whether non-residents of New Mexico could become medical cannabis patients started when major changes to the state’s medical cannabis law went into effect. One minor word replacement drastically changed who could become a patient, argued Duke Rodriguez, president and CEO of medical cannabis producer Ultra Health. Before July 2019, the law stated that qualified patients must be a resident of New Mexico. Now, the law defines a qualified patient as a “person.” Rodriguez’s company bought both internet and radio ads promoting the change. But the Department of Health, which oversees the Medical Cannabis Program, along with the governor and at least one legislator, argued the intention of the law was never to open the program up to non-residents. 

Now, barring a compelling argument from DOH, the state could be forced to expand eligibility to anyone from across the country. 

The law is clear

In his ruling Monday morning, Santa Fe district Judge Bryan Biedscheid wrote that the law is clear.

Should the state increase regulation of homegrown medical cannabis?

During a New Mexico Department of Health public hearing earlier this month that allowed public input into proposed rule changes to the state’s Medical Cannabis Program, a major player in the industry raised concerns with some patients. 

Willie Ford, managing director of the medical cannabis consulting company Reynold Greenleaf and Associates, told DOH officials he wanted more state oversight of patients who grow their own cannabis.   

“PPLs need more regulation, they need more oversight for public safety issues,” Ford said. “These are significant and serious issues that affect the general public and their safety.”

PPLs, or Personal Production Licenses, allow patients who qualify to grow up to four plants for their own use. He voice concern with a proposed rule change that would allow PPL holders to take their harvested cannabis to licensed manufacturers to produce extracts and concentrates. Four plants, Ford said, could equal about 20 pounds a year per PPL. 

Ford’s comments, and the online rebuttals from PPL patients that came after, highlight an issue that DOH will likely be forced to address, especially before New Mexico legalizes cannabis for recreational use: whether PPL patients should be regulated similar to Licensed Non-Profit Producers who sell products through their dispensaries. 

Josh McCurdy with the New Mexico Medical Cannabis Patients Advocate Alliance told NM Political Report that he didn’t appreciate the suggestion that PPL patients are doing anything other than growing their own medicine, often in places where dispensaries are far and few between. 

“We need more competition,” McCurdy, who lives and grows his own cannabis in Ruidoso, said. “That’s the reason it’s $10 a gram in Albuquerque and it goes from $12 to $15 in rural areas.”

He estimated his homegrown cannabis costs about $5 to $6 a gram to grow. 

McCurdy disagreed with Ford’s claim that four plants harvested around 4 to five times a year could yield about 20 pounds. 

“I’ve been by a few hundred PPL grows in this state and 99 percent of them are struggling just to yield a couple of ounces every four months,” McCurdy said. 

McCurdy dismissed a common sentiment he said he’s heard from producers—that home growers contribute to illegal cannabis sales. 

“The producers have put it in a way, where they like to do some fear mongering and act like the PPLs are the illicit black market,” McCurdy said.