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.
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.
After just several months serving as second in command of the New Mexico Regulation and Licensing Department, John Blair announced on Tuesday that he is leaving his position as the deputy superintendent of the department.
In addition to regulating many industries in the state, RLD most recently took on regulation of cannabis after the Cannabis Regulation Act went into effect in June.
In an email announcement, Blair praised Gov. Michelle Lujan Grisham for the opportunity to help set up the Cannabis Control Division and his former colleagues for the work they have done.
“I’m grateful to Governor Lujan Grisham for allowing me to serve in her administration and to help her both legalize adult-use cannabis and stand up the regulatory and licensing framework for this emerging industry,” Blair wrote. “It’s been my great honor to be a part of Team RLD and to work with the dedicated public servants I’ve been lucky enough to call colleagues and friends.”
Blair didn’t specify why he was leaving but said he would announce what’s next for him in the coming weeks.
Blair has worked numerous political and policy jobs including numerous years for U.S. Sen. Martin Heinrich’s office and for New Mexico Secretary of State Maggie Toulouse Oliver. Morse recently Blair ran for office to replace U.S. Sen. Ben Ray Lujan when Lujan left his previous U.S. House seat to run for Senate.
NM Political Report received numerous tips since last week that Blair was preparing to leave his position and that former Lujan Grisham staffer Victor Reyes will take Blair’s spot. An RLD spokesperson confirmed that Reyes will take over as deputy superintendent of RLD. “The entire team at the Cannabis Control Division is sad to be saying goodbye to Deputy Superintendent John Blair, but we wish him all the best in his next adventure,” RLD spokesperson Heather Brewer told NM Political Report.
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.
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.
New Mexico cannabis regulators are one step closer to opening the proverbial floodgates for those who plan to apply for a cannabis cultivation license.
The state’s Regulation and Licensing Department and its Cannabis Control Division announced on Tuesday that the department finalized rules and regulations for cannabis cultivation as well as a social and economic equity plan and plans for addressing possible cannabis shortages.
The department also announced that it would start accepting cultivation applications several days ahead of the statutory deadline of Sept. 1.
In a statement on Tuesday, RLD Superintendent Linda Trujillo said the rules “reflect the unique needs and perspectives of New Mexico residents, businesses, entrepreneurs and communities.”
“We are ready for business,” Trujillo said. “The Cannabis Control Division is committed to supporting licensees to maximize the economic opportunities that adult-use cannabis sales offer our state.”
The new rules create four different levels of cultivation licenses, based on the number of plants that a producer plans on growing. At the highest level, producers can have up to 8,000 flowering plants, but an unlimited number of immature plants. The rules seem to create a path for exceptions to the 8,000 plant rule, but also state that no cultivator may have more than 10,000 plants.
The finalized rules also set a goal for the Cannabis Control Division to ensure that “at least 50 percent of applicants for licensure, licenses, and cannabis industry employees” represent groups and communities that have historically been negatively impacted by previous drug laws.
For years, medical cannabis patient advocacy groups have raised concerns about the state’s Medical Cannabis Program taking a back seat to the new adult-use program.
In what could end up being the first test case of illicit cannabis operations in a post-legalization New Mexico, a business “gifting” cannabis has caught the attention of state regulators.
According to KVIA-TV, the state’s Cannabis Control Division sent a cease and desist letter to a Las Cruces business called Speak Easy after it was discovered that the business was giving away cannabis with the purchase of a sticker.
In the letter, the Cannabis Control Division concluded that the price of said stickers matched the value of the cannabis being gifted and therefore is illegal.
“Additional media stories have been published by other media outlets in the Las Cruces, New Mexico, area likewise recounting the ‘gifting’ of cannabis products by Speak Easy to involve a purchase being made by a customer and the quantity of the ’gift’ of cannabis products provided by Speak Easy being tied to the dollar value of the purchase made by the customer,” the letter stated. A lawyer representing Speak Easy told KVIA-TV that the business is operating within the law and that gifting cannabis is still an “unsettled area of law.”
A spokesperson for the state’s Regulation and Licensing Department, which oversees the Cannabis Control Division, previously told NM Political Report that there are two sections in law that address giving away cannabis.
The Cannabis Control Act, which went into effect on June 29 of this year defines trafficking as “the distribution, sale, barter or giving away of cannabis products,” but in a separate section, the law states that adults 21 years of age or older can gift cannabis to another adult as long as there is no compensation. Further complicating the issue, sanctioned sales of adult-use cannabis will not start until sometime next year, and the gifted cannabis has to be obtained through legal means.
It’s unclear whether Speak Easy and its lawyer will challenge the cease and desist letter, but the issue might be brought to the Legislature for further clarification.
When NM Political Report asked RLD about trafficking versus gifting, Heather Brewer, a spokesperson with the department said the issue may require tweaks to the law.
“Our understanding is that the legislators’ intent was to allow for gifts of legally purchased cannabis to someone legally allowed to possess cannabis and to prevent the giving away of cannabis, without a license,” Brewer said. “If it turns out that this language is sufficiently vague as to create actual confusion in the enforcement of the law, it might be worth the Legislature going back and clarifying the language.”
Duke Rodriguez, the president and CEO of the prominent medical cannabis producer Ultra Health, told NM Political Report that he visited Speak Easy earlier this week and purchased a $15 sticker. He said he was given one gram of cannabis, which he promptly threw away.
There are less than two months left before the New Mexico Regulation and Licensing Department is required by law to start accepting recreational-use cannabis business applications. But before the department can do that, it needs to finalize rules that outline its own standards and requirements for cannabis businesses.
The department held a public rulemaking hearing last month where dozens of people raised concerns of large cannabis growers potentially exploiting local water rights and excess water use, particularly in areas dependent on acequias. Many of the hundreds who spoke at the hearing also asked logistical questions, all of which the hearing officer said would be answered by the department outside the hearing.
Last week RLD announced it would conduct another public hearing for an updated set of proposed rules. In a phone interview last week, RLD Superintendent Linda Trujillo told NM Political Report that the new set of rules include changes based on previous public comments as well as new proposals.
Limits on production limits, for example, were added to the new proposals, but the department also added a proposal for provisional licenses after many people raised concerns about a requirement that physical space is secured before applying for a cannabis business license.
The following is a conversation between NM Political Report and Trujillo, which has been edited slightly for clarity and brevity. NM Political Report: Can you explain to readers why RLD is doing another round or rules, separate from the last batch?
On the first day of legalized, recreational-use cannabis in New Mexico the department set to oversee the new industry held a rulemaking hearing.
During the hearing, held by the New Mexico Regulation and Licensing Department and its Cannabis Control Division, a long list of stakeholders shared their concerns about water conservation, racial and social equity and transparency. But the public comment included nearly as many questions for the department as there were concerns.
As New Mexico struggles with yet another drought this year, many who spoke at the meeting raised concerns about large cannabis companies adding to the state’s ongoing water problems.
Alejandría Lyons, the environmental justice organizer with the Southwest Organizing Project said she and the organization want to see more water-use oversight to protect the generations-old family farms across the state.
“We worry about our acequias, we worry about our farmers who have already been asked not to water, to fallow their fields,” Lyons said. “And more importantly, we are very worried about the oversight. The Office of the State Engineer is already at capacity, and we fear that we need higher regulation to prevent illegal water use, especially in a drought year, as we’re seeing right now.”
Jaimie Park, the policy coordinator and staff attorney for the New Mexico Acequia Association said that although the Cannabis Regulation Act details water requirements like showing proof of access to water or water rights, she and the association would like to see deliberate rules regarding legal access to water.
“It’s really important that the regulatory language mirror the statutory language so that this important water protection mandate is lawfully and meaningfully implemented through these draft rules,” Park said.
Park added that she and the association submitted written comments with suggestions that RLD and the Cannabis Control Division add stringent water reporting requirements for cannabis cultivators.
One of the major selling points during the special legislative session that resulted in the newly effective Cannabis Regulation Act was social justice and equity. The bill’s sponsors argued that legalization should also include a minimally restrictive path for New Mexicans to enter the industry.
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.