NM Cannabis regulators lift cease and desist order from producer

A New Mexico cannabis company that was ordered to cease operations at one of its Santa Fe facilities can now resume its operation. 

According to a letter from Cannabis Control Division Director Kristen Thomson to cannabis company Sacred Garden, state regulators lifted a previously issued cease and desist order on April 27.  

“Sacred Garden has remedied, or has initiated appropriate plans to remedy, all violations cited by the CCD related to imminent hazards to public health and to Sacred Garden employees,” Thomson wrote. 

The cease and desist order was issued by the Cannabis Control Division on March 24, after two reported instances of mold found on products from Sacred Garden and division staff reportedly found conditions that would pose a risk to the public at the Santa Fe facility. 

Days after the Cannabis Control Division issued the cease and desist letter to Sacred Garden, the cannabis producer filed a request for an injunction to counter the division’s order. Initially, a Santa Fe state district judge ordered the division to allow Sacred Garden to sell manufactured products, such as extracts and edible products, until the Santa Fe facility was deemed safe to fully reopen. In a subsequent hearing, the judge criticized the Cannabis Control Division for not articulating a clear path to compliance. Sacred Garden’s lawyer accused the division of adding additional requirements to remove the cease and desist order between hearings. 

During the initial hearing, the lawyer for the division said an inspector could go back to the Sacred Garden facility in a week to verify the safety issues had been fixed. But during the next hearing, the division’s attorney said Sacred Garden would need to find an air quality specialist to ensure there were no excessive mold spores in the facility.  

The judge gave the Cannabis Control Division about a week to come up with and complete a testing regime that would produce results by last week.

NM judge orders cannabis regulators, producer to agree on testing ‘regimen’

A New Mexico cannabis producer asked to halt a majority of its operations by the Cannabis Control Division after reports of mold is still barred from selling its cannabis flower, for at least another week. In a hearing on Wednesday, Santa Fe state district judge Bryan Biedscheid ordered cannabis regulators and cannabis producer Sacred Garden to try and come up with an agreeable way to move forward in the ongoing case by the end of the day on Thursday. 

Biedscheid said he was not going to rule on a motion filed by Sacred Garden asking for an injunction to allow the company to continue selling dried cannabis flower. But Biedscheid did call on the state’s Regulation and Licensing Department and its Cannabis Control Division to actively work with Sacred Garden to come up with an acceptable testing “regimen” that can be completed by next week. 

“The department cannot continue to sit back. And this is the perception of this court, that it is sitting back and waiting for it to be presented, in some fashion, with results it finds satisfactory,” Biedscheid said. “It must take action to see that its concerns are addressed in a way that does not cause unnecessary delay, and other irrevocable harm to the plaintiff.”

The ongoing legal dispute stems from a cease and desist letter the Regulation and Licensing Department sent Sacred Garden just days before legal adult-use sales were to begin in New Mexico.

Acequia Association, state water office hope to see changes to cannabis clean-up bill in the final hours of legislative session

After nearly an hour-long debate Monday night about water rights and cannabis, the New Mexico Senate removed a water right verification provision from what has been presented as a cannabis law clean-up bill. Even with compromise language regarding legal water access added on the Senate floor, one water advocacy group and a state water official say the bill could prove problematic if passed in its current form. 

The bill didn’t originally aim to change any water requirements in the state’s Cannabis Regulation Act, which legalized cannabis last year. But, after debate in a Senate committee and a subsequent debate on the Senate floor, lawmakers eliminated a requirement that cannabis growers verify they have legal access to water as a condition of state licensure. 

The current version of SB 100, sponsored by Sen. Linda Lopez, D-Albuquerque, includes language that allows the state’s Regulation and Licensing Department and its Cannabis Control Division to revoke a license “if a licensee is using water to which the licensee does not have a legal right.” 

On Tuesday morning, the New Mexico Acequia Association issued a statement of frustration.  

“We are disappointed that water protections enacted in 2021 have been gutted,” association president Paula Garcia said. “Having water rights verified as part of the licensing process is essential to good water management.”

The Legislature added the requirement to prove legal access to water to the Cannabis Regulation Act during the 2021 special legislative session after a push from the Acequia Association. During debate on the bill, in both a committee hearing and on the Senate floor, Sen. Cliff Pirtle, R-Roswell, argued that proving water rights during the cannabis business application process would create an unnecessary barrier to entry and added that it is already illegal to use water without proper approval from the state for any type of agricultural use. 

John Romero, who oversees the state’s Water Resources Allocation Program, which is part of the state’s Office of the State Engineer, previously told NM Political Report that his office would have a hard time finding illegal water use among cannabis growers without a requirement that growers verify water access on the front end of the process.

Senate passes cannabis law changes, adds new water rights language

The New Mexico Senate approved a bill late Monday night that aims to clean up language of the state’s Cannabis Regulation Act, increase production limits for small cannabis companies and allow those smaller companies to wholesale cannabis to and from other cannabis businesses. 

The most significant changes SB 100 proposes are increasing plant limits for cannabis microbusinesses from 200 to 1,000, allowing those types of businesses to buy, sell and transport cannabis from other companies and allow medical cannabis companies that were previously required to be registered as nonprofits to become for-profit companies. 

After an amendment in a committee hearing the day before, nearly all of the debate on the Senate floor was devoted to water issues, even though the original bill did not address any changes related to water.    

Earlier this week, a Senate committee approved an amendment that stripped a water right verification section from the Cannabis Regulation Act. 

During a Senate Judiciary Committee, Sen. Cliff Pirtle, R-Roswell, proposed removing the section, calling it “unnecessary red tape.”

“There’s one instance of a constituent of mine that was trying to get licensed and they tried to transfer ownership into a separate business so that it didn’t put his farm into liability,” Pirtle said on Sunday. “And it became problematic to prove who has the legal right, who’s supposed to have it, who’s leasing from whom.”

Sen. Katy Duhigg, D-Albuquerque, who works as a cannabis attorney, agreed with Pirtle. 

“We have hamstrung this industry with the approach that we took to water in the bill last year,” Duhigg said on Sunday. “I think we got it wrong, frankly, last year, with what we did with water.” 

Sen. Linda Lopez, D-Albuquerque, unsuccessfully tried to further amend the bill to include what she said was a compromise in verifying legal water access. Her amendment, she argued, would only require that a cannabis company “demonstrate” that it has legal access to water. But after about an hour of debate, her amendment failed on a 19-20 vote, with a number of Democrats voting against it. 

Most of the pushback on the amendment came from Pirtle who reiterated his comments from the previous day, arguing that it’s already illegal to use water for any agricultural use without legal access to it. 

“You have a water right or you don’t have a water right,” Pirtle said.

Senate committee approves cannabis law changes

The New Mexico Senate Judiciary Committee on Sunday moved a cannabis clean-up bill forward with a 6-3 vote. 

SB 100 aims to amend the Cannabis Regulation Act by doing several things, including increasing production limits for cannabis microbusinesses from 200 to 1,000 and allowing microbusinesses to wholesale products. 

During the committee hearing, Regulation and Licensing Superintendent Linda Trujillo told committee members that increasing production limits for cannabis microbusinesses will help to ensure there is enough medical cannabis in the state for the patients that rely on it. She said her department and its Cannabis Control Division originally planned on all cannabis producers subscribing to the maximum number of plants. The department recently issued an emergency rule change that raised plant limits for most producers from 10,000 to 20,000. 

“The analysis was based on all [producers] just biting at the bit and waiting to go up to the amount of 10,000,” Trujillo said. “Come to find out they weren’t because the cost was too high.”

Trujillo added that with only a handful of producers maxing out their supply limit, medical cannabis supplies could be threatened. Further, she said, raising production limits for larger producers posed an equity problem for microproducers, whose production limits are written into law and not department rules. 

“Now when you start comparing a business that can do 20,000, in comparison to a business that can do 200, there is just no equity there, there really is just no equity there, it’s almost impossible to compete like that,” Trujillo said. 

Republican committee members unsuccessfully tried to add amendments that would limit which types of companies microbusinesses can engage in wholesale transactions with and remove language that allows non-profit cannabis companies to become for-profit companies.

Senate committee approves cannabis law fix

The New Mexico Senate Tax, Business and Transportation Committee on Thursday approved a proposal that would make some minor changes to the state’s Cannabis Regulation Act, the law which legalized adult-use cannabis. 

SB 100, which the committee approved by a 7-3 vote, would most significantly increase production limits for cannabis microbusinesses from 200 plants to 1,000 plants. The proposal would also make technical changes to the law which would allow a cannabis business license holder to also have a liquor license, as long as the two establishments are separate. SB 100 would also allow the Regulation and Licensing Department, which oversees the Cannabis Control Division, to work in conjunction with the state’s Environment Department, which oversees food production safety, to better regulate the production of edible cannabis products. The bill would also make tax-related changes like specifying tax rates for cannabis that is delivered across city or county lines and creating a path for existing non-profit medical cannabis businesses to become for-profit businesses. Prior to the Cannabis Regulation Act, which went into effect in June 2021, the state’s Department of Health required medical cannabis producers to be non-profit businesses. 

Regulation and Licensing Deputy Superintendent Victor Reyes, who helped present the bill, told the committee that the department helped the bill’s sponsor, Sen. Linda Lopez, D-Albuquerque, craft a bill that was restricted “to the most immediate needs.”

The significant production limit change for cannabis microbusinesses comes weeks after the Cannabis Control Division issued an emergency rule change that allows most other cannabis producers to increase production in order to avoid medical cannabis shortages when recreational-use sales begin in about two months.

NM cannabis regulators temporarily increase production limits in an attempt to avoid shortages

With a little more than two months before recreational-use cannabis sales are expected to start, the New Mexico Cannabis Control Division issued an emergency rule change that doubles plant limits for cultivators. 

The emergency rule change, which went into effect last Thursday, increases the maximum amount of mature cannabis plants for producers from 10,000 to 20,000. 

In documents filed with the state’s Commission of Public Records, division director Kristen Thomson justified the emergency rule change. 

“The Division has considered demand estimates provided by applicants and licensees in the cannabis industry,” Thomson wrote. “Projected market demand shows that the demand for regulated cannabis will increase year-to-year as more cannabis consumers move from the illicit market to the regulated market. The supply of medical cannabis will become increasingly threatened without an adequate supply of plants.” 

Cannabis production limits have been an issue in New Mexico since nearly the inception of the state’s Medical Cannabis Program. One of the state’s more prominent cannabis producers, Ultra Health, has battled with the state in court for years over plant limits. In 2015 the New Mexico Department of Health, which oversees the Medical Cannabis Program, increased production limits from 150 to 450 mature plants, per producer.

Bernalillo County passes ordinance banning outdoor cannabis consumption areas

The Bernalillo County Commission unanimously approved an ordinance on Tuesday that bans outdoor cannabis consumption areas in parts of the county not already governed by the City of Albuquerque. 

An earlier version of the proposal would have made a distinction between medical and recreational-use cannabis consumption areas as well as prohibited multiple cannabis production and manufacturing in one place. The commission ultimately amended the ordinance to eliminate the distinction between the two types of cannabis use and allow integrated cannabis businesses to perform multiple operations in one location, after securing a special-use permit. 

But even with the amendments, the ordinance would still prohibit outdoor cannabis consumption areas. 

Bernalillo County Zoning Administrator Nicholas Hamm told commissioners that the intention of the legislation was to “create an environment that’s separated from the public broadly, because this is still a controlled substance, and it has some intoxicating effects, so that adults can do that within a building and behind a carbon filter.”

None of the commissioners took issue with prohibiting an outdoor consumption area, but Erica Rowland, a medical cannabis patient advocate and cannabis business license hopeful, spoke out against the consumption area portion of the proposal. Rowland praised the commission for adding a special permit option for multiple cannabis uses, but said she was worried about the consequences of requiring businesses licensed as consumption areas to keep smoking inside. “I’m very concerned with outdoor consumption not being allowed,” Rowland said. “The indoor consumption-only language is very restrictive.

NM cannabis regulators now accepting all types of business applications

The New Mexico Regulation and Licensing Department and its Cannabis Control Division announced on Tuesday that it would start accepting applications for all cannabis businesses. The department and its cannabis division has already been accepting applications for cultivation licenses, but in the announcement on Tuesday, the department said it is accepting all business applications as a way to “streamline the licensing process.”

“The Cannabis Control Division’s licensing system is open for business,” Regulation and Licensing Superintendent Linda Trujillo said in a statement. She added that the department is expanding its “user-friendly online platform” in order to get ahead of the process of licensing businesses. 

While the department will start accepting applications for manufacturing, retail and testing licenses, rules and regulations for those license types have not been finalized, so those licenses will not be issued until rules are promulgated. 

Cannabis Control Division Director Kristen Thomson, in a statement, said the division decided to move forward with accepting applications after hearing concerns about hitting the ground running.  

“After hearing stakeholders’ enthusiasm for standing up this industry as soon as possible, we are instituting this new licensing process to help businesses, entrepreneurs and communities maximize the economic opportunities this new industry is creating,” Thomson said. RLD and CCD have already issued at least one cultivation license and by law, recreational-use cannabis sales have to begin no later than April 1, 2022.

NM Cannabis Control Division considers requiring union agreements as part of licensure

As part of the process to set up a recreational-use cannabis industry in New Mexico, the state’s Regulation and Licensing Department and it’s Cannabis Control Division held a public rulemaking hearing on Wednesday regarding residual solvents in cannabis manufacturing and requiring employers to work with labor unions. The proposal to require cannabis businesses to enter into a labor peace agreement with a labor union, as a condition of state licensure, did not receive much support during the hearing. 

Out of the handful of people who testified during the hearing, only one person spoke about allowable solvents used to manufacture cannabis extracts and only one person spoke in favor of the labor peace agreement proposal. 

The labor agreement proposal, if approved by RLD Superintendent Linda Trujillo, would require employers to enter into an agreement with a “bonafide labor organization that is actively engaged in representing or attempting to represent the applicant’s employees,” and that agreement would have to be “an ongoing material condition of licensure.”

But the proposal would also prohibit a labor union from organizing protests against the company. 

“For purposes of this section, a labor peace agreement between a cannabis establishment and a bona fide labor organization includes protecting the state’s interests by, at a minimum, prohibiting the labor organization from engaging in picketing, work stoppages, or boycotts against the cannabis establishment,” the proposal reads. 

Timo Serna, who said he was in favor of requiring labor agreements during his testimony and that he plans on opening a cannabis microbusiness with the hopes of expanding, argued that prohibiting strikes and walk-outs strips the rules of any effectiveness. 

“That basically takes away all the power that the employees have and being a part of a union becomes largely symbolic, because all that’s governing that is pieces of paper at that point,” Serna said. “There’s nothing else that is going to ensure that employees’ voices are going to be heard.”

Besides the one comment on solvents, all of the other participants argued that mandating a labor union agreement as a condition of licensure is a regulatory over-step by the department. 

Duke Rodriguez, the CEO and president of Ultra Health, one of the state’s more prolific medical cannabis producers, argued that not only is a required labor agreement an overstep but that it is illegal and hinted that it would likely open the department to a lawsuit.  

“This mandate is punitive to a new industry,” Rodriguez said. “How would other industry professionals respond if labor peace agreements were mandated for every license RLD currently manages? There would be an uproar.”

Rodriguez added that Ultra Health is “committed to workplace well-being” and that starting next year the company will start paying its 300 employees at least $15 per hour. 

Kristina Caffrey, a lawyer for Ultra Health also spoke about the legality of mandating labor agreements.