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.
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.
An owner of a CBD store and gift shop in Doña Ana County pleaded not guilty earlier this week to a fourth-degree felony charge of unauthorized cannabis sales. Jason Estrada, who is one of the owners of Speak Easy in Las Cruces, filed his not guilty plea with a state magistrate court on Nov. 9, in response to the felony charge filed in September.
Estrada is likely the first person in New Mexico to be charged with illegally selling cannabis under the recently passed Cannabis Regulation Act.
Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, spoke with Estrada in August, just after the New Mexico Regulation and Licensing Department sent him a cease and desist letter, asking him and his partners to stop giving away cannabis with the purchase of a shirt or sticker.
Estrada told Growing Forward that after he and his partners received the letter from RLD, they transitioned back to selling legal hemp products like CBD.
“We 100 percent stopped and we’re just a CBD store,” Estrada said. “One of the best CBD stores in the state. I will say that as well.”
But according to court records, the Doña Ana County Sheriff’s office alleged that Speak Easy did not stop after the letter from regulators.
According to an affidavit from Doña Ana County Metro Narcotics Agent R. Holguin, undercover agents entered Speak Easy in August and purchased three different cannabis products without purchasing a shirt.
“The items purchased by the undercover agent(s) consisted of: 1) 5 pre rolled cigarettes containing marijuna, 2) a small container of THC wax, and 3) approximately 3.6 grams of marijuana flower,” the affidavit read.
According to the affidavit, officers had the products tested at a state-approved cannabis testing lab and that all three products tested positive for THC, the psychoactive substance in cannabis.
In a press release, Estrada’s lawyer, Matthew Madrid, said his client has been in full compliance with RLD’s cease and desist letter since he received it.“The decision to comply with the Cease and Desist Order was based, in large part, on communications between Speak Easy and the Cannabis Control Division,” Madrid said in the statement.
The New Mexico Regulation and Licensing Department and its Cannabis Control Division heard from the public on Thursday during a public rulemaking hearing regarding cannabis couriers, retail establishments and manufacturing facilities.
The comments during the meeting varied from proposed regulations for packaging requirements, general business practices to cannabis deliveries to both businesses and residences. Albuquerque-based cannabis attorney Katy Duhigg brought up a series of issues she said she would like to see changed and offered specific suggestions. Duhigg also serves as a New Mexico state Senator, but said she was not speaking in her capacity as a lawmaker.
Duhigg took issue with a proposed requirement that cannabis manufactures prove they have access to water rights because manufacturing doesn’t necessarily use water the same way cultivation does.
“Requiring all manufacturers to prove water rights for their application, I think, is unreasonably burdensome, because it’s just not going to be a factor for a number of them,” Duhigg said.
During the special legislative session surrounding the Cannabis Regulation Act, lawmakers added a provision that cannabis cultivation companies, which are often referred to as producers, have to show that they have legal access to water after many members of the public raised concerns about New Mexico’s scarce water supply.
Duhigg also said she was concerned with a provision that would limit cannabis retail businesses from giving away free products to anyone but medical cannabis patients.
“I think that businesses should be allowed to make the business decision to give free products if they so choose, Duhigg said. “It should be tracked and accounted for, but I don’t think there’s a compelling governmental interest in restricting who businesses can give their products away to for free.”
Duhigg also suggested the department revisit a proposed rule that would limit cannabis deliveries to residential addresses. She said it would put an “unreasonable burden” on couriers to decide what is considered a residence.
“It will reduce cannabis tourism in New Mexico, and there’s no compelling governmental interest in doing that,” Duhigg said.
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.
As New Mexico prepares for its new recreational-use cannabis industry, two cannabis producers are warning of an impending crisis if state regulators do not lift a moratorium on expanding existing medical cannabis production.
After the New Mexico Regulation and Licensing Department and its Cannabis Control Division announced a halt on approval of new facilities until further rules are finalized, two legacy producers, who rarely see eye to eye on regulations, said they are both worried about supply when adult-use sales begin next year.
Earlier this year, Nicole Bazzano, the acting deputy director of business operations for the Cannabis Control Division, sent a letter to medical cannabis producers informing them that any new production facilities would have to wait until after September.
“The [Cannabis Regulation Act] prohibits the [Cannabis Control Division] from accepting any new applications on or after June 29, 2021, for additional premises until related rules have been finalized,” Bazzano wrote. “As such, the [Cannabis Control Division] will not be processing applications for additional premises submitted June 29, 2021 or later, until rules for the corresponding license types are finalized.”
Duke Rodriguez, who is the president and CEO of prominent cannabis company Ultra Health, said that a pause on increasing production facilities will only worsen shortages he has been warning of for years.
“We’re going to have a crisis,” Rodriguez said. “Mathematically we cannot avoid it.”
Rodriguez has long said that New Mexico, particularly in rural areas, was already experiencing cannabis supply shortages because of rules and regulations that cap the number of plants for cultivators.
Rodriguez said the data his company has compiled shows that New Mexico could run out of cannabis completely just several days after recreational-use sales begin. He said allowing medical cannabis producers to expand operations as a way of bolstering supply is only part of the solution and that it may be too late to completely avoid a crisis. That’s partly, he said, because the New Mexico Department of Health’s Medical Cannabis Program capped production to 450 plants per producer for years.
Nearly 400 companies started the process of applying for a license to grow cannabis in the first several hours the New Mexico Regulation and Licensing Department started accepting applications.
According to an RLD representative, of the 344 applications that were started, 226 of them were for a microbusiness license, which is a type of production license to grow no more than 200 plants.
According to RLD, five applications were submitted as complete, but had not been verified as complete. One of those completed applications, according to RLD, was a test application submitted by an existing medical cannabis producer. Existing medical cannabis producers went through the application process earlier this summer.
In a statement RLD Superintendent Linda Trujillo said the department is committed to setting up a program “in ways that support businesses, consumers and communities.”
“The Cannabis Control Division is committed to making the licensing process as easy as possible while upholding the law and ensuring the integrity of New Mexico’s cannabis industry,” Trujillo said. “We look forward to working with licensees to stand up an industry we can all be proud of.”
The application is currently only open for cultivation, but the department and the Cannabis Control Division has to come up with rules and regulations for manufacturers, curriers, retailers and cannabis testing by January 1, 2022.
According to a press release from RLD, integrated businesses, or those that include multiple aspects of cannabis business, will need to apply for each part of their business separately, but any fees paid for individual licenses will be applied to the total fee that would normally be applied to an integrated license application.
The Cannabis Control Act, which legalized non-medical cannabis use in New Mexico requires that cultivation licenses be issued no later than January 1, 2022 and that retail sales begin no later than April 1, 2022.
More information on requirements and the application process can be found here.
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.
Today marks the first official day of adult-use cannabis legalization in New Mexico. But legal sales for those without authorization to purchase and use medical cannabis will not begin until sometime early next year.
The New Mexico Legislature passed the Cannabis Regulation Act earlier this year during a special session and Gov. Michelle Lujan Grisham signed it into law several days later. The new law dictates that legal sales will begin no later than April 1, 2022, but there is still more work to be done in terms of setting up the framework for the state’s newest industry. Here’s just some of what you should know about legal cannabis and what is or isn’t permitted.
Failure is not an option
The newly established Cannabis Control Division is overseen by the state’s Regulation and Licensing Department. In preparation for its third season, Growing Forward—a collaborative podcast between NM Political Report and New Mexico PBS—spoke with Regulation and Licensing Superintendent Linda Trujillo in April about the next steps for the state.
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.