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.

Judge orders state to allow cannabis producer to sell some products after reports of mold

A legal battle has emerged between a New Mexico cannabis business and the agency tasked with regulating cannabis production and sales after state regulators reportedly found mold in some of the company’s products. 

The day before legal adult-use cannabis sales began, cannabis producer Sacred Garden filed a request for a temporary restraining order and preliminary injunction in state court, asking a judge to effectively override a cease and desist order issued by the state’s Cannabis Control Division. 

First Judicial District Court Judge Bryan Biedscheid, during a hearing on Tuesday, ordered the Cannabis Control Division to allow Sacred Garden to sell manufactured products, which both parties agreed would not have been affected by the mold that was reportedly found. 

Biedscheid said on Tuesday that “the appropriate court order” he could issue at the time was to allow Sacred Garden to sell manufactured products that are “thought to be safe by virtue of the process involved.”

Biedscheid also took issue with the reason that regulators had not been back to Sacred Garden’s facility to determine if the reported mold problem had been resolved. Kevin Graham, deputy general counsel for the New Mexico Regulation and Licensing Department, which oversees the Cannabis Control Division, initially told Biedscheid that the division cannot send a qualified inspector to Sacred Garden’s facility until early next week. 

“One of the reasons we said we needed until Monday in order to be able to come back out to the facility was that we have one staff member who’s particularly qualified to assist in that type of examination,” Graham told Biedscheid. “He’s out of town on vacation, which, you know, employees get to take some time off every once in a while.”

Sacred Garden’s attorney, David Foster, told Biedscheid that the facility that the division shut down is key to the company’s operation. Because state regulators froze the company’s access to the state’s tracking software and 95 percent of Sacred Garden’s supply comes from that facility, Foster said, the entire company is at risk of shutting down.    

“They’re about to be out of product to sell, I would say by tomorrow at the latest,” Foster said. 

Biedscheid gave the Cannabis Control Division another day to review an updated independent test from Sacred Garden and said he wanted to balance public safety with the prosperity of the cannabis business.   

“We’ve got two issues here,” Biedscheid said. “One is speed to mitigate any harm to this company, in terms of a determination and an open-ended ‘Well, maybe things will work out when people come back from vacation,’ in the current environment isn’t cutting it.”

Biedscheid gave Graham until Thursday morning to respond to the latest test Sacred Garden commissioned and said he was prepared to schedule another timely hearing if needed. 

“I’m not comfortable saying that I’m going to override the department, and it’s going to go to retail,” Biedscheid said.

Brief public hearing focused on cannabis testing standards, additional meeting scheduled

Snowy and icy roads Friday morning made for a short, and yet to be completed, public comment period for medical cannabis rule changes. 

New Mexico’s Medical Cannabis Program (MCP), which is run by the state Department of Health, convened a meeting for public comments on a number of proposed changes, including patient reciprocity, consumption areas and testing standards. The program’s director, Dominick Zurlo, began the meeting by announcing a second meeting to give those who could not make it due to the weather a chance to add input. Friday’s meeting was only about an hour long and comments largely focused on testing standards and mostly came from producers. 

Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, told the MCP that the proposed microbiological, heavy metal and pesticide testing and labeling standards were problematic. 

“We feel like labeling is a very important component, but the labeling restrictions are simply unrealistic for what needs to go on a vast amount of products that are sold as medicine,” Lewinger said. 

Lewinger added that the increased amount of product producers are required to pull for testing would not only harm producers, but would increase costs to patients. 

Jennifer Merryman, from Mountaintop Extracts, agreed with Lewinger about testing sample sizes and suggested the MCP have more frequent and thorough conversations with those in the medical cannabis industry before proposing rules. 

“Perhaps we could add a little bit of local, New Mexico common sense,” Merryman said. “We’re all willing to work with you.”

Zurlo later invited those in the crowd to reach out to him with their concerns. 

Merryman told NM Political Report the proposed rules would significantly cut into the supply of smaller production companies. 

“Normally we send one and a half grams, sometimes [testing labs] will ask for two grams but not anymore than that per batch testing,” Merryman said. “Now, they’re looking to have a 23 gram sample per batch test.”

She said that standard would hurt small operations who have smaller yields. 

“That’s taking away product from that dispensary who has to compensate the loss of that money on to the patient,” Merryman said. 

Other producers also spoke about their concerns about labeling and testing standards and their common message was that increased sample sizes would ultimately equal higher prices for patients. 

What was almost non-existent in the meeting were the topics of patient reciprocity, producer fee structures and consumption areas.

Canadian firm drops acquisition of NM marijuana nonprofit

A Canadian marijuana company will not acquire a New Mexico medical marijuana nonprofit after all. Nutritional High, the Toronto-based company focused on creating a high-level brand of cannabis-infused edibles, canceled its deal to buy 51 shares of Santa Fe-based Sacred Garden, one of 23 state-sanctioned medical cannabis producers. In a statement released Tuesday, Nutritional High said its decision was based on “various factors,” including “the due diligence process, larger opportunities in other states” and “a decision to maintain the Company’s stated focus on marijuana oils, extracts and edibles while limiting exposure to risks inherent in marijuana growing.”

“Given the small size of the New Mexico market in relation to the costs to acquire Zephyr, to build out its grow capabilities, and to build out our edibles facility using the quality control and dosing methods we have been, we have decided to focus our financial resources on other pipeline opportunities,” Nutritional High CEO David Posner said in the statement. The reversal comes after a high level of  scrutiny from the state’s medical marijuana community over the planned acquisition. Tim Scott, president of New Mexico Medical Cannabis Patients Alliance, told New Mexico Political Report last month that he feared the deal could lead to consolidation and monopolization of the local industry.

Consolidating and cashing in on medical marijuana

[box]© New Mexico Political Report, 2015. Contact editor@nmpoliticalreport.com for info on republishing.[/box] legalization is likely far off in New Mexico, but you wouldn’t know it from the way some businesses are acting. Recent news of a Canadian company’s encroachment into Santa Fe spawned backlash from those critical of an out-of-state, out-of-country company attempting to get a piece of New Mexicos’ medical marijuana industry. Last month, Toronto-based Nutritional High announced that it would be acquiring 51 percent of shares from and assuming management operations of Sacred Garden, a Santa Fe nonprofit medical marijuana producer that’s been operating for nearly five years. The plan drew immediate backlash from patient advocates and others in the industry.