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.

Tax expert says there could be significant revenues in cannabis legalization, some lawmakers still skeptical

Comments and questions raised on Tuesday during an interim legislative tax policy committee point towards lengthy debates on recreational cannabis legalization in the upcoming legislative session in January. 

Richard Anklam, the president and executive director of the New Mexico Tax Research Institute, told lawmakers that states that were early in legalizing recreational-use cannabis like Colorado, Washington, Oregon and California have seen significant tax revenue increases in the past several years. Anklam, using a study from the Tax Foundation, a national think tank, said New Mexico could see roughly $70 million in excise taxes, before factoring in gross receipts taxes, if the state legalizes cannabis for recreational use. 

While not as common, Anklam said some states who have recently legalized recreational-use cannabis have developed tax models based on potency instead of by volume of what is sold. He said, the potential increase in tax revenue may not become the state’s saving grace, but that it would make a significant impact. 

“What’s the marijuana market worth? It’s worth a lot,” Anklam said. “Most states can’t fund highly significant portions of their government with it, but every little bit helps.”

Duke Rodriguez, the president and CEO of Ultra Health, a New Mexico medical cannabis production company, told lawmakers that despite the large amounts of possible tax money going to the state, current restrictions on cannabis production would not be conducive to a cannabis boom. 

Rodriguez has long been a vocal critic of the state’s Department of Health’s restrictions on how many plants producers can grow.

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.

Another medical cannabis company joins in legal action against the state

A second medical cannabis company has filed a petition asking a state district judge to invalidate rules recently enacted by the New Mexico Department of Health. 

Pecos Valley Production, a medical cannabis company with dispensaries in the southern part of the state, filed a petition Monday in state district court calling for an annulment of regulatory rules that lawyers for the company called “arbitrary and capricious.”

The petition from Pecos Valley argues similar points as one filed last week, on behalf of cannabis producer and manufacturer Ultra Health. Both petitions are filed under the same case. Lawyers for Ultra Health, one of which is Brian Egolf, who also serves as the state’s Speaker of the House, argued that the Medical Cannabis Program and the DOH failed to show reasoning for new rules. Ultra Health’s lawyers also accused the state of copying regulations from other states that have a medical cannabis program like Oregon and Colorado. 

The petition from Pecos Valley Production also accused the state of adopting rules from other states instead of properly consulting with medical cannabis producers in New Mexico. “These industry participants are well versed in the day-to-day operations of the New Mexico medical cannabis industry and therefore are more likely to provide relevant New Mexico specific evidence than the standards cut and pasted from other states,” the second petition reads.

NM cannabis producer challenges new DOH rules

A high-profile medical cannabis producer filed a petition in a state district court last week, asking a judge to invalidate rules recently put in place by the New Mexico Department of Health. 

In the petition, lawyers for cannabis producer Ultra Health argued that many of the recently adopted rules regarding plant and product testing, product labels and facility safety standards are “arbitrary and capricious.”

Last year, the state’s Medical Cannabis Program, which is part of the DOH, started the rule change process with a series of public meetings, which carried over to early this year. The rules, which range from pesticide and chemical testing to reciprocity for already approved cannabis patients from other states, went into effect earlier this month. But Ultra Health’s petition focuses on the new standards for producers, some of which the petition says would increase the financial burdens for patients. 

“Producers, who already pay well over $100,000 per year for their license and are precluded by federal law from taking any income tax deductions, will have to pay for the increased testing burden and will pass along the costs to patients,” the petition reads. 

A DOH spokesman wouldn’t say if or when the department would respond to the request to annul the new rules. 

“The Department of Health does not comment on pending litigation,” DOH spokesman David Morgan said. 

Arguably a perennial thorn in the side of the department, Ultra Health and its CEO Duke Rodriguez have filed numerous legal actions against the state over issues like the legality of displaying a cannabis plant at the state fair and increasing the number of plants producers can grow. Brian Egolf, who also serves as the state’s speaker of the House, is one of two lawyers who filed the petition.  

Testing and labels 

The new rules from the DOH spell out specific standards for testing plants for fungus, pesticides and heavy metals. But in the petition, Ultra Health’s lawyers argued that the department failed to show evidence that the safe level of contaminants is based on studies or science.  

“While Petitioner Ultra Health agrees that some testing is necessary to protect the safety of cannabis patients, DOH’s rules do not draw the necessary connection between the arbitrarily chosen testing parameters and specific measurements of patient safety,” the petition states. 

The petition also asserts that the DOH simply copied regulations from other states like Colorado and Oregon, where both medical and recreational-use cannabis are legal.

Medical cannabis qualified patient clarification bill breezes through committee

The Senate Public Affairs Committee voted in favor of a bill that would specify that only New Mexico residents can enroll in the state’s Medical Cannabis Program. 

All but one member voted to approve Sen. Jerry Ortiz y Pino’s SB 139, which Ortiz y Pino said is an attempt to “clarify” that a qualified medical cannabis patient must be a resident of New Mexico. 

Up until last year, the statutory definition of a qualified patient included the words “resident of New Mexico.” Ortiz y Pino told the committee that one of his bills last year struck those words and replaced them with “person.” He also told the panel that his intention was to establish a path towards reciprocity with other medical cannabis states.  

“Not being a lawyer, I don’t understand how that wasn’t clear,” he said. Ortiz y Pino’s bill last year, which Gov. Michelle Lujan Grisham signed into law, had a separate definition for reciprocal patients. Department of Health Secretary Kathyleen Kunkel helped to present the bill and answer questions. She told the committee that one of her bigger concerns, other than having enough medical cannabis for New Mexico patients, is that residents of Texas are getting New Mexico cannabis patient cards and taking cannabis across state lines, which is against federal law. 

“We have now essentially given license to non residents to transport a controlled substance across our state borders,” Kunkel told the committee. 

Kunkel said there are currently more than 600 patients enrolled in New Mexico’s Medical Cannabis Program who are residents of other states and one person from Mexico with a pending application. For context, there are about a dozen counties in the state with fewer patients.

Medical cannabis patient asks judge to allow cannabis on house arrest

An Albuquerque-based attorney, who also serves in the state Senate, wants a judge to weigh-in on whether those on house arrest should have access to medical cannabis. 

The attorney and state lawmaker Jacob Candelaria, on behalf of his client Joe Montaño, filed a writ of mandamus, or a request for a ruling, in state district court, asking a judge to order Bernalillo County to allow those in custody to use medical cannabis if they are part of the state’s program. 

In his court filing, Candelaria argued that Montaño has a right to “adequate and reasonable medical care” while in custody. Candelaria also argued that state law says, “Medical Cannabis shall be considered the equivalent of the use of any other medication under the direction of a physician and shall not be considered to constitute the use of an illicit substance,” and therefore his client should be allowed access to his medical cannabis. 

According to New Mexico’s Lynn and Erin Compassionate Use Act, which was updated during last year’s legislative session, medical cannabis patients are protected—with some exceptions—from discrimination for using medical cannabis. When mentioning incarceration though, the law seems open to interpretation.    

“A person who is serving a period of probation or parole or who is in the custody or under the supervision of the state or a local government pending trial as part of a community supervision program shall not be penalized for conduct allowed under the Lynn and Erin Compassionate Use Act.” NM Stat § 26-2B-10

Sen. Jerry Ortiz y Pino, D-Albuquerque, sponsored the Senate bill that added sweeping changes to the state’s medical cannabis law. He previously told NM Political Report that the custody provision was aimed at those in pretrial services or those on probation or parole, and Gov. Michelle Lujan Grisham’s office agreed. 

Now Candelaria, who is also a medical cannabis patient, is challenging that thinking with the financial help of one of New Mexico’s more prominent medical cannabis producers, which is led by one of the state’s Medical Cannabis Program’s most vocal critics.

NM leaves med. cannabis security specifics up to producers

On a Sunday afternoon over Labor Day weekend, a masked man, armed with a gun, burst through the doors of an Albuquerque medical cannabis dispensary. About two minutes later, he walked back out the door, with an estimated $5,000 worth of cannabis products. In that time, the man hopped over a glass display case and corralled employees and at least one patient into one spot while he emptied a large jar of cannabis—and seconds later cannabis concentrates from the display case—into a bag. After he left, the man got into a car waiting in the back and sped off. All of it was caught on security cameras.  

In body camera footage from the Albuquerque Police Department, one of the employees can be heard recounting what the man said. 

“He asked if we had families and he was like, ‘Then you understand why I have to do this,’” the employee said.

Cannabis producer says state is pricing out smaller producers, limiting access to medicine

Dueling press releases over medical cannabis fees show the continuing, contentious relationship between a medical cannabis producer and the New Mexico Department of Health. The producer, Ultra Health, has long argued, often in court, that state mandated plant limits for producers should be higher. 

In a press release issued last week, Ultra Health argued that even with the latest plant increase to 1,750, the state’s fee structure discourages producers from growing the maximum amount of plants. Making it harder for producers to grow the maximum amount of plants, Ultra Health argued, will impact patients.  

“Under the new fee schedule, it will be impossible for all producers to meet the 1,750 maximum and cultivate an adequate supply of medicine for patients,” the Ultra Health release read. 

The DOH recently changed fees for producers to a graduated structure. The cost per plant significantly increases for producers after 1,000. According to Ultra Health’s data, only 12 of the 34 licensed producers paid $180,000 for the maximum 1,750 plants.