New Mexico Cannabis License Raises Eyebrows

A lucrative cannabis producer license that was issued by the New Mexico Department of Health with little notice only days before the agency lost its regulatory authority is raising eyebrows. Some of the state’s marijuana industry insiders are calling for an investigation into the affair amid allegations of favoritism.

The license awarded to Albuquerque-based GH LLC came less than a week before the health department ceded authority over the state’s Medical Cannabis Program (MCP) to the state’s new Cannabis Control Division, which was created following the legalization of adult-use cannabis by New Mexico lawmakers in April. The license, the first awarded by the health department in six years, was issued following a short, unannounced application period in June.

“This new licensee process has certainly ignited a fair amount of distrust, raised eyebrows and questions,” Duke Rodriguez, president and CEO of New Mexico Top Organics-Ultra Health, the state’s largest medical cannabis business, told the Santa Fe New Mexican last week.

“There are a number of good folks who have invested time, effort and resources while not knowing there might have been an express lane,” he said.

License Awarded After Unannounced Application Period in New Mexico

On June 23, only days before the Cannabis Control Division of the state Regulation and Licensing Department took over marijuana regulation, the health department posted a notice on its website titled “Medical Cannabis Licensed Non-Profit Producer Application Instructions.” No official notice that applications were being accepted was issued, however, although an online application listed a June 28 deadline.

According to documents obtained under a public records request, on June 25, only two days after the application instructions were posted, GH LLC submitted a 731-page application for a nonprofit medical cannabis producer license. On Sunday, June 27, Dominick Zurlo, director of the MCP, and Billy Jimenez, general counsel and deputy secretary of the Department of Health, visited the GH LLC facility in Alburqueque to perform an inspection. One day later the “legacy” producer license was issued by the department for a fee of $10,000.

“In my opinion, this was a dirty affair,” said Willie Ford, managing director of Reynold Greenleaf & Associates, a consulting firm for cannabis businesses. “This was obviously somebody making it happen for somebody else.”

Health Department Responds to Questions

Department of Health spokeswoman Baylee Rawson said that the department “often posts announcements through the website,” adding that the site is visited frequently by medical cannabis license holders and patients.

“It is also one of the primary methods used to present information and updates about the program including meeting announcements, patient statistics, educational materials and other reports and documents,” Rawson wrote in an email.

Rawson also wrote that for several months, the Department of Health had been working “on opening licenses for additional licensees to help ensure patients had additional options for obtaining their medication.” When asked about the Sunday inspection during the narrow application window, Rawson said that, “It is not unusual for MCP staff to work on weekends due to the high workload and demand for services.”

Emails obtained through the public records request show that after the transfer of responsibility for the Medical Cannabis Program, decisions regarding the GH LLC application were made by top officials at the Cannabis Control Division. In August, acting deputy director of business operations for the division Nicole Bazzano asked health and safety specialist Joshua Wilson for an update on the status of the application.

“It’s my impression that they are just waiting on the inspection from you in order to start producing/manufacturing, is that correct?” she wrote. “What can we do to get them taken care of and up and running properly and legally?”

The following day, Wilson replied that he “had to go back and do a bit of research on this one” and that he “largely” had no information on the approval of the license.

“The processing, inspection and approval were done at a level above MCP License and Compliance staff,” he wrote. “After looking at the approval letter, it does appear that they were issued some form of conditional approval allowing for the completion of infrastructure and requiring re-inspection before being allowed to cultivate, manufacture, or distribute.”

The ‘Mack Daddy of Licenses’

Rodriguez of Ultra Health characterized the license awarded to GH LLC as the “mack daddy of licenses.”

“You’re the vertically integrated license that allows you to do everything—produce, manufacturing—you can do all those things,” he said. “The new approach under the [Cannabis Regulation Act] makes you subject to having this silo effect. You have to get a license for manufacturing. You have to get a license for retail. You have to get a license for production.”

Medical marijuana advocate Larry Love, the host and producer of Santa Fe-based Medical Marijuana Radio, said that he knows “plenty of people” who would have applied for the medical marijuana producer license had the application period been publicized by the health department in advance.

“It just doesn’t seem fair to the public, knowing that someone was able to get a license ahead of everybody else,” said Love.

But in a brief interview last week, GH LLC founder Vance Dugger apparently shrugged off the controversy over the license, saying “We submitted an application like everyone else.”

The post New Mexico Cannabis License Raises Eyebrows appeared first on High Times.

New Mexico Approves Cannabis Rules and Prepares for Legalization

New Mexico officials have announced the arrival of cannabis producer rules, and they plan to allow interested producers to begin their applications for licenses sometime this week.

The New Mexico Regulation and Licensing Department announced on Facebook on August 24 that rules regarding cannabis producers have been finalized and are effective today, and that the agency will begin to accept applications sometime this week. 

“Producer Rules Effective Today! The rules that take effect today cover the licensing of cannabis producers—the people and businesses that grow and harvest cannabis,” the post read. “The rules include plant count limits, which are required by the Cannabis Regulation Act, as well as licensing fees. The Cannabis Control Division will start accepting license applications through its streamlined online system later this week. The CCD has 90 days to approve or deny an application once a completed application is received.”

This is the first round of rules released to the public. Eventually, more will follow with details about retailers and testing facilities, among other important topics. These rules will need to be finalized by January 2022.

“We are ready for business,” said New Mexico Regulation and Licensing Department Superintendent Linda Trujillo about the announcement. “The Cannabis Control Division is committed to supporting licensees to maximize the economic opportunities that adult-use cannabis sales offer our state.”

The rules were published on the New Mexico Commission of Public Records website in four different sections: General Provisions, Licensing and Operational Requirements for Cannabis Establishments, Cannabis Plant Limits and Process to Address Shortage of Cannabis Supply in the Medical Cannabis Program and Fees.

One point of concern has been rules regarding allowances for large-scale cannabis cultivators. Following two public hearings, the final rule text states that cultivators may grow between 6,000 and 8,000 mature plants (or up to 10,000 if they have special approval from the state). There are varying levels of farm sizes ranging from Level 1 (201-1,000 plants), Level 2 (1,001-3,000 plants), Level 3 (3,001-6,000 plants) and the final tier, which includes the information above. Originally, the Cannabis Control Division set plant caps at 4,500 per producer.

The rules also address the growing concern of shortage of medical cannabis. “Upon the division allowing commercial cannabis retail sales, cannabis retail establishments shall make reasonable efforts to sell a minimum of 25 percent of their monthly cannabis sales to qualified patients, primary caregivers and reciprocal participants, or to other licensed cannabis retail establishments that meet or exceed the 25 percent sales to qualified patients, primary caregivers and reciprocal participants until December 31, 2022,” the rules state. The rules also detail a plan for addressing further shortages if they persist through December 2022.

Finally, a section dedicated to social equity efforts states that a plan will be created no later than October 15, 2021, and will include numerous guidelines regarding disproportionately affected communities, individual assessments and any incentives for social equity applicants.

New Mexico is the 17th state to legalize recreational cannabis, which was made official when Governor Michelle Lujan Grisham signed legislation in April 2021. The law, which took effect on June 29, legalizes possession of up to two ounces of cannabis and allows residents to cultivate up to six mature plants for personal use. Recreational cannabis sales are expected to launch by April 2022, although it is possible that they could start sooner than April if the rules are well received and not challenged in court.

In addition to the rule announcement, a recent court ruling established that the Department of Health and the Regulation and Licensing Department cannot enforce purchase limits for medical cannabis or take away rights of medical cannabis patients that they receive under state law, effectively increasing the amount of medical cannabis that can be purchased by patients.

The post New Mexico Approves Cannabis Rules and Prepares for Legalization appeared first on High Times.