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Law New Mexico

Rule change doubles number of cannabis plants for growers


An emergency state-level rule change doubled the number of cannabis plants that licensed growers can cultivate at one time, but some in the industry are concerned that the change is too little, too late to meet demand for the start of recreational sales in April.
“Building the infrastructure to double plant count could take months to years for most operators, and plants put in the ground today won’t be ready in April,” said Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, in a prepared statement.

The emergency rule change, which went into place last week, increases the maximum number of mature cannabis plants that licensed growers can grow at one time from 10,000 to 20,000.

In a record of finding to adopt the emergency rule change, Cannabis Control Division director Kristen Thomson wrote that the change is necessary to ensure patients enrolled in New Mexico’s medical cannabis program don’t face shortages due to demand from the recreational market, while keeping the state on track to begin recreational sales on April 1.

“The supply of medical cannabis will become increasingly threatened without an adequate supply of plants,” Thomson wrote.

Duke Rodriguez, president and CEO of Ultra Health, the state’s largest cannabis producer, called the change “great news,” but said it likely wouldn’t significantly change the amount of cannabis that will be available in April. He said it typically takes around 5½ months to get a cannabis plant in the ground and ready for harvest, so additional plants wouldn’t be ready for harvest by April.

“We’re probably not going to receive any relief in the remaining 74 days to April 1,” Rodriguez said.

Ultra Health has been aggressive in the past in seeking higher plant counts, filing multiple court challenges against state agencies and requesting emergency rule changes in the past to increase the number of plants available to license-holders. Rodriguez told the Journal that he would like to see the state abolish plant counts altogether and take a market-based approach.


On the other hand, Lewinger said increasing plant counts now undermines work from industry advocates and lawmakers last year to keep the industry from being dominated by a small handful of large-scale producers.

“Increasing the plant count now will only help the very biggest and well-resourced producers – it won’t help medical cannabis patients and it won’t help new businesses trying to break into the industry,” Lewinger said.

The record of finding states that the new rule is slated to expire on July 12.
 

Proposed changes to New Mexico cannabis rules before start of recreational sales spark criticism


With less than a month and a half to go before sales of recreational marijuana are scheduled to begin in New Mexico, the state agency charged with standing up the burgeoning industry is proposing new regulations and tweaks to others.
The proposed changes to existing rules just before the start of retail sales sparked some criticism of the Cannabis Control Division during a public hearing Tuesday.
“There’s constant moving targets in this program, and we have not even begun,” said Erica Rowland, who is working to open a “cannabis country club” in Albuquerque’s North Valley.
“How is one to focus on requirements and plan to succeed when costly and timely paperwork requirements are constantly changing or being eliminated?”
Heather Brewer, a division spokeswoman, said the agency set out to “get everything right” but noted it had to start up a new industry in the state in a little over eight months.
“We’re not living in a perfect world,” she said. “There are changes that need to be made. There are things that, as we get further into the process and hear feedback [from various stakeholders], we realize we have to change.”
Among the proposed amendments is eliminating a requirement for businesses to submit a diagram of their work premises in their license applications, largely over concerns the blueprint would be a public record that could be used for nefarious purposes.
“As people were submitting their applications, that’s when the issue was brought about by the legacy producers,” said Jason Barker, a cannabis policy expert.
“They said, ‘Hey, you’re having us submit a diagram in the form of a public record that is nothing more than a blueprint on how to break into our business if someone gets ahold of it who shouldn’t.’ Obviously, with crime in the state, that’s really concerning.”
Brewer said public safety was at the heart of the decision.



“Any documentation like that [is subject to the New Mexico Inspection of Public Records Act], so somebody could conceivably get a layout of a business and use that as a way to target them,” she said.
Rowland said she spent about $2,000 to obtain a diagram. The rules now require the cannabis business to certify they will maintain such a document at all times.
“It’s a bummer that they’re playing with the rules when the game hasn’t even started,” she said.

The amendments also call for reports annually — “or as otherwise reasonably requested” — from manufacturers, testing laboratories and retailers.
“Those are a holdovers from requirements from the original Medical Cannabis Program,” Brewer said. “For the sake of consistency, it’s being now applied across the board for adult use, as well.”
During Tuesday’s virtual hearing, which got off to a bumpy start because of internet connectivity issues, a number of speakers asked the agency to consider adding “Level 1 manufacturing” to production licenses to allow for the sale of such items as marijuana joints and cannabis oils.
“For the very basic micro producer license, all you can do is grow cannabis and sell the cannabis flower,” Barker said.
“If a person who got approved for that license decided to sell some pre-rolls and roll up some joints, that would be manufacturing, and [that person] would be breaking the law.”
Baker said the limitation puts micro producers at a disadvantage.
“If all they have is one or two items they can sell in their store, and then the next store is 500 feet away and has
200 items because it’s a big producer, then it’ll make the decision really easy on the consumer,” he said.
Others raised concerns about the division’s lack of responsiveness.
“I’ve called; I’ve written emails,” said a man who identified himself as John Roybal.
“It seems that we can get no timely responses whatsoever. There’s no in-person support. No office. I mean, it’s a couple months away, and we have no way to answer these questions in a timely manner for our clients. I mean, these are million-dollar businesses, and it seems like we’re just being ignored.”
Brewer said the agency, which pleaded with lawmakers for additional funding during the 30-day legislative session that ended last week, has received more than 800 applications for business licenses across all sectors of the industry. She also said the agency has been “very short-staffed” but has generally received positive feedback.
“They understand that there are some hiccups in the process — they’re willing to work with that — but overall, things are going smoothly,” she said.
 

New Mexico Revoked Licenses of Cannabis Growers and Fined Them $2M for Many Violations


New Mexico marijuana regulators revoked the licenses of two growing operations in a rural county for numerous violations and have levied a $1M fine against each business.​


One of the businesses, Native American Agricultural Development Co., is connected to a Navajo businessman whose cannabis farming operations in northwestern New Mexico were raided by federal authorities in 2020. The Navajo Department of Justice also sued Dineh Benally, leading to a court order halting those operations.


A group of Chinese immigrant workers sued Benally and his associates, and claimed they were lured to northern New Mexico and forced to work long hours illegally trimming marijuana on the Navajo Nation, where growing the plant is illegal.


In the notice made public by New Mexico’s Cannabis Control Division, Native American Agricultural Development was accused of exceeding the state`s plant count limits, of not tracking and tracing its inventory, and for creating unsafe conditions.


An email message seeking comment on the allegations was not immediately returned by Benally. David Jordan, an attorney who represented him in the earlier case, did not return a phone message Tuesday.


The other business to have its license revoked was Bliss Farm, also located in rural Torrance County within miles of Benally`s operation. State officials said the two businesses, east of Albuquerque, are not connected in any way.


The state ordered both to immediately stop all commercial cannabis activity.


“The illicit activity conducted at both of these farms undermines the good work that many cannabis businesses are doing across the state,” Clay Bailey, acting superintendent of the New Mexico Regulation and Licensing Department, said in a statement. “The excessive amount of illegal cannabis plants and other serious violations demonstrates a blatant disregard for public health and safety, and for the law.”


State regulators cited Bliss Farm for 17 violations. Regulators said evidence of a recent harvest without records entered into the state`s track and trace system led the division to conclude that plants were transferred or sold illicitly.


Adam Oakey, an Albuquerque attorney representing the group of investors that own the operation, told The Associated Press in an interview that the company had hoped the state would have first worked with it to address some of the issues before revoking the license.


“We did our best to get into compliance but we fell below the bar,” he said, adding that he`s afraid the state`s action might discourage others in the industry from coming to New Mexico.


The company already has invested tens of millions of dollars into the operation and will likely have to go to court to reopen the farm, Oakey said.


As for Native American Agricultural Development, regulators said there were about 20,000 mature plants on site, four times more than the number allowed under its license. Inspectors also found another 20,000 immature plants.


The other violations included improper security measures, no chain of custody procedures, and ill-maintained grounds with trash and pests throughout. Compliance officers also saw evidence of a recent harvest but no plants had been entered into the state`s track-and-trace system.


The violations were first reported last fall by Searchlight New Mexico, an independent news organization. At the time, Navajo Attorney General Ethel Branch told the nonprofit group that the tribe and the Shiprock area still deserved justice for the harm done previously by the grow operation that had been set up in northwestern New Mexico years earlier.


Federal prosecutors will not comment, but the New Mexico Attorney General`s Office confirmed Tuesday that in general it “continues to investigate, with our federal partners, potential criminal activity within the New Mexico cannabis industry.”
 

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