Mother, producer sue health department over ‘arbitrary’ plant limits

By Peter St. Cyr / Santa Fe Reporter

Published on August 17, 2016

A top economist spent the summer collecting information about the state’s medical cannabis market and says her study proves the health department’s strict 450-plant cap is responsible for an endless shortage of medication.

Current demand for cannabis exceeds supply by 2.26 tons, and the deficiency is forecast to grow to 6.8 tons by the first quarter in 2018, according to Kelly O’Donnell, a former regulation and licensing department secretary under then-Gov. Bill Richardson.

“Having a very limited supply of plant material prevents suppliers from innovating and offering the broader array of products like edibles, patches and lozenges, or products with different concentrations of specific cannabinoids—CBD, for example—that better target certain health conditions or the needs of different kinds of patients,” says O’Donnell.

Officials at the New Mexico Department of Health admit they haven’t done a good job predicting rapid growth in the program. Instead, rules are based on Secretary-Designate Lynn Gallagher’s concerns for potential Drug Enforcement Agency intervention. She also worries that increased inventories could be diverted to the black market, create producer monopolies or up the potential for large crop disease.

Shortages are a huge problem for thousands of patients and caregivers, including Nicole Nuñez, the mother of 8-month-old Amylea Nuñez. Amylea suffers from life-threatening seizures, and Nuñez often has to travel to Colorado to buy the cannabis-derived oil that helps her infant, even though a producer says he can make enough here if the state gave the green light.

On Tuesday, local attorney Brian Egolf filed a complaint in state district court in Santa Fe on behalf of Nuñez (using her legal name, Nichole Sena) and licensed producer New Mexico Top Organics–Ultra Health, Inc.

In part, the lawsuit states that “the program is still managed and governed by an arbitrary and capricious production limitation that ensures there will never be an adequate supply of cannabis in New Mexico.”

Egolf argues the health agency and Gallagher are ignoring a legally mandated duty to ensure an uninterrupted 90-day supply of cannabis medication for qualified patients.

“In this case, we thought a valid demand model/analysis would be the most effective way to prove beyond any reasonable doubt the dire situation the NMDOH has placed patients’ wellness,” says Duke Rodriguez, Ultra Health’s president. “It’s hard to believe we have a $45 million program with no meaningful modeling, projections or vision from NMDOH on how this program should be operated.”

The department could license more producers rather than increase plant counts, but O’Donnell says that would only solve the problem for two years and would not set up growers to benefit from economies of scale or have enough material to develop specialty medications like Haley’s Hope, which costs Nuñez and her husband Ernie $175 for a single 2-ounce bottle. To extract the cannabinoids needed to make the drug requires lots of flowering buds—generally more than New Mexico producers are willing to set aside to manufacture the specialty medication.

The lack of scientific modeling and avoidable staffing deficits have already ensnarled program staff as patient enrollments has rocketed up 81 percent since June 2015, from 15,265 patients to 26,568 patients at last count in July 2016. Staffers spent the entire summer catching up on a backlog of applications that is still not resolved.

The plaintiffs claim the department’s restrictive plant cap makes it impossible to keep up with patient growth, and they want a judge to order Gallagher to lift the agency’s “arbitrary” cap before patients’ health is negatively impacted.

Rodriguez hired O’Donnell to produce the data-driven market report. She determined that about 1.2 percent of the state’s population is currently registered in the program, but another 630,000 residents, or about 30 percent of the state’s population, suffer from at least one of the program’s qualifying medical conditions. O’Donnell expects many of them will begin to enroll in the program.

To support a robust medical cannabis market in New Mexico as demand for medication increases, O’Donnell suggests the state’s 35 current growers will have to increase harvest yields up to 600 percent by early 2018 and be allowed to grow between 27,000 and 37,000 additional plants—more than double the 13,800 plants producers paid to grow between now and August 2017. This is still significantly less than the 320,000 or more plants being cultivated in Colorado each month.

As New Mexico’s aging population increases to 33 percent of the state’s total population by 2030, supply could be further constrained as even more residents will qualify for the program. Other epidemiological trends will also affect the upward demand, O’Donnell says, including the number of patients suffering from PTSD, chronic pain and those with opiate use disorder who plan to petition the department to allow cannabis to be used as way to treat addiction to prescription painkillers.

For now, Rodriguez and others are left to question why the department imposed plant caps since the enabling act in 2007 doesn’t specify a limit. They also wonder why Gallagher is ignoring New Mexico State University scientists’ view that smaller crops are more likely to be affected by various diseases than larger grows.

O’Donnell tells SFR that the health department may not be the best agency to oversee the program. While they do, market penetration or monopolization isn’t something the health department should be concerned about.

“They’re already in over their heads trying to regulate essentially an agricultural crop,” she says.

Nuñez is aware that the DEA, like her daughter’s own doctors, refuses to recognize the drug’s medicinal value—but Nuñez insists it’s a life-saver.

She’d like more places to access it in New Mexico. Better yet, Nuñez would like to have her insurance plan pay for her daughter’s cannabis. But that, she knows, is a different battle for a different day.