Ultra Health is the first cannabis provider to win a lawsuit over production regulations

(Santa Fe) – Nicole Sena, a medical cannabis caregiver to her infant daughter with a rare form of epilepsy, and Ultra Health prevailed in the lawsuit they jointly filed against the New Mexico Department of Health (NMDOH) to secure an adequate supply of medical cannabis.

This is the first time any medical cannabis provider in the United States has successfully sued the state on overly restrictive production regulations.

“This is a victory for my daughter and all New Mexicans,” Nicole Sena said. “I think this will make a huge impact on our cannabis program because not all patients use the same products and they will be able to choose what is right for them now that producers will be able to have more plants.”

Santa Fe District Court Judge David K. Thomson issued a thoughtful, 60-page ruling in favor of the plaintiffs, stating the NMDOH regulatory 450 plant count is arbitrary and capricious.

“In essence, DOH is using its regulatory authority in a manner and with an end toward impeding the purpose of the [Lynn and Erin Compassionate Use Act],” Judge Thomson said in his ruling. “Further, its regulatory mandate of 450 plants is not based on fact or reliable data and is not rationally related to its regulatory authority. More importantly, it impedes the ability to assure medical patients have an adequate supply.”

The judge ordered a stay on the injunction of the plant count for 120 days to allow NMDOH to conduct fact-finding procedures to arrive at a plant count that complies with providing an adequate supply of medical cannabis per the Lynn and Erin Compassionate Use Act. The judge has also given Ultra Health the responsibility of preparing the form of order to execute the judge’s decision.

“The ruling squarely directed the NMDOH to act in accordance with the law. Allowing for the beneficial use of cannabis to all qualified New Mexicans is the clear intentions of the Legislature,” said Duke Rodriguez, CEO and President of Ultra Health®. “Going forward, we can now have a program fully committed to the public health benefits of cannabis availability and affordability. Better health over the politics of the past.”

Below are highlighted quotes from Judge Thomson’s ruling.

CONCLUSIONS OF LAW

“Further any plant count, and certainly the 450 plant count, it may not be simply based on outdated and unrelated data in such a manner and means as to violate the Legislature’s directive to provide an adequate supply.” (Item 1, Page 50)

“…the inclusion of the adjective ‘regulated’ in the statute does not bestow on DOH wide-ranging power to issue whatever regulations it wants.” (Item 7, Page 50)

“The statute provides for ‘beneficial use,’ and if patients cannot obtain cannabis from regulated sources in an amount which is actually beneficial, then the statute is an illusion. The specific mention of ‘beneficial use’ in the statute signals the statute intends to build a system where cannabis is not just available in a theoretical sense – as in, each patient gets access to one gram per month at $100 per gram – but is available in an amount which can benefit patients.” (Item 8, Page 51)

“The Court declares that the 450 plant limitation is not within the power of the Department and since it frustrates the purpose of the statute, alters the reach of the statute, and contradicts the statute, the remedy is to strike the 450 figure and remand to the Department for further proceedings to find a number which can ensure patient needs are met.” (Item 13, Page 53)

“It is the Legislature’s role to decide if the regulation should be ‘strict’ or not, and the Legislature’s silence on any production limit (in contracts to the explicit possession limit for patients), plus plus its seven specific enumerated items in § 26-2B-7, suggests the Legislature wanted a flexible, relatively hands-off, patient-centric regulatory system.” (Item 14, Page 53)

“The Agency limit of 450 plants is arbitrary and capricious.” (Item 15, Page 53)

“The Department of Health exceeded their statutory authority by, without justification, altering, modifying and limiting the reach of the [Lynn and Erin Compassionate Use Act] created by the Legislature by their unsupported limit of 450 plants per producer.” (Item 17, Page 54)

FINDINGS OF FACT

“DOH’s choice of 450 plants as the limitation point is not based on reliable data or updated data. DOH’s choice of 450 plants is not supported by current and/or reliable data and is not justified by any grant or delegation of authority by the New Mexico Legislature.” (Item 1, Page 11)

“DOH impermissibly reads into the statute its style of regulation that in fact impedes on its statutory mandate to ensure an adequate supply.” (Item 2, Page 11)

“There is also ‘pent-up’ demand from patients who are not enrolled in the program precisely because they do not have access to medicine, and this demand is essentially silent…” (Item 4, Page 12)

“Equally important is what DOH has not done in three-and-a-half years: no more surveys, no studies, no calculators by epidemiologists or economists, no forecast reports, no projections…” (Item 7, Page 12)

“DOH failed to implement a proactive system of medical cannabis regulation. DOH retroactively responded to a shortage crisis in 2013, but it reacted only to the needs of the existing 9,760 patients. A regulation designed to serve 9,760 patients cannot reasonably be expected to serve 45,000 patients, and the data used to serve 9,760 patients may not be used by hope of higher yield to serve 45,000.” (Item 14, Page 13)

SUMMARY OF DECISION

“DOH has a duty/obligation to ensure that patients can obtain an ‘adequate supply’ of medical cannabis products, and therefore DOH has a duty to adequately study and evaluate whether patients can obtain such an adequate supply. [Ultra Health’s] claim is substantiated that DOH is not fulfilling its obligation because its data collection is unreliable and because its evaluation of supply is baseless and unreliable.” (Page 8)

“Although the Department of Health has endeavored to ensure the general availability of cannabis within the Program, DOH has failed to ensure that there is an adequate supply within the Program as to cannabis in general or as to any given cannabis products.” (Item 4, Page 10)

“In essence, DOH is using its regulatory authority in a manner and with an end toward impeding the purpose of the [Lynn and Erin Compassionate Use Act]. Further, its regulatory mandate of 450 plants is not based on fact or reliable data and is not rationally related to its regulatory authority. More importantly, it impedes the ability to assure medical patients have an adequate supply.” (Item 7, Page 10)