Collected fees increase by 30%, while one-third of total plants go unsubscribed due to higher fees 

(Albuquerque) – The 34 licensed cannabis producers in New Mexico’s Medical Cannabis Program paid $3.8 million in plant fees to the New Mexico Department of Health (NMDOH) for the 2019-2020 period by October 4, 2019. This represents an increase of 30% from the fees collected during the 2018-2019 period, even with one less licensed cannabis producer. 

Of the total 59,500 plants available under the newly promulgated 1,750 plant cap per producer, 20,000 plants went unsubscribed due to the substantial fee increase to grow the maximum number of plants. 

 

Compared to last year’s fee schedule, 18 producers saw plant fee increases of up to 100%. These top producers were responsible for $1.3 million of additional plant fees collected compared to the 2018-2019 period, when total cannabis producer fees totaled $2.9 million. 

Previously, 29 of the 34 producers elected to grow the maximum number of allowed plants because the fees were capped at a collective amount of $90,000. When NMDOH raised the plant cap to 2,500 with no additional fee under the Emergency Rule, 22 producers subscribed to the maximum number of plants. Now, only 13 producers were able to elect the maximum of 1,750 plants due to unreasonably high fees that unduly burden producers who wish to cultivate the maximum plant allowance. 

Under the new fee schedule, producers who elect to utilize more than 1,000 plants pay 33% more in fees per plant than producers who wish to elect just 500 plants. The punitive fees for a higher number of plants have created a significant barrier to scalability and the production of an adequate supply for patients as mandated by statute.  

NMDOH was forced to promulgate the new plant cap regulation after then-District Court Judge David K. Thomson ruled the previous cap of 450 was arbitrary, capricious, and frustrated the purpose of the Lynn and Erin Compassionate Use Act. Judge Thomson enjoined the department from mandating a plant cap that does not provide for an adequate supply to 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. 

New Mexico charges the most expensive annual renewal fees per capita for medical cannabis cultivation licensees in the country, while simultaneously having the most restrictive plant cap regulation of a maximum 1,750 plants per producer. The minimum fee per producer is $40,000, and the maximum is $180,000.

In a letter regarding the rule change for licensing fees, NMDOH Assistant General Counsel Chris Woodward stated the Medical Cannabis Program’s current annual budget is $3.2 million, with an anticipated 20% budget growth needed to hire 12 more full-time employees.

Although producers paid $3.8 million in fees, it is not clear what the department intends to do with the additional fees paid by cannabis manufacturers, testing laboratories, cannabis couriers, and personal producers. While NMDOH charges cannabis producers up to $180,000 annually, new rules will charge manufacturers an annual licensing fee of $5,000; testing laboratories $2,200; couriers $1,500; and personal producers $30.

There were 8,049 personal production licenses issued as of September 30, 2019, indicating the department has received an additional $241,170 from personal producers.  

Another financial burden is also placed on patients to carry out their practitioner’s exam to receive their patient registry card. On average, patients pay about $125 for an exam, accounting for a collective $9.7 million paid out-of-pocket by all 77,168 patients. In 2018, patients paid $106 million out of pocket for their medicine.