ULTRA HEALTH WINS FAVORABLE RULING, JUDGE INVALIDATES NEW CANNABIS REGULATIONS

Judge invalidates Department of Health rules on license revocation, hemp, and testing due to lack of evidence

(Santa Fe) – Ultra Health, New Mexico’s #1 Cannabis Company, won a favorable ruling on regulations promulgated by the New Mexico Department of Health (NMDOH) in June 2020. The regulations – including the strictest testing requirements in the United States, arbitrary restrictions on hemp activities, and suspension or revocation of a license without notice – were all invalidated by Santa Fe District Court Judge Bryan Biedscheid. 

Judge Biedscheid invalidated the rules after NMDOH failed to consult the Medical Cannabis Advisory Board regarding the new regulations and failed to provide substantial evidence to support the changes. 

Ultra Health and several other medical cannabis industry operators filed a petition under Rule 1-075 NMRA, which authorizes appeals from administrative decisions. Rule 1-075(R) NMRA requires that the Court analyze whether the decision of the agency is supported by substantial evidence, or evidence that is relevant and that a reasonable person may accept as adequate to support a conclusion.

“Given the applicability of Rule 1-075(R)(2) NMRA, and the State Rules Act’s requirement that an agency ensure technical information is contained within the rulemaking record, the Court finds that Department’s decision to adopt certain provisions of the repeal and replacement of 7.34.4 NMAC is not supported by substantial evidence,” Judge Biedscheid stated in the order. 

Judge Biedscheid also held that the NMDOH had not consulted with the Medical Cannabis Advisory Board as required by the Lynn and Erin Compassionate Use Act, NMSA 1978, Section 27-2B-7(A) (2019). “There is insufficient information in the record from which to conclude that the Board and Department consulted about the full extent of the repeal and replace rulemaking,” the Court’s order stated. 

Specific regulations that were repealed include: 

• Suspension or revocation of a license without notice.
• Prohibition of the growing of hemp plants on property licensed for medical cannabis cultivation. 
• Prohibition of hemp, hemp extract, and hemp derived products other than hemp paper and hemp seed oil to be combined with usable cannabis intended for sale.
• Testing requirements that set extremely strict action levels for microbes, mycotoxins, heavy metals, and pesticides.
• Requiring that cannabis producers, manufacturers, and testing laboratories obtain department approval before making “any physical modification or addition” to their facilities.  
• Requiring all cannabis producers and manufacturers to have floors, walls, and ceilings that are washable, wipeable, and non-absorbent. 
• Mandating a hazard analysis critical control point plan (HACCP) for each product a manufacturer produces. 
• Requiring onerous, duplicate product labeling.

“Judge Biedscheid’s ruling clearly states the department may not attempt to promulgate any rules it wishes without fully consulting stakeholders and providing substantial evidence for such changes,” said Duke Rodriguez, CEO and President of Ultra Health®. “Organizationally, we support testing and reasonable regulation, including enhanced testing for pesticides and heavy metals. However, regulations must absolutely be promulgated rationally and consistently as compared to industry standards in other cannabis markets. Most importantly, regulations must be consciously promulgated to avoid driving up the price of medicine and reducing the availability of medicine for New Mexican patients who desperately need access to affordable medical cannabis care.”