Legal pot or not? Protecting NM’s medical marijuana industry

Read the other stories in the series: Legal pot or not?

Copyright © 2019 Albuquerque Journal

New Mexico’s medical cannabis industry is booming.

The number of medical cannabis cardholders has grown from just over 8,000 in 2012 to 68,000 today. At the end of 2018, more than 80 dispensaries were operating around the state. The 35 licensed producers – most of whom also operate dispensaries – topped $51 million in sales in the first six months of the year.

Eric and Rachael Speegle at the Verdes Foundation indoor cannabis growing room. They say the state’s limit on the number of plants that can be grown has hampered expansion and hurt patients. (Greg Sorber/Albuquerque Journal)

Total medical marijuana sales for 2018 are expected to top $100 million – pumped up by a significant increase in the number of patients using the drug after being diagnosed with chronic pain or PTSD.

One of the key questions facing legislators considering whether to legalize recreational marijuana for adults and create a new industry is how the move would affect New Mexico’s highly regulated medical cannabis program.

The medical cannabis industry in New Mexico is a mature one, dating back to 2007 when the Legislature passed the Lynn and Erin Compassionate Use Act.

The law was designed and named for cancer patients Lynn Pierson and Erin Armstrong, who advocated for access to marijuana for patients suffering from chronic illnesses.

Arnoldo Olivas, left, and Ray Ramos manicure cannabis buds for sale to medical cannabis patients at the Verdes Foundation manufacturing facility in Albuquerque. (Greg Sorber/Albuquerque Journal)

Pierson, who died in 1978, was a Vietnam War veteran with lung cancer who lobbied for a medical marijuana program in the 1970s. Armstrong lobbied for the current program in 2006 and 2007 and is now an Albuquerque attorney.

Legalized marijuana has undercut the medical cannabis program in some states, but sponsors say protecting it is a key goal here. And the industry has an important ally in the upcoming debate.

Newly elected Gov. Michelle Lujan Grisham was the secretary of the Department of Health under then Gov. Bill Richardson when the program was rolled out.

Lujan Grisham has said her approval of any law legalizing a recreational marijuana industry is contingent on protecting the medical cannabis program she helped foster.

She has also promised to deal with a couple of problems plaguing the industry by lifting the cap on the number of plants (450) that producers in the medical cannabis program can grow and speeding up the licensing process for medical marijuana dispensaries.

Lower prices?

Medical cannabis users found increased prices and shortages of products as recreational pot dispensaries opened in some states that legalized recreational marijuana.

An array of products sold at the Verdes Foundation cannabis dispensary, 7301 San Antonio NE, on Wednesday.

That could alarm some patients in New Mexico, where prices for medical marijuana are considered high – more than $2,000 a pound for marijuana buds for smoking – or $10 a gram – leaving patients who use the maximum amount paying as much as $2,300 out of pocket for the maximum allowable 90-day supply.

It is also subject to gross receipts tax – something legalization sponsors say they want to eliminate.

A typical New Mexico medical cannabis patient tends to spend up to $500 a month – and it generally isn’t covered by insurance, Medicaid or Medicare.

Duke Rodriguez, president of Ultra Health, the largest medical cannabis seller in the state, said he sees only upside for medical marijuana patients under legalization and some regulatory changes to the medical marijuana program that are already or soon will be in the works.

Rodriguez and others say the high price for medical cannabis here is driven by a cap that limits a producer to growing 450 plants at any time – while on the demand side there is no limit on the number new patients the state approves each month. That combination leads to shortages and increased prices.

State District Judge David Thomson of Santa Fe has ruled that the 450-plant limit is “arbitrary and capricious” and has given the Department of Health, which regulates the program, until the end of January to present the court with a new plan.

Rodriguez said the October ruling should give medical cannabis patients dramatic relief.

“You could see a 50 percent drop in prices,” Rodriguez said.

As to the impact of legalized marijuana, Rodriguez said, “States like Washington, Nevada and Oregon had serious bumps in the road because their medical programs were only 2 years old when they legalized adult use. They didn’t have the decade of experience that New Mexico has had.”

“Generally, opponents of adult use will cry that the medical cannabis programs will be harmed,” Rodriguez said. “The reality is that states with mature medical cannabis systems have rolled out adult use programs without harming the medical program.”

Limits questioned

The 2007 law didn’t mention plant limits, but it did authorize the Medical Cannabis Advisory Board to “recommend quantities of cannabis that are necessary to constitute an adequate supply for qualified patients and primary caregivers” to the Department of Health.

Licensed medical marijuana producers, who also operate dispensaries around the state, are still limited to growing 450 plants at any point in time.

The producers pay a fee of $200 a plant and must grow a minimum of 150 plants.

Indoor growers have multiple harvests, and outdoor growers usually have one harvest a year.

“It (the cap) doesn’t allow us to scale up,” said Rachel Speegle, CEO of the Verdes Foundation. “It makes it less accessible in rural areas and lower income areas. We can’t have all the products on the shelf that consumers want.”

The state also limits the number of “units” a cardholder can buy to 230 (a little more than eight ounces) over a 90-day period.

A unit is equal to 1 gram of dried cannabis flower or 200 milligrams of THC for cannabis-derived products such as inhalers or baked goods. The unit price for those products is more than $14.

If a patient tries to buy more than 230 units during a 90-day period, the state’s tracking system will block the sale.

“It (230 units) was a good starting point, but hospice patients can go through those units fairly quickly,” Speegle said. “Other patients are forced to stretch out their units, and for pain management patients and others with complicated issues, that’s difficult.”

Rodriguez said producers were preparing to file another civil lawsuit over the 230-unit cap but expects the new administration to lift it.

Industry protections

People working on the bill to legalize adult use of marijuana say they have included protections for the medical cannabis industry.

“It is a priority for everyone involved,” said Rep. Javier Martinez, D-Albuquerque.

The bill would eliminate the gross receipts tax on medical cannabis and treat it like prescription drugs.

It would also create a subsidy program, with 2 percent of tax revenues from the adult recreational program going to the Department of Health to help patients who can’t afford medical cannabis.

Currently, licensed medical cannabis producers who also want to apply for a separate license under the adult recreational use program would have to maintain one-third of their inventory for medical cannabis.

While the proposed legislation would place the new recreational marijuana industry under the state Department of Regulation and Licensing, it would keep the medical cannabis patient registry and card distribution within the Department of Health because of the department’s experience in protecting the privacy of medical patients.

Growing the program

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