New Mexico Cannabis License Raises Eyebrows

A lucrative cannabis producer license that was issued by the New Mexico Department of Health with little notice only days before the agency lost its regulatory authority is raising eyebrows. Some of the state’s marijuana industry insiders are calling for an investigation into the affair amid allegations of favoritism.

The license awarded to Albuquerque-based GH LLC came less than a week before the health department ceded authority over the state’s Medical Cannabis Program (MCP) to the state’s new Cannabis Control Division, which was created following the legalization of adult-use cannabis by New Mexico lawmakers in April. The license, the first awarded by the health department in six years, was issued following a short, unannounced application period in June.

“This new licensee process has certainly ignited a fair amount of distrust, raised eyebrows and questions,” Duke Rodriguez, president and CEO of New Mexico Top Organics-Ultra Health, the state’s largest medical cannabis business, told the Santa Fe New Mexican last week.

“There are a number of good folks who have invested time, effort and resources while not knowing there might have been an express lane,” he said.

License Awarded After Unannounced Application Period in New Mexico

On June 23, only days before the Cannabis Control Division of the state Regulation and Licensing Department took over marijuana regulation, the health department posted a notice on its website titled “Medical Cannabis Licensed Non-Profit Producer Application Instructions.” No official notice that applications were being accepted was issued, however, although an online application listed a June 28 deadline.

According to documents obtained under a public records request, on June 25, only two days after the application instructions were posted, GH LLC submitted a 731-page application for a nonprofit medical cannabis producer license. On Sunday, June 27, Dominick Zurlo, director of the MCP, and Billy Jimenez, general counsel and deputy secretary of the Department of Health, visited the GH LLC facility in Alburqueque to perform an inspection. One day later the “legacy” producer license was issued by the department for a fee of $10,000.

“In my opinion, this was a dirty affair,” said Willie Ford, managing director of Reynold Greenleaf & Associates, a consulting firm for cannabis businesses. “This was obviously somebody making it happen for somebody else.”

Health Department Responds to Questions

Department of Health spokeswoman Baylee Rawson said that the department “often posts announcements through the website,” adding that the site is visited frequently by medical cannabis license holders and patients.

“It is also one of the primary methods used to present information and updates about the program including meeting announcements, patient statistics, educational materials and other reports and documents,” Rawson wrote in an email.

Rawson also wrote that for several months, the Department of Health had been working “on opening licenses for additional licensees to help ensure patients had additional options for obtaining their medication.” When asked about the Sunday inspection during the narrow application window, Rawson said that, “It is not unusual for MCP staff to work on weekends due to the high workload and demand for services.”

Emails obtained through the public records request show that after the transfer of responsibility for the Medical Cannabis Program, decisions regarding the GH LLC application were made by top officials at the Cannabis Control Division. In August, acting deputy director of business operations for the division Nicole Bazzano asked health and safety specialist Joshua Wilson for an update on the status of the application.

“It’s my impression that they are just waiting on the inspection from you in order to start producing/manufacturing, is that correct?” she wrote. “What can we do to get them taken care of and up and running properly and legally?”

The following day, Wilson replied that he “had to go back and do a bit of research on this one” and that he “largely” had no information on the approval of the license.

“The processing, inspection and approval were done at a level above MCP License and Compliance staff,” he wrote. “After looking at the approval letter, it does appear that they were issued some form of conditional approval allowing for the completion of infrastructure and requiring re-inspection before being allowed to cultivate, manufacture, or distribute.”

The ‘Mack Daddy of Licenses’

Rodriguez of Ultra Health characterized the license awarded to GH LLC as the “mack daddy of licenses.”

“You’re the vertically integrated license that allows you to do everything—produce, manufacturing—you can do all those things,” he said. “The new approach under the [Cannabis Regulation Act] makes you subject to having this silo effect. You have to get a license for manufacturing. You have to get a license for retail. You have to get a license for production.”

Medical marijuana advocate Larry Love, the host and producer of Santa Fe-based Medical Marijuana Radio, said that he knows “plenty of people” who would have applied for the medical marijuana producer license had the application period been publicized by the health department in advance.

“It just doesn’t seem fair to the public, knowing that someone was able to get a license ahead of everybody else,” said Love.

But in a brief interview last week, GH LLC founder Vance Dugger apparently shrugged off the controversy over the license, saying “We submitted an application like everyone else.”