New Mexico medical cannabis company Ultra Health is asking a state district court judge to invalidate industry product testing, labeling, and facility safety rules that went into effect earlier this month calling them “arbitrary and capricious” and warning that the rules will increase prices for patients, according to New Mexico Political Report.
The petition filed last week notes that New Mexico medical cannabis producers “already pay well over $100,000 per year” for their licenses “and are precluded by federal law from taking any income tax deductions.” Those businesses, the petition states, “will have to pay for the increased testing burden and will pass along the costs to patients.”
The Department of Health-mandated rules require medical cannabis to be tested for fungus, pesticides, and heavy metals. Ultra Health’s attorneys argue that the health department rules “do not draw the necessary connection between the arbitrarily chosen testing parameters and specific measurements of patient safety,” according to the Political Report’s overview of court documents.
The petition also argues that health officials copied the regulations from other states where both medical and adult-use cannabis is legalized and that standards applied in other states with different climates should not be applied in New Mexico.
“All of the biological and environmental differences between New Mexico and other regions guarantee that cannabis grown in New Mexico will have a very different potential for various kinds of contaminants than cannabis grown in Colorado or Oregon, but DOH never considered these basic environmental factors that make New Mexico unique.” – Ultra Health lawyers in the petition
Moreover, the filing takes aim at a rule allowing the DOH to randomly test products that are packaged and ready for market. The lawyers argue that producers and sellers face financial strain if they are not compensated for those products. They also argue that the rule requiring both product labels and accompanying fact sheets to include the same information is unnecessarily redundant, referring to it as a “belt-and-suspenders rule.”
The petition also calls for the removal of rules requiring product testing at state-approved labs, arguing that New Mexico has only two approved testing labs and “if one of them cannot meet DOH’s requirements, testing would slow to a crawl” and if both cannot meet the requirements the program “would cease to function.”
The attorneys further argue that the health department overstepped its authority with the rule banning medical cannabis and hemp cultivation on the same site. In New Mexico, hemp operations are regulated by the Department of Agriculture and the lawyers note that the Health Department “has never been given any kind of regulatory authority over hemp,” therefore cannot dictate where it can – or cannot – be grown. The attorneys make the same claim about the DOH rule prohibiting hemp products, such as CBD, from being mixed with medical cannabis products.
Additionally, the petition alleges that Health Department rules about facility repairs or upgrades would require cannabusinesses to “submit applications for amended licenses whenever they change a lightbulb.”
Ultra Health has previously filed lawsuits against other state agencies, including a 2019 case against the state Taxation and Revenue Department over tax deductions. A February judgement in that case by an appellate court found that state-licensed medical cannabis producers can claim a tax deduction as prescription medication producers. The state has appealed that case to the New Mexico Supreme Court.
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