Monday, December 5, 2016

Medical Cannabis Demand, Adequate Supply and a Plant Count Tax

A look at how some New Mexico Legislators see medical cannabis as a new revenue source…
Part one in two part series.
Photo Credit:

New Mexico’s economy continues to be one of the slowest growing economies in the country.  The state budget shortfalls for 2016 totals near $600 million, and this slow economic growth by the state reveals too much dependence on largess by the federal government and oil revenues. The special session called by the Governor for the state legislature, that resulted in more cuts to the budget and party politics taking away from the purpose of the special session. Those sources of New Mexico's economic malaise provide funding for educating the youth,  police and fire department services and for Health and Human Services programs like Medicaid.  New Mexico is also a state, where half of all New Mexicans are on medicaid or medicare.

The New Mexico medical cannabis program has seen tremendous growth in 2016, more than doubling the number of registered participants from 14,000 New Mexicans last year to 32,840 at the end of October 2016.  There are 35 licensed producers growing medical cannabis, operating 41 dispensaries around the state, and 23 of these dispensaries are located in the Albuquerque area.  Current state law does not limit the number of plants that can be grown by the state’s licensed producers. Each one of the licensed producers is can choose to grow up to 450 medical cannabis plants, the maximum allowed under the Department of Health program rules and regulations. The department may issue two classes of producer licenses; to a qualified patient who holds a valid personal production license and to a non-profit producer who operates a facility.

A qualified patient who holds a valid personal production license is authorized to possess no more than four mature female plants and a combined total of 12 seedlings and male plants, and may possess no more than an adequate supply of usable cannabis, as specified in department rule.  A non-profit licensed producer that operates a facility and, at any one time, is limited to a combined total of no greater than 450 mature female plants, seedlings and male plants.
Photo Credit: Vice News
The state’s medical cannabis program (MCP) was created in 2007,  under the Lynn and Erin Compassionate Use Act, chapter 210 Senate Bill 523. The purpose of this Act is to allow the beneficial use of medical cannabis in a regulated system for alleviating symptoms caused by debilitating medical conditions and their medical treatments.  The purpose of this law is not to provide a potential revenue stream for the state to mend its broken budget.

Due to the incredible growth in the medical cannabis program participants, there needs to be a clear increase to the plant count allowed for by the licensed producers from the Department of Health. In order for the Department of Health Medical Cannabis Program to allow for the beneficial treatment with medical cannabis, the Department must properly have “adequate supply”.  For the Department to have “adequate supply” they would need to know the different amounts of plant material that goes into all the different types of medicine being produced. Types of medicine used by patients in the program are; dried cannabis flower (bud), pre-rolls, edibles, tinctures, topicals/salves, and concentrated forms of cannabis all require different amounts of cannabis plant material to produce.

This is empirical data that has not been collected within the state’s medical cannabis program, despite a past attempt by legislator Deborah Armstrong.  This missed opportunity by the state legislature in 2015, further prevents the Department of Health from being able to set a proper plant count for each producer in the program for the means of achieving adequate supply within the medical cannabis program as required by law.  The 2016/17 licensure list for the medical cannabis program shows a total of 13,800 medical cannabis plants licensed by the 35 producers for the 33,000 patients in the program.  

During hearings of the Legislative Health and Human Services interim Committee this summer, many patients enrolled in the program stated that the recent expansion in supply was not adequate to support current demand.  There are over 33,000 New Mexicans authorized to purchase medical cannabis and there is less than 14,000 medical cannabis plants available to be grown by the producers. Producers have to pay an annual fee of $200 per plant, for a total of $90,000 each and that money underwrites the cost of Department of Health (DOH) administration of the program.

So what is the right plant count and adequate supply for the New Mexico medical cannabis program? Some states have restrictions on the number of plants producers are allowed to have and other states such as Nevada and Arizona have none. California and Washington limit the square
footage of plant production facilities and other states such as Delaware, Hawaii, Maine, and New
Hampshire limit plant counts based on patient need.

Photo Credit: NM Political Report

During the special session held by the state legislature in October 2016, Senator Gerald Ortiz y Pino (D-12-Bernalillo), sponsored the bill- No Medical Marijuana Plant Limits (SB3), SB3 increases the number of medical cannabis plants any one licensed producer can have under cultivation at a time. Testimony on the bill revealed that producers have to pay an annual fee of $200 per plant and the bill was amended to limit the number of plants any single producer can have under cultivation at any one time. A license holder’s production capacity cannot exceed 15% of the number of approved card holders at the time the producer applies for the expanded license. SB3 is a new tax on the medical cannabis plant and the “no limit” proposal on medical cannabis plants for the program has no scientific methodology provided in how it was determined by the bill’s sponsor.  The estimated increase in gross receipts tax (GRT) revenue from the sale of the additional cannabis plants is $3 to $5 million a year.
“In a year when we are looking for every available source of revenue or savings to balance the budget, I believe this small step could make a significant contribution to the budget picture,” said Sen. Ortiz y Pino. “Not only will it help this year, but it will help in subsequent years as the demand for medical marijuana and its derivatives increase.”  The state senator further commented, “The artificially low caps that are imposed by DOH have forced many patients who are unable to secure their medicine from licensed providers to attempt to grow their own medicine or even to purchase the plant product from illegal sources,” said Sen. Ortiz y Pino.  “There is no good policy reason to restrict the producers in this fashion.”  Nor does good policy come from one source.

Aside from clearly seeing that the medical cannabis program in New Mexico and its plant based medicine is now viewed as potential income resource by some state legislators thru more taxes,  and further-why is it stated that, “ ...DOH have forced many patients who are unable to secure their medicine from licensed providers to attempt to grow their own medicine”. As a patient in the program with my own personal production license, do I now need to be concern of this right being further jeopardized?
Any qualified Patients may apply for a license to grow their own supply of medical cannabis and every patient that has the ability should exercise this right. The license should be posted or kept near the growing area. A Personal Production License (PPL) allows Patients to have 4 mature plants and 12 seedlings at any given time.

What this would mean for the licensed producer; with near 33,000 patients in the program that 15% would be almost 5000 possible plants for each licensed producer to grow at a fee of $200 per plant. That is 1 million in fees for the licensed producer to grow 5000 medical cannabis plants, in addition to cost of expansion of current grow operations they have.  And not every producer in the program has unlimited capital, thus the potential for monopolized medical cannabis market and several dispensaries then closing.

For ensuring safe access to all areas of the the state of New Mexico and proper administering of the Lynn and Erin Compassionate Use Act, by the New Mexico State Department of Health, this can be achieved by opening applications for producer licensure specific to rural expansion in the state and by providing a new plant count structure to provide adequate supply as follows;  
First, not all medical cannabis plants are the same. The cannabis plant contains dozens of cannabinoids. The most well known cannabinoid for a long time has been tetrahydrocannabinol (THC), but as more scientific research is conducted involving cannabis and its ability to be used as a medicine, more and more people are learning about other cannabinoids, especially cannabidiol (CBD). Some plants have THC and others produce CBD, THC has psychoactive properties that affect your brain and give you a ‘runner’s high’ while CBD does not.
Photo Credit: Leaf Science
Making revisions to licensing requirements for medical cannabis licensed producers with a plant count for patients and producers properly structured and increased: Medical cannabis CBD strains at ratio of;  1.5 thc(or lower) : 1 cbd (or higher) should not be counted against patient or producer allowable plant count.  Medical cannabis clones and cuttings provided to qualified patient with a personal production license by a licensed producer should not count against the maximum allowable plant

A plant count that is based on ratio of patients to serve with inclusion of empirical data for varying amounts cannabis plant material needed to manufacture different forms of medical cannabis medicine.  A plant count to provide a ratio of 3 THC medical cannabis plants per enrolled patient in conjunction with medical cannabis CBD strains having been removed from the plant count. And based on yearly program totals. Thus if there were 40,000 patients plus the 3 cannabis plants would equal 120,000 THC medical cannabis plants for 35 licensed producers equals 3,429 allowable medical cannabis plants (Minimum standard set by MCAB &  Plant Count adjusted yearly for program growth). Plant count increase structured to be 1715 plant increase by July 1st 2017 then another 1714 by July 1st 2018. Structuring this in phases will reduce the risk of crop problems and maintain high standards of quality for the medical cannabis plants.
Licensing fee structure changed and lowered to be as follows; the department shall assess a nonrefundable fee not greater than five hundred dollars ($500) for processing an application for a new or renewal license. For a new or renewal processor license, medical wholesale license or medical retail license, the department shall charge an annual license fee of not more than two thousand dollars ($2,000). For a new or renewal production license, the department shall charge an annual license fee of: Fifteen thousand dollars ($15,000), if the producer will possess up to one hundred fifty cannabis plants; and an additional five thousand dollars ($5,000) for each additional fifty cannabis plants the producer will possess.  And this also will prevent a small number of the licensed producers from cornering the market of medical cannabis.
The per plant fee would be $100 for medical cannabis plants containing a THC content above the provided CBD ratio.  Licensure limit established allowing one licensed producer to have one grow location per three dispensary store fronts whereas current rules and regulation do not limit this.  All current producers would be granted additional license(s) per application review and program performance standards met. A time period for new producers to open needs to be established; 90-120 window of days then letter sent providing a warning and 45 days time, then final letter sent providing 30 days before forfeiture of license. Currently 6 of the 35 licensed producers are not open yet, well over a year after being awarded a license to produce medical cannabis.

A plant count structure like this would bring the state of New Mexico and the Department of Health in compliance with the intent of the law and uphold the spirit of the Lynn and Erin Compassionate Use Act, 2007.  New Mexico’s medical cannabis history started in 1978.  After public hearings the legislature enacted H.B. 329, the nation’s first law recognizing the medical value of cannabis...the first law. The Department of Health should additional employ three staff members to provide medical cannabis health education statewide. The Department of Health should also establish a training and certification program for all dispensary employees.

Photo Credit: NM Political Report
For all New Mexicans our best platform to date for the legalization of cannabis, was not introduced in the New Mexico legislature 2016 special session as HB-11 (Cannabis Revenue & Freedom Act) by Bill McCamley and Javier Martinez .

Any resident seeking assistance in qualifying for the New Mexico Medical Cannabis program can find that thru the LECUA Patients Coalition of New Mexico. The LECUA Patients Coalition of New Mexico, as a grassroots organization, is the leader in New Mexico amongst medical cannabis patient groups. Providing the latest scientific and medical based research for medical cannabis for the: patients, prospective patients, community education & information, physicians / medical professionals, local & state organizations. Duke City Fitness & Wellness is set up as a FREE educational medical cannabis resource website.
Part two in this articles series, we’ll discuss patient adequate supply of medical cannabis,  properly defined, structured, and increase of adequate supply to a maximum quantity of usable cannabis increased to 425.243 grams per 3 months ( 2.5 ounces every two weeks ), patient cultivation rights and inclusion of patient collectives and cooperative medical cannabis cultivation. Under New Mexico law cardholders in the medical cannabis program are currently legally permitted to be in possession of 230 units (grams).
To contact your New Mexico state legislator and voice your opinion go to, Find My Legislator or call the roundhouse at (505) 986-4600
By Jason Barker
(Medical Cannabis Patient & Organizer -LECUA Patient’s Coalition Of New Mexico)
The solution provided above was derived from the following sources:
Americans For Safe Access, Colorado Medical Marijuana Program, Colorado Department of Revenue- An assessment of physical and pharmacokinetic relationships in marijuana production and consumption in Colorado,  Cannabis Yields and Dosing by Chris Conrad (court qualified cannabis expert), and the Hawaii Medical Cannabis Program-Medical Marijuana Dispensary Task Force Study 2015.
LECUAPCofNM Acronym.jpeg
Lynn & Erin Compassionate Use Act Patient’s Coalition of New Mexico ~ A GrassRoots Movement!

(All Rights Reserved 04/20/2016)