The head of New Mexico’s Medical Cannabis Program on Monday defended a highly criticized process the state followed to issue a coveted marijuana production license just one day before a new agency assumed regulatory authority.

On June 23, the Department of Health opened a five-day window to apply for lucrative marijuana producer licenses, the first time it had sought applications in six years.

But the department gave little public notice.

The department posted a link to the application on its website but didn’t issue a news release or otherwise alert the public, nor did the posting explicitly state new applications were being accepted.

The one and only company that applied — Albuquerque-based GH LLC — was granted a license June 28. That was a day after high-level officials conducted a Sunday inspection of the company’s facilities and a day before the medical program’s transfer of power to the newly created Cannabis Control Division.

Program Director Dr. Dominick Zurlo said the department didn’t do anything out of the norm.

“We used the same process that we’ve been using for the last two years with other [types of] applications, which has been posting it onto our website,” he said.

Zurlo also said the department sought applications for producer licenses to ensure there would be enough product for medical cannabis patients as the state moves into the recreational marijuana industry. He said the state had been working to increase the number of licenses for months.

“If we had had more time, I’m sure we would have gotten additional applications,” he said.

But the Cannabis Regulation Act that legalized recreational marijuana in New Mexico “was going into effect at that time, so we utilized the time that we had to be able to do the best that we could to help ensure that there were enough licenses to be able to produce enough cannabis for the medical patients,” Zurlo said.

Zurlo said former Health Secretary Dr. Tracie Collins approved the decision to seek applications for additional licenses.

Collins, who returned to work at the University of New Mexico as dean of the College of Population Health when she stepped down as health secretary, did not return messages seeking comment.

Tripp Stelnicki, a spokesman for Gov. Michelle Lujan Grisham, said the Governor’s Office was not involved in the process of opening a new application window for producers. “The notice that was provided was satisfactory and, yes, the process overall was above board, in our view,” he added.

State Sen. Jacob Candelaria, D-Albuquerque, an attorney who represents New Mexico Top Organics-Ultra Health, the state’s largest medical cannabis operation, said Zurlo and the Department of Health have “fought tooth and nail in District Court” against any order to increase the state’s supply of medical cannabis.

“Let me just be very, very clear,” Candelaria said. “It is the height of cynicism, hypocrisy and doublespeak for Dr. Zurlo to say one thing to the District Court when it benefits the Department of Health and say an entirely different thing today to cover up what seems to be a pretty glaring abuse of power.”

Duke Rodriguez, president and CEO of New Mexico Top Organics-Ultra Health, echoed the sentiment.

“He’s been the loudest voice repeatedly beating the drum that there is enough product and enough dispensaries already in the marketplace,” Rodriguez said. “He has resisted raising the purchase limit or the plant count in every form possible. He has been the No. 1 voice saying that we don’t need any more plants, we don’t need any more producers, that the supply is adequate.”

In April, Zurlo told New Mexico Political Report the state had “more than an adequate supply.”

At the Medical Cannabis Advisory Board’s most recent meeting, Zurlo told the panel there was adequate supply in New Mexico, Rodriguez said.

“You cannot on one day say that there is plenty and then the next day say there’s a shortage as a defense for why you adopted this unusual licensing process,” he said. “It just makes no sense.”

The two issues are “not mutually exclusive,” Zurlo wrote in an email.

“I have stated there is a sufficient supply of cannabis for medical patients at this time,” he wrote. “This licensure helps to ensure there will continue to be enough medical cannabis when adult use sales start. I often hear the question about quantity, but this is about more than just quantity of cannabis. Additional licenses also help to provide an environment which helps reduce prices and make medical cannabis more affordable for patients. Additional licenses also help create an environment where quality of the cannabis and the diversity of products both increase.”

In the interview, Zurlo said he hoped the state would receive more applications for producer licenses. Asked whether he believed the process was fair and transparent, Zurlo said he did.

“We did put it out onto our public website, which is visited every day by many patients, individuals in the field of cannabis and medical cannabis, and so it was there and it was available,” he said. “I believe that we did do what we needed to do.”

The process has sparked allegations of favoritism and calls for an investigation.

Zurlo said he understood why the process would be criticized but maintained everything was aboveboard.

“I can say I did not benefit from this in any way, shape or form,” he said. “This was about what can we do to help patients the best in the time we have remaining as regulators.”

Candelaria called it “disingenuous” for Zurlo to claim the department was acting in medical cannabis patients’ best interests. In a court filing earlier this year, the department wrote that data maintained by the agency “confirms the adequacy of the supply afforded by the 1,750-plant limit.”

For example, the court filing states, “DOH maintains publicly available quarterly reports showing that, since the promulgation of the 1,750-plant count rule, the remaining stock of cannabis available for sale in each quarter has exceeded the amount sold within each quarter, and that the difference has increased each quarter.”

“In court, they’re saying one thing and then all of a sudden they get their hands caught in the cookie jar, and they’re like, ‘Oh, we’re doing it for the patients,’ ” Candelaria said. “No, you weren’t. We’ve been in litigation trying to force you to increase the supply for months, and they refused.”

Follow Daniel J. Chacón on Twitter @danieljchacon.

(3) comments

Sarah Dolk

This is NOT the way it has been done in the past. This did NOT follow previous licensing protocol AT ALL. There is no way someone could even complete an application for a LNPP in five days (ask any current licensee). Even yearly re-licensing takes longer that that, so I feel pretty sure these people who were granted a license knew it was happening well before it showed on the website. Additionally, the Medical Cannabis section of the DOH website has been going thorough a lot of changes in the past few months, making it very difficult to find information. It is always in a different place. I remember in the past there were notices of the application process being opened on the Home Page of the Medical Cannabis section of the DOH website. Not this time. Why? I feel this was set up for this company only and they were probably guided by DOH staff. This smells so bad

I work for a company who was told by the Medical Cannabis Program that the new dispensary location could not be licensed by the DOH and they would have to be have to wait and go through the CCD. This was before the CCD took over this process. This is very shady business.

The Medical Cannabis Section of the DOH website is still changing often and today there were several times it gave 505 errors when you tried to go there. I was looking for patient counts. They weren't there, but tonight they showed up. Again...very shady. Something fishy is going on.

Mike Johnson

Thank you Mr. Chacón for another well researched and presented story on the kind of people and corruption NM is famous for, really NMTrue. Easy to see how this "official" is only doing as the bard would say.....thou dost protest too much.....

John Cook

I very nearly never criticize a reporter. Conceivably, because my daughter is an investigative reporter for a major newspaper. I note that the lede in every Daniel Chacon story has a pejorative adjective. In this case: 'a highly criticized process'. It turns out the 'high' criticism comes from a single source: Senator Candalaria.

I'm particularly reminded of an earlier story by the same reporter on the Governor being cleared of an ethics complaint. The lede that time said voters were 'wrathful' about actions that were dismissed as ethics violations. Other examples can be found in every story filed by this reporter. It's time for editors to start being editors.

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