Inside Track

In February 2015, Ward authorized the state's 23 current producers to triple the number of plants they could grow. In March, she sent pot prospectors scrambling to compete for a dozen new producer licenses after she opened the application process for the first time since Gov. Susana Martinez was elected in 2010.

It's that second step in Ward's action plan that is raising eyebrows about potential cronyism and conflicts of interest in the awarding of the licenses.

While fewer than 15 percent of those who applied were tapped to become commercial cannabis producers, an SFR investigation reveals that one of the winning nonprofits had ties to Michal Hayes, an attorney who worked for the Department of Health at the time.

Public records show that even though Hayes was on the board of directors of Keyway Inc. when the Santa Fe nonprofit applied to the department in May, she didn't move to another state job until more than a month after the nonprofit learned in October that it had made the cut.

SFR confirmed Hayes' role with Keyway after reviewing the nonprofit's bylaws. Hayes signed that public document, along with Keyway's executive director Matt Clarke, before it was recorded with the New Mexico Corporations Bureau, just before the license application deadline.

After a two-month investigation, it's still unclear if Hayes, who transferred to another assistant general counsel job at the Aging and Long-Term Services Department, ever disclosed her involvement to Ward or her supervisors before the applications were evaluated, scored and ranked last summer.

Kenny Vigil, a spokesman for both departments, would not answer SFR's specific questions about whether Hayes made the disclosure.

Vigil, who routinely denies requests for interviews and instead demands written inquiries, declined to make Ward or Hayes available to talk about the situation and dodged our yes-or-no question: Did NMDOH know Michal Hayes was serving on Keyway's board during the application evaluation process?

Instead, Vigil claims that Ward "did not look at names of applicants" prior to making her final selections. Vigil also insists Hayes never "provided the [medical cannabis] program any legal advice" and "was not involved in the evaluation of applications," even though the department has acknowledged Hayes' general contributions in the agency's overall strategic planning report for fiscal years 2014-2016.

Hayes, a Humboldt State University history graduate who later earned a law degree in Vermont and spent more than three years at NMDOH, also did not respond to SFR's request for interviews before publication. Clarke, a private attorney in Santa Fe, did not reply to email and phone inquiries about why he put a health department employee on his board.

The bylaws explain that Hayes doesn't earn compensation for her work on the board, yet her involvement with Keyway is raising red flags for some lawmakers, as well as would-be growers whose own license applications were rejected.

Karen DeSoto tells SFR the plans she submitted to grow and dispense cannabis were denied, even though she was preparing to set up in a rural part of the state.

"They told us that was their priority last year," says DeSoto, who hoped to open a shop in Grants.

"No one on our all-Hispanic-women team is politically connected," she says, wondering aloud if those facts dampened their chances. Evaluators who hold high positions in the health department, she says, "don't know me from Adam."

DeSoto says she suspects her application was set aside to make room for Hayes and another high-profile application backed by former state Public Safety Secretary Darren White. She doesn't buy the department's claim that Hayes was completely separated from the process.

"Of course there is going to be some bias. If you see a name of a person you work with on the application, it's human nature to want to score them higher," says DeSoto.

She claims the health department employees and their family members should have been ineligible to apply for a license or sit on a nonprofit's board.

"It looks bad," says Jason Marks, an attorney and former public regulation commissioner, who helped Southwest Wellness Center in Taos with their winning application. "But the way the health department has described the process, it doesn't appear to be a conflict of interest."

"It's the kind of thing that looks funny to the public and undercuts confidence in the process that should ensure that nobody gets special treatment," Marks adds, before suggesting a counterargument: "State employees don't give up their rights to associate with people to form a nonprofit."

But state Rep. Deborah Armstrong, D-Albuquerque, tells SFR she thinks Hayes' role with Keyway has the appearance of a conflict of interest.

"Her interests should be fully disclosed, and (the health department) should assure the public that Ms. Hayes did not inappropriately influence the selection of cannabis producers," says Armstrong.

SFR asked the governor's staff if they believe Hayes' board position violated the Code of Conduct but never received an answer.

The policy requires employees to make a "full disclosure of real or potential conflicts of interest" as a "guiding principle for determining appropriate conduct." When the new code was instituted in April 2011, Scott Darnell, a senior advisor to the governor, said Martinez "believes that public officials should be motivated by a desire to serve—not by a desire to make money based on contacts or influence that is developed while working in state government."

While the state health department says it needs more time to provide documents about all the nonprofits that applied for licenses last year, a rule change that went into effect Monday led officials to publish information about existing commercial cannabis producers and those still undergoing the license process.

Santa Fe Reporter