Cannabis Supply in Checkmate
Producer says low plant limit stunts job growthLocal NewsMonday, July 25, 2016
A SFR investigation reveals the backlog that's lasting up to 60 days for some applicants is just the tip of the iceberg.
Duke Rodriguez, the president and chief executive officer of Ultra Health, which already manages six cannabis dispensary locations in New Mexico, tells SFR that he’s prepared to create 85 new dispensary jobs around the state with an average pay of $15 per hour, but the health department is dragging its feet. He wants them to approve his plan to open 13 new dispensaries in rural cities without full-time dispensaries (stores that are open at least 40 hours a week.)
Rodriguez, who is already writing rent checks for leased, but still unoccupied spaces in Alamogordo, Silver City, Deming, Carlsbad and other cities, says Charles Castillo, a health department compliance officer, emailed his staff last Friday to express concerns about Ultra Health’s ability to reliably supply enough medication to the proposed new locations.
“The issue which has affected further consideration of your organization’s amendments requesting additional dispensaries relates only to your ability to adequately supply those proposed dispensaries with a steady and reliable supply of usable medical cannabis,” writes Castillo. “Simply stated, you yourself have indicated on numerous occasions that with the maximum 450 plant count it would be extremely difficult, even under optimal conditions and an ideal production cycle, to adequately serve the needs of even six dispensaries with that plant count.”
Instead, Castillo wants Rodriguez to negotiate wholesale agreements with smaller producers without a large dispensary infrastructure or Ultra Health's marketing expertise.
“You were advised on several occasions that if you could produce Memorandums of Understanding (MOU), Memorandums of Agreement (MOA), or other formal agreements between yourselves and such producers, that we could move forward in considering additional dispensaries,” writes Castillo.
Castillo's explanation doesn’t sit well with Rodriguez or Ultra Health General Manager Leonard Salgado. They tell SFR that before last Friday they had not heard anything from program staff since the end of April and that they were never told that “adequate supply” was the sole concern for delaying their business expansion.
After reviewing Castillo’s email, Rodriguez and Salgado want the department to provide them any modeling data that shows how the regulators calculate adequate supply based on patient demand, since the number of enrolled patients is up 93 percent since last summer.
He claims that prospective employees, just like patients, are having to wait up to two months for their Licensed Nonprofit Employee cards to be processed.
“By the time we call them, they’ve already found other jobs,” says Rodriguez. "Most people can't wait two months to start work."
For now, Rodriguez and Salgado estimate the state will receive up to $3.5 million in gross receipts taxes from medical cannabis sales this fiscal year. They want lawmakers to propose bills to lift plant limits imposed by the health department and consider transferring regulator control from the health department to the regulation and licensing department.
Rodriguez also suggests that if lawmakers return to the Roundhouse for a special session to deal with a looming budget deficit, they once again consider legalizing cannabis for social use.
“It could generate up to $131 million in new revenues, depending on the tax rate” says Rodriguez, who cautions about more deep spending cuts.
“We do not have a spending problem; we have a revenue problem. In healthcare it is well understood that if you cut too deeply, you are no longer cutting into fat but are cutting into needed muscle,” says Rodriguez, adding the cannabis could be the perfect prescription for what ails New Mexico.