# N.M. Code R. § 7.34.4.8

Section 7.34.4.8 - PRODUCER LICENSING; GENERAL PROVISIONS**A.****The department may license two classes of producers:****(1)** A qualified patient or primary caregiver who holds a valid personal production license. A qualified patient or primary caregiver 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; provided that a qualified patient or qualified patient's primary caregiver may possess that qualified patient's harvest of cannabis. A personal production license holder may additionally obtain usable cannabis, seeds, or plants from licensed non-profit producers. The primary caregiver of a qualified patient who holds a personal production license may assist the qualified patient to produce medical cannabis at the designated licensed location that is identified on the personal production license.**(2)** A non-profit producer that operates a facility and, at any one time, is limited to a combined total of no greater than 1,750 cannabis plants, not including seedlings, and an inventory of usable cannabis and seeds that reflects current patient needs. A non-profit producer may possess any quantity of seedlings, as defined in this rule. A non-profit producer shall not possess a quantity of cannabis plants that exceeds the quantities authorized by their licensure and associated licensing fee. A licensed non-profit producer may sell and distribute usable cannabis to a person or entity authorized to possess and receive it. A licensed non-profit producer may obtain plants, seeds and usable cannabis from other licensed non-profit producers.**B.****Increase to non-profit producer plant limit:** The department may increase the cannabis plant limitation for a licensed non-profit producer in accordance with the following: **(1)** Effective June 1, 2021, a non-profit producer may request an increase of up to 500 plants that exceeds the total plants allowed in Paragraph (2) of Subsection A of 7.34.4.8 NMAC at the time of renewal of its licensure period. In order to be considered for approval by the department, the non-profit producer shall demonstrate a need for the plant count increase to meet demand for their qualified patients. The non-profit producer shall provide the following information to the department to demonstrate the need for a plant count increase: **(a)** average yield of usable cannabis flower and trim produced by the non-profit producer from the past 12 months;**(b)** current reported inventory of cannabis and cannabis-derived products;**(c)** percentage of usable cannabis and cannabis-derived products that was sold to qualified patients, primary caregivers, or to another licensed producer or manufacturer; and**(d)** any other information requested by the department.**(2)** The department shall make a determination to approve or deny the non-profit producer's request to increase plant count based on the following factors:**(a)** the non-profit producer has sold at least eighty percent of its usable cannabis for the last 12 months it has operated;**(b)** the non-profit producer's current inventory and average yield of usable cannabis is consistent with current averages from other licensed producers;**(c)** the number and severity of complaints and enforcement actions on the non-profit licensed producer;**(d)** the information provided by non-profit producer is consistent with the quarterly reports or inventory tracking information it has provided to the department within the last 12 months;**(e)** supply and demand of medical cannabis throughout the state and in underserved geographical regions;and**(f)** the completeness of information and data provided to the department.**(3)** Effective June 1, 2021, a non-profit producer may request an emergency increase once per year outside of their license renewal period, of up to 500 plants that exceeds the total plants allowed in Paragraph (2) of Subsection A of 7.34.4.8 NMAC, at any time. The non-profit producer shall demonstrate a need for the plant count increase to meet demand for their qualified patients, and shall submit to the department the information identified in Paragraph (1) of Subsection B of 7.34.4.8 NMAC. The department shall only approve the request if the non-profit producer can demonstrate by clear and convincing evidence that it is not able to meet qualified patient demand for usable cannabis or cannabis-derived products with its current plant count or by obtaining usable cannabis or cannabis products from another licensed producer. The non-profit producer shall provide objective data about the current supply in the medical cannabis market to demonstrate these factors. The department shall also consider the same factors in Subsection B when approving or denying this request.**(4)** Any increase in plant count approved under this section shall be voided in the event of a transfer of the majority of ownership for a licensed producer, at which time the plant limit for the license shall revert to the limit allowed in Paragraph (2) of Subsection A above.**(5)** The department is not required to approve a request for an increase to a non-profit producer's plant limit and retains sole discretion to grant or deny the request.**C.****Limitation on distribution:** A non-profit producer shall not knowingly sell or otherwise distribute usable cannabis to any person or entity that is not authorized to possess and receive the usable cannabis pursuant to department rules.**D.****Processing of production applications:****(1)** The issuance of an application is in no way a guarantee that the completed application will be accepted or that a license will be granted. Information provided by the applicant and used by the licensing authority for the licensing process shall be accurate and truthful. Any applicant that fails to participate in good faith or that falsifies information presented in the licensing process shall have its application denied by the department.**(2)** The number of licenses issued by the department to non-profit private entities, and the determination of which non-profit entities shall be licensed, shall be determined at the discretion of the secretary, which determination shall constitute the final administrative decision of the department.**(3)** An applicant whose application for licensure is not approved shall not be entitled to further administrative review.**E.****Factors considered:** The secretary shall consider the overall health needs of qualified patients and the safety of the public in determining the number of licenses to be issued to non-profit private entities and shall further consider: **(1)** the sufficiency of the overall supply available to qualified patients statewide;**(2)** the service location of the applicant;**(3)** the applicant's production plan, including but not limited to the applicant's plan for the growth, cultivation, and harvesting of medical cannabis;**(4)** the applicant's sales and distribution plan, including but not limited to the applicant's plan for sale of medical cannabis, plan for delivery (if any) to qualified patients, and the forms of usable cannabis and cannabis-derived products to be sold or distributed;**(5)** the applicant's skill and knowledge of horticulture and cannabis production technology, as well as the applicant's knowledge of current good manufacturing practice in manufacturing, packaging, labeling, or holding operations for dietary supplements; environmental protection agency agricultural worker protection standards; and New Mexico department of agriculture (NMDA) pesticide registration, licensing and use requirements to ensure a safe product and environment;**(6)** the applicant's plan for the manufacture or distribution of cannabis derived products, including but not limited to edible products;**(7)** the security plan proposed, including location, security devices employed, and staffing;**(8)** the applicant's quality assurance plan, including but not limited to the applicant's plan to ensure purity, consistency of dose, as well as the applicant's plan for routine testing by a department approved laboratory;**(9)** the experience and expertise of the non-profit board members;**(10)** the financial resources available to the applicant for licensure and operations;**(11)** the facilities available to the applicant for production, distribution, storage, and other purposes, and the applicant's ownership of the property, buildings, or other facilities identified in the production and distribution plan, as applicable; and**(12)** other relevant factors.**F.****Production and****distribution of medical cannabis by a licensed non-profit producer; use of couriers:** Production and distribution of medical cannabis by a licensed non-profit producer to a qualified patient or primary caregiver shall take place at locations described in the non-profit producer's production and distribution plan approved by the department, and shall not take place at locations that are within 300 feet of any school, church, or daycare center that existed within the 300-foot area before the producer became licensed to operate at the location; provided that this distance requirement shall not apply to distribution at the home of the qualified patient or primary caregiver. A licensed non-profit producer may, consistent with this rule, and with the consent of a purchasing qualified patient or primary caregiver, utilize an approved courier to transport usable cannabis to a qualified patient or primary caregiver, and may for this purpose share with an approved courier the contact information of the purchasing qualified patient or primary caregiver. A licensed non-profit producer may, consistent with this rule, also utilize an approved courier to transport usable cannabis to another non-profit producer, to an approved laboratory, and to an approved manufacturer. A licensed non-profit producer shall not identify any person as an intended recipient of usable cannabis who is not a qualified patient, a primary caregiver, an approved courier, an approved manufacturer, or an approved laboratory.**G.****Verification of application information:** The department may verify information contained in each application and accompanying documentation by: **(1)** contacting the applicant by telephone, mail, or electronic mail;**(2)** conducting an on-site visit;**(3)** requiring a face-to-face meeting and the production of additional identification materials if proof of identity is uncertain; and**(4)** requiring additional relevant information as the department deems necessary.**H.****Cooperation with the department:** Upon submitting an application, an applicant shall fully cooperate with the department and shall timely respond to requests for information or documentation. Failure to cooperate with a request of the department may result in the application being denied or otherwise declared incomplete.**I.****Criminal history screening requirements:** All persons associated with a licensed non-profit producer or non-profit producer-applicant, manufacturer or manufacturer-applicant, approved laboratory or laboratory applicant, and approved courier or courier-applicant, shall consent to and undergo a nationwide and department of public safety (DPS) statewide criminal history screening background check. This includes board members, persons having direct or indirect authority over management or policies, employees, contractors, and agents. Background check documentation shall be submitted annually for approval to the department with the applicant's renewal materials and prior to an individual assuming any duties or responsibilities for a non-profit producer, manufacturer, laboratory, or courier. Background check documentation shall be received by the medical cannabis program, and the individual shall be approved by the program, before the individual begins to provide any work or services to the producer, manufacturer, laboratory, or courier. **(1)****Criminal history screening fees:** All applicable fees associated with the nationwide and DPS statewide criminal history screening background checks shall be paid by the non-profit producer, manufacturer, laboratory, courier, or applicant.**(2)****Disqualifying convictions:** Individuals convicted of a felony violation of Section 30-31-20 (trafficking of a controlled substance); 30-31-21 (distributing a controlled substance to a minor); 30-31-22 NMSA 1978 (distributing a controlled substance); or a violation of any equivalent federal statute or equivalent statute from any other jurisdiction, shall be prohibited from participating or being associated with either a non-profit producer licensed under this rule, an approved laboratory, an approved manufacturer, or an approved courier. If an individual has been convicted of a felony violation of the NM Controlled Substances Act other than Sections 30-31-20 through 30-31-22 NMSA 1978, or has been convicted of any equivalent federal statute or equivalent statute from any other jurisdiction, and the final completion of the entirety of the associated sentence of such conviction has been less than five years from the date of the individual's anticipated association with the production facility, then the individual shall be prohibited from serving on the board of a licensed non-profit producer, or working for the licensed producer, or approved entity. An individual who is disqualified shall be notified of his or her disqualification. If an individual has been convicted of more than one felony violation of the above-cited sections of the NM Controlled Substances Act or an equivalent federal statute or equivalent statute from any other jurisdiction, the individual shall be notified that he or she is permanently prohibited from participating or being associated with a licensed non-profit producer, approved manufacturer, approved laboratory, or approved courier. Any violation of this subsection shall result in the immediate revocation of any privilege granted under this rule and the act.**J.****Board membership requirements for private entities:** The board of directors for a private non-profit applicant or licensee shall include at a minimum five voting members, including one medical provider limited to a physician (MD or DO), a registered nurse, nurse practitioner, licensed practical nurse, or physician assistant, and three patients currently qualified under the Lynn and Erin Compassionate Use Act.**(1)** for purposes of board membership, a single individual may not qualify as both the patient and as the medical provider;**(2)** members of the board of directors for a non-profit producer shall be residents of New Mexico; and**(3)** no member of a non-profit producer's board of directors may at any given time serve on more than one single board of directors for licensed non-profit producers, or be employed by another non-profit producer.**K.****Limitation on number of production facilities:** A licensed non-profit producer shall conduct its production operations at a single, physical location approved by the department. An additional production facility or facilities may be allowed at the department's discretion.**L.****Limitation on sales within 90 consecutive calendar days:** A licensed non-profit producer shall not sell or distribute usable cannabis to a qualified patient or primary caregiver in a total quantity that exceeds 230 units, as described in department rules concerning patient registry identification cards, within any 90-day period, unless the qualified patient or primary caregiver presents proof of a valid medical exception granted by the department.**M.****Destruction of usable cannabis and cannabis plants:** A licensed non-profit producer shall document the destruction of any usable cannabis or cannabis plants using a video recording, and shall retain the video recording of the destruction for no less than 120 days. A licensed non-profit producer shall make the video recording of the destruction available for the department's inspection or copying upon the department's request.**N.****Maximum water content in dried usable cannabis:** A licensed non-profit producer shall not sell usable cannabis, other than a cannabis derived product, that contains fifteen percent or greater water content by weight. A licensed non-profit producer may be subject to testing to ensure compliance, consistent with the provisions of this rule.**O.****Non-profit producer policies and procedures:** The non-profit producer shall develop, implement, and maintain on the premises policies and procedures relating to the medical cannabis program, which shall at a minimum include the following: **(1)** distribution criteria for qualified patients or primary caregivers appropriate for cannabis services, to include clear, legible photocopies of the registry identification card and New Mexico photo identification card of every qualified patient or primary caregiver served by the private entity;**(2)** testing criteria and procedures, which shall be consistent with the testing requirements of this rule;**(3)** alcohol and drug-free work place policies and procedures;**(4)** an attestation that no firearms will be permitted on any premises used for production or distribution by the non-profit entity;**(5)** employee policies and procedures to address the following requirements: **(a)** job descriptions or employment contracts developed for every employee that identify duties, authority, responsibilities, qualifications, and supervision; and**(b)** training materials concerning adherence to state and federal confidentiality laws.**(6)** personnel records for each employee that include an application for employment and a record of any disciplinary action taken;**(7)** on-site training curricula, or contracts with outside resources capable of meeting employee training needs, to include, at a minimum, the following topics: **(a)** professional conduct, ethics, and patient confidentiality; and**(b)** informational developments in the field of medical use of cannabis.**(8)** employee safety and security training materials provided to each employee at the time of his or her initial appointment, to include:**(a)** training in the proper use of security measures and controls that have been adopted; and**(b)** specific procedural instructions regarding how to respond to an emergency, including robbery or a violent accident.**(9)** a general written security policy, to address at a minimum: **(a)** safety and security procedures;**(b)** personal safety; and**(c)** crime prevention techniques.**(10)** training documentation prepared for each employee and statements signed by employees indicating the topics discussed (to include names and titles of presenters) and the date, time, and place the employee received said training;**(11)** a written policy regarding the right of the private entity to refuse service;**(12)** a confidentiality policy to ensure that identifying information of qualified patients is not disclosed or disseminated without authorization from the patient, except as otherwise required by the department;**(13)** an attestation that the nonprofit producer will prohibit its employees and contractors from being under the influence of drugs or alcohol in the workplace; and**(14)** such other policies or procedures as the department may require.**P.****Retention of training documentation:** A non-profit producer shall maintain documentation of an employee's training for a period of at least six months after termination of an employee's employment.**Q.****Licensure periods:****(1)****Licensure period for non-profit producers:** The licensure period of a licensed non-profit producer shall be from August 1st (or the date of approval of the licensure application, if later) through July 31st of a given year. Exception; transition to revised 2019 rules: The licensure period for a licensed non-profit producer that would otherwise end on August 1, 2019 shall instead continue until September 30, 2019.**(2)****Licensure period for qualified patient producers:** A qualified patient's personal production license shall expire one year after the issuance of the personal production license, or at the end of the person's enrollment in the NM medical cannabis program, whichever occurs first.**(3)****Identification cards:** An employee of a licensed non-profit producer shall carry their department issued employee identification card at all times during their work, and shall present the card to law enforcement officials and to department officials upon request. An employee who is unable to produce their department issued identification card upon request shall not remain on the licensed premises, and shall produce the card for the department's inspection prior to returning to the licensed premises. Licenses and identification cards issued by the department are the property of the department and shall be returned to the department upon a producer's withdrawal from the program, upon termination of a card holder's employment with a licensed non-profit producer, or upon suspension or revocation.**R.****Amended license:****(1)****Submittal of application for amended license:** A licensed producer shall submit to the department an application form for an amended license, and shall obtain approval from the department, at least 30 business days prior to implementing any: **(a)** change of location of a qualified patient who also holds a personal production license;**(b)** change of location of a non-profit producer's production or distribution facilities, change of directors, change of ownership of production or distribution facilities, producer name, capacity or any physical modification or addition to the facility; and**(c)** substantial change to a producer's production plan or distribution plan, including any change to the type(s) of products produced or distributed, the producer's manufacturing plan (as applicable), the producer's method(s) of distribution, and security plan.**(2)****Process for incomplete application for amended license:** In the event that an application for amended licensure is determined by the program to be incomplete, the program will specify the information or materials that remain to be submitted. If the licensed producer does not submit the requested information or material, and does not otherwise contact the department regarding the application, within thirty days of receiving notice of the deficiency, the application will be closed as incomplete, and the licensed producer will be required to recommence the application in order to resume the application process.**S.****Application for renewal of an annual production license:****(1)****Deadline for private entities.** Each licensed non-profit producer shall apply for renewal of its annual license no later than August 1st of each year by submitting a renewal application to the department. The department shall provide the renewal application requirements no later than June 1st of each year.**(2)****Deadline for personal production license holders:** A patient who holds personal production licensure shall apply for renewal of their annual license no later than 30 days prior to the expiration of the license by submitting a renewal application to the department.**(3)****General submission requirements for qualified patients:** Qualified patients applying for personal production licensure shall submit: **(a)** an application for issuance or renewal of a personal production license; and**(b)** a non-refundable thirty dollar ($30) application fee, except that the fee may be waived upon a showing that the income of the qualified patient is equal to or lesser than two hundred percent of the federal poverty guidelines established by the U.S. department of health and human services. A lost or stolen identification card shall be reported as soon as practicable to the medical cannabis program.**(4)****General submission requirements for private entities:** Private entities shall submit: **(a)** an application for renewal of license; and**(b)** applicable non-refundable licensure renewal fees.**T.****Non-transferable registration of license:****(1)** A license shall not be transferred by assignment or otherwise to other persons or locations. Unless the licensed producer applies for and receives an amended license, the license shall be void and returned to the department when any one of the following situations occurs:**(a)** ownership of the facility changes;**(b)** location change;**(c)** change in licensed producer;**(d)** the discontinuance of operation; or**(e)** the removal of all medical cannabis from the facility by lawful state authority.**(2)** Transactions, which do not constitute a change of ownership, include the following: **(a)** when applicable, changes in the membership of a corporate board of directors or board of trustees; and**(b)** two or more corporations merge and the originally licensed corporation survives.**U.****Automatic expiration of license; closure of nonprofit producer operations:** A license shall expire at 11:59 p.m. on the day indicated on the license as the expiration date, unless the license was renewed at an earlier date, suspended, or revoked.**V.****Display of license:** The licensed producer shall maintain the license safely at the production location(s) and dispensary location(s) and shall be able to produce the license immediately upon request by the department or law enforcement.**W.****Fees applicable to applicants and licensees:****(1)****Non-profit producer application fee:** A non-profit producer shall submit with its initial application an application fee of ten thousand dollars ($10,000). If the application is denied, the department shall issue a refund of nine thousand dollars ($9,000) to the applicant.**(2)****Non-profit producer license fee:** A non-profit producer that is licensed shall submit to the medical cannabis program a non-refundable licensure fee before beginning operations, no earlier than July 1st of each renewal year and no later than August 1st of each renewal year, of: $40,000 for the first 500 cannabis plants to be possessed by the non-profit producer; $5,000 for each additional increment of 50 cannabis plants above 500 and up to a collective total of 1,000 cannabis plants; and $6,000 for each additional increment of 50 cannabis plants above 1,000.**(3)****Exception; transition to revised LNPP fees, plant limits:** A fee that is paid by a non-profit producer in the year 2019 shall be tendered to the department no earlier than September 23, 2019 and no later than October 4, 2019.**(4)****Exception; newly licensed LNPPs:** The license fee to be paid by a non-profit producer that obtains initial licensure after the enactment of this revised rule shall be pro-rated based on the time remaining in the licensure period.**(5)****Qualified patient personal production fees:** A qualified patient shall submit with each initial application and renewal application for personal production licensure a fee of thirty dollars ($30), except that the fee may be waived upon a showing that the income of the qualified patient is equal to or lesser than two hundred percent of the federal poverty guidelines established by the U.S. department of health and human services; and.**(6)****Replacement license fee:** A fifty dollar ($50) payment is required for replacement of an identification card for an employee of a licensed non-profit producer, and for replacement of a personal production license card.**(7)****Payment:** Fees shall be paidby check, money order, or any other form of payment approved by the medical cannabis program director or designee, and shall be made payable to the medical cannabis program of the department.**X.****Geographic requirements for initial licenses:** The department may require that a non-profit producer operate dispensaries in geographical locations of the state that are specified by the department as a precondition of initial licensure.**Y.****Inventory and sales equipment:** The department may require a licensed non-profit producer to utilize specified equipment, software, and services for purposes of tracking inventory, sales, and other information, and for the purpose of reporting that information to the department of health.**Z.****Reporting of theft to department:** A non-profit producer shall submit to the department notification of any theft, robbery, break-in, or security breach that occurs on the producer's premises, no later than 10 calendar days after the producer first becomes aware of the event. The description shall include a description of any property that was stolen or destroyed, and the quantity of any usable cannabis that was stolen.**AA.****Closure of applications period:** The department may close the applications period during which applications for non-profit producer licenses will be accepted and reviewed.