In a significant move, New Mexico State Police recently seized and destroyed tens of thousands of pounds of marijuana plants from greenhouses in northwestern New Mexico over regulatory compliance issues. Now the company involved says it plans to file a lawsuit against the state, claiming its rights were violated by regulators when the state revoked its license.
The seizure took place in the first week of November after state regulators accused NNK Equity, LLC, of failing to respond to a notice of contemplated action over 11 alleged violations of state cannabis regulations.
But the company’s attorney, Jacob Candelaria, argues his clients’ civil rights were violated when the state’s Cannabis Control Division (CCD) allegedly refused to provide a translation of the division’s notice for NNK Equity’s owners, Irving Lin and Bao Xue, who primarily speak Mandarin Chinese. According to the owners, they sent a request for a translation to the CCD but never received a response. The CCD, for its part, has said it complied with all state requirements.
NNK Equity was licensed in December 2023 to operate a marijuana cultivation facility in Waterflow, a rural community near the Navajo Nation. The CCD in June conducted a compliance inspection and reported discovering NNK Equity had exceeded its permitted plant count. Further investigation, CCD said, revealed the company was storing additional plants at an unlicensed site.
In July, CCD’s notice was sent to the company and published online. It reported a number of serious violations:
According to the notice, NNK Equity failed to post its license onsite, was unable to prove that it had obtained the proper water rights for its operation, failed to install enough on-site security cameras, did not have any hand-washing or sanitation equipment onsite, lacked any written waste disposal procedures, did not follow proper procedures for transporting and manifesting product transfers, failed to tag plants for the state’s Bio Track system and engaged in commercial cannabis cultivation at a premise that didn’t have a license.
The company also allegedly committed violations that could have directly harmed consumers. According to the notice, NNK Equity was storing gas containers, a propane tank and corrosives in improper areas. Authorities said it could have led to fire, explosion or product contamination.
Operators were also allegedly caught using plant clones with visual mold growth which could potentially have posed a serious health risk. Regulation agents also reported finding loose dogs roaming freely through the facility and sleeping among the plants.
The CCD gave NNK Equity 20 days to request a hearing or settlement conference with the CCD to discuss the violations. When those 20 days were up, the division revoked the company’s license and prohibited the owners from seeking a new license for three years. The company was also ordered to pay the CCD $1 million and send a written plan to the division outlining how it would go about selling or destroying any leftover weed that it possessed.
When the division still failed to receive a response, state police were sent to seize the products and destroy them. Authorities reported that tens of thousands of pounds of cannabis products were subsequently destroyed.
But Candelaria said the state’s response was excessive. He voiced concerns over the use of temporary restraining orders to justify the immediate eradication of NNK Equity’s private property before the company was given a reasonable chance to respond. Although the state did warn NNK Equity, Candelaria maintains that regulators should have provided Mandarin Chinese translations of the notice to the company’s owners.
The company now plans to petition a state district judge to overturn the license revocation and compel regulators to hold a formal hearing. Additionally, NNK Equity intends to sue the state for property damages.
As the legal battle unfolds, the case will likely serve as a test of New Mexico’s regulatory framework for the cannabis industry. For industry stakeholders, it may seem like a simple case of regulatory violations run amok, but it also raises questions about due process and the rights of license holders in the face of government actions.