New Mexico cannabis regulators have placed a hold on sales of products that were tested by a lab that was busted for falsifying records. The hold will remain until those products are retested and proven to be in compliance. Many industry stakeholders say they are happy with the action, but some are calling for a full recall of all the affected products.
In January the state’s Cannabis Control Division (CCD) petitioned the Second Judicial District Court to suspend all of Bluebonnet Lab’s operations after state inspectors allegedly found 11 serious violations and evidence of illegal activity.
This news comes as a major blow to the industry. Bluebonnet Labs was one of the largest of only six labs that have been licensed by New Mexico to handle cannabis testing for all of the state’s marijuana products. If the allegations are accurate, then tens of thousands of cannabis products were potentially never properly tested, and CCD can’t guarantee that those products are compliant with state regulations.
State inspectors found that the lab was not maintained properly and that staffers had been falsifying records. Worse yet, there was evidence that marijuana samples had been illegally shipped across state lines to be tested at Texas labs that weren’t licensed by New Mexico.
The court ordered the product hold on Feb. 12.
According to a CCD industry bulletin, all licensees have been ordered to immediately isolate and clearly label any products that were tested by the lab. The products will remain on administrative hold until they are retested or the CCD announces that the hold has been lifted.
Licensees are allowed to destroy the products if they wish. Otherwise, the most recent producer or manufacturer to transfer the product to a retailer will be responsible for paying for a retest and providing a clean Certificate of Analysis to the retailer.
This administrative hold is different than a full-on product recall. If the CCD is happy with the retests, it will release the hold, and retailers will be able to put the products back on shelves. If CCD recalls the products, they would have to be destroyed.
“Recalling all products tested by Bluebonnet labs would be one of the largest recalls to date among all states that have legal cannabis,” says Ben Lewinger, Executive Director at the New Mexico Cannabis Chamber of Commerce. He says the cost of that recall would be passed on to cannabis businesses.
“The Cannabis Chamber supports the Division’s administrative hold as an interim step to determining whether or not products were satisfactorily tested for safety,” Lewinger tells The Paper. “If it’s determined that the products are safe and the administrative hold is lifted, operators who relied on Bluebonnet will be relieved to put those products back on shelves.”
Lewinger says there’s no need to rush to a full recall before the products have been tested. “If there is any question as to whether or not those products are safe,” he says, “the Chamber supports a full recall in the interest of public safety, but know that a recall of this level will surely put licensed operators out of business.”
Meanwhile, Ultra Health CEO Duke Rodriguez says he’s underwhelmed by the CCD’s action.
“Calling this an ‘administrative hold’ instead of a recall is just wordsmithing to avoid saying what this really is,” Rodriguez tells The Paper. “It lacks the urgency this situation deserves and feels more like a face-saving move than a true commitment to consumer protection.”
Rodriguez also criticizes the CCD for its response time. “The fact is, the inspection happened in November, yet action was only taken now — so no, this was not timely,” he says.
“And now, instead of clear, decisive action, we have confusion,” he notes. “What does an ‘administrative hold’ even mean to the average consumer? A straightforward recall would have been the responsible choice, ensuring transparency and avoiding any further delays or risks to public health.”
The CCD ordered mandatory product recalls three times in 2024. Each recall was done after products tested positive for banned pesticides. None of them would come close to the one contemplated by Rodriguez in regards to sheer scale, and the possible ramifications of such a decision are tough to predict. If regulators recall the products or they are found to be out of compliance, many weed companies could go out of business in one fell swoop.
Meanwhile, a bill is currently moving through the state Legislature that would create a police agency with authority over cannabis law enforcement that would be attached to the Office of the Superintendent of Insurance. The agency would be able to seize suspected illicit products and arrest bad actors.
At the moment, CCD staffers have limited legal authority to enforce the regulations that the agency oversees. Advocates of the Cannabis Enforcement bill say that the Bluebonnet Labs case highlights the need for creating a marijuana police force that can intervene early when a bad actor has broken the rules.
The bill is said to have support from bipartisan lawmakers and Gov. Michelle Lujan Grisham. It was approved unanimously by the House Commerce and Economic Development Committee and the House Judiciary Committee.