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The battle between state cannabis regulators and a testing lab embroiled in controversy has turned into a legal wrestling match. Now inspectors are being denied access to a Texas lab where New Mexico cannabis was tested against state policy.
In February, the state’s Cannabis Control Division (CCD) placed an administrative hold on all marijuana products that were tested at Bluebonnet Labs. Inspectors found that the company violated numerous serious regulations, including falsifying records and failing to maintain lab equipment.
Worse yet, some of the evidence found by CCD staff appears to indicate that Bluebonnet was shipping samples to its home lab in Texas for testing, meaning the company may have broken federal and state laws by transporting weed across state lines to an area where the drug remains illegal.
The lab is reportedly claiming that the plan to ship samples to Texas was approved by a previous CCD director. In an email to The Paper., Regulation and Licensing Department (RLD) spokesperson Andrea Brown says that’s impossible. “The CCD has no jurisdiction to grant that type of approval since, under the Cannabis Regulation Act, all commercial cannabis activity must occur in New Mexico and cannot cross state lines,” she writes.
The agency is now in a legal battle to force an inspection on Bluebonnet’s Texas lab. According to court documents, the CCD has attempted to schedule an inspection on a number of occasions since the hold was put in place — through email and phone — but Bluebonnet appears to have been dodging the agency. In emails between the CCD and Bluebonnet, the lab’s attorney even cited a medical emergency to delay the inspection. In subsequent emails, Bluebonnet refused to allow CCD to inspect its Texas facility because it would be too burdensome.
In the last week of February, CCD filed a Motion to Compel that would force the lab to submit to an inspection. The agency says it’s waiting for the court’s decision and still hasn’t been given access to the Texas lab.
“The health and safety of consumers in New Mexico is the number one priority,” says Matt Kennicott, CEO and co-founder of cannabis industry association The Plug. “So if CCD wants to have an inspection, they should be granted the inspection.”
“The escalating dispute between the CCD and Bluebonnet Labs has taken on the dramatic twists of a telenovela,” says Duke Rodriguez, CEO of Ultra Health. “When regulatory bodies cross state lines without clear authority, they risk entangling themselves in legal quagmires, undermining the very compliance they seek to enforce.”
Bluebonnet appears to have cut all ties to its New Mexico venture, even removing all mention of the Albuquerque lab from its website. It did not respond to a request for comment.
“This isn’t about cannabis oversight anymore,” says Rodriguez. “It’s about a standoff that benefits no one.”
Rodriguez is a vocal supporter of a full recall on all products associated with the tainted lab. “At some point, the adults in the room need to push the ‘recall’ button and end this,” he says.
But some in the industry are leery of a full recall and the financial effects it may have. Rodriguez disagrees. “New Mexico’s cannabis industry isn’t collapsing over this,” he says, “but the bureaucratic gridlock is real.”
Brown says the CCD won’t be recalling the products for the time being. “The CCD cannot issue a product recall without sufficient evidence that the products in question do not meet the health and safety standards promulgated by the CCD,” she says. “At this time the CCD does not have conclusive evidence that products don’t meet health and safety standards.”
Under the administrative hold, cannabis licensees are instructed to isolate and label all products that were tested by the lab and keep them away from consumers until those products can be retested. They have also been locked in the state’s seed-to-sale system to prevent sales. The products are currently in a state of limbo since it’s unclear whether they live up to standards or not since they were potentially never tested by a licensed facility.
The CCD says it has already released numerous products from the hold that have received secondary testing and were proven to be in compliance.
Kennicott says the state did the right thing by initiating the hold instead of a full-fledged recall. Industry stakeholders have estimated that the hold could affect up to 10 percent of all the cannabis products in New Mexico. Kennicott says a full recall of that magnitude — on products that haven’t been verified one way or another — would be financially devastating to some cannabis businesses.
“Unfortunately, I do know that there are retailers with over three-quarters of a million dollars in product that was put on hold,” says Kennicott. “I think it’s hitting some of these businesses harder than people realize.”
Nevertheless, Kennicott is joining others in voicing a desire to see the whole mess cleared up quickly. “CCD and Bluebonnet and whoever else is involved really need to get to the bottom of this so retailers and everybody else in the industry can have some relief from the hold,” he says. “And so we know that consumer health and safety is being protected.”