Following a local dispensary’s very public fall from grace, New Mexico’s marijuana regulators clarify that an amount of THC exceeding the legal limit of “hemp” is enough to categorize a product as “cannabis,” and place it under the state’s regulatory authority—no matter how it was sourced.
Earlier this year, a judge ordered Albuquerque dispensary Sawmill Sweet Leaf to shut its doors after Cannabis Control Division (CCD) staffers found out-of-state products on the shop’s shelves and an unlicensed and unpermitted THC extraction operation in the back.
When it came to the out-of-state cannabis products, Sawmill Sweet Leaf initially told CCD staffers that they contained Delta-8 THC, an unregulated compound that’s sourced either from the marijuana plant itself or, more commonly, synthesized from CBD. According to the dispensary, the CCD should have had no regulatory authority over the products in this case.
Delta-8 THC is not the same THC you find listed on cannabis product labels in New Mexico dispensaries. Those labels are referring to Delta-9 THC, the compound usually associated with the psychotropic effects of weed and regulated by the state. Delta-8 THC only shows up in trace amounts in weed plants, and it’s said to produce a mild state of intoxication—much less inhibiting, compared to Delta-9 THC.
The compound has received little scientific scrutiny but has been outlawed in many states. New Mexico is one of the states where Delta-8 THC is legal.
Sawmill Sweet Leaf told regulators that the products it was selling that were labeled to suggest that they came from California contained only Delta-8 THC. If that were true, then the division would have had no authority over them. The CCD has confirmed to The Paper. that it has no regulatory power over Delta-8 THC products.
But According to CCD records, the products were tested and found to contain the regulated Delta-9 THC, meaning it was illegal to transport them across state lines and sell them to New Mexico consumers.
As for the extraction setup, regulators said the unlicensed closed-loop system presented an explosion danger that could have injured or killed employees. Sawmill Sweet Leaf also lacked the required permits from the construction industries division to operate the potentially dangerous equipment, including a liquefied petroleum gas permit and a certificate of occupancy.
For the first time ever, the CCD filed a petition for preliminary injunction against the dispensary. A judge granted the injunction and the dispensary was ordered to cease and desist all operations.
At an administrative hearing held in October, division environmental scientist Christopher Romero and division compliance officer Santiago Silva—the staffers who conducted the site visits and discovered the violations—were called as witnesses for the state.
Romero said that the dispensary claimed the out-of-state products were widely available online and were sourced from hemp, a claim that was repeated at the hearing by Sawmill Sweet Leaf’s witness, Cloud Duran (listed as a company principal, according to the Better Business Bureau), who said the products were purchased legally.
Since hemp is defined as cannabis with less than 0.3 percent Delta-9 THC, it would take an incredibly large amount of hemp to produce any useful amount of the compound.
And by the CCD’s definition, whether the products’ Delta-9 THC was sourced from hemp or not doesn’t actually matter. In an email to The Paper., Andrea Brown, Public Relations and Marketing Specialist for the Regulation and Licensing Department, which oversees the CCD, clarified that if a product contains more than 0.3 percent Delta-9 THC, it is no longer considered “hemp” and will be considered a cannabis product by the division.
Duran also claimed that the extraction setup had been installed by a consultant associated with Sunny Slabs extract company in Colorado. He claimed that he had been suffering from an injury and was unable to oversee what the consultant was up to at the facility. He claimed he wasn’t aware of any manufacturing that had taken place there and said that dust found on top of the extraction equipment was proof that it wasn’t being used.
Silva, the compliance officer at the site during the inspection, testified that he’d found 20,000 grams of hydrocarbon THC wax at the site, which he said was a much larger amount of wax than what is usually found at local dispensaries. He also noted seeing labels for the Sunny Slabs brand.
Duran said the wax must have been brought onsite by the consultant or made by them while they were working at the dispensary without his oversight.
The CCD ultimately decided to revoke Sawmill Sweet Leaf’s license. The dispensary was ordered to transfer all of its legally obtained weed products and destroy the rest.
This story serves as a reminder to marijuana businesses that selling out-of-state cannabis products will get them shut down. Regulators say the purpose behind the law is to protect consumers—not just to rain on the parade of pot dispensaries.
New Mexico’s cannabis law was written with specific standards in mind. Importing illicit products produced in other markets means selling products that don’t necessarily meet those standards—even if they come from another regulated market.
If Sawmill Sweet Leaf is given the benefit of the doubt, and its managers really did believe they were selling Delta-8 THC products, then this story highlights why dispensaries should stick to products produced in New Mexico, where the chain of regulation is explicit and easy to follow. If it wasn’t born in the state, it can be tough for dispensaries and consumers to determine its quality and content.
Just to put it in perspective: A study published in August in the Journal of Cannabis Research found that 92 percent of unregulated cannabis in Canada tested positive for dangerous pesticides. Without being able to track a plant from seed-to-sale, it’s impossible to know exactly what is in a product.