Where does medical cannabis go from here? Critics, supporters offer differing opinions on program's future in New Mexico

Mar. 4—The day was Sept. 8, 2016 — opening day for the New Mexico State Fair — and people from across the state came to enjoy festivities that ranged from unusual food combinations to rides and games. Vendor booths scattered across the fair grounds, people stopping by for more information on promoted materials.

But one booth stood out.

Ultra Health, the state's largest cannabis company, showcased Dorothy, a 3-week-old marijuana plant, at its booth in an effort to bring awareness to medical cannabis.

State police escorted Ultra Health and Dorothy from the premises by day's end, but they were too late to remove the message that began to gain traction: medical cannabis had arrived.

"It was confrontational — I admit to that," says Duke Rodriguez, president and CEO of Ultra Health. "It had the immediate benefit of raising awareness that we even had a medical cannabis program — and not just in Albuquerque. This was raising awareness in all parts of New Mexico."

Enrollment had jumped nearly 18,000 by the same time the following year. And three years after that, enrollment spiked to just about 100,000 patients.

But recently, industry experts have raised concerns about the medical cannabis program's viability with the introduction of adult-use sales, which came online last April.

Those concerns touch on two notable points of data — enrollment and sales, both of which have declined since recreational cannabis became the state's new normal.

"The state benefits more by doing non-medical... because they're collecting a 20% tax," Ed Gifford, owner of Zia Health & Wellness, says. "I eventually think that it's all going to just become recreational over a period of time."

A brief history

Medical cannabis was legalized back in 2007 when then-Gov. Bill Richardson signed off on the Lynn and Erin Compassionate Use Act.

But the program was much smaller in the early years, with only a limited number of patients enrolled in the program and fewer qualifying conditions than the 29 the state accepts now.

Just a few years later, by 2014, enrollment jumped to more than 12,000, according to data from the New Mexico Department of Health — the state department that oversees the medical program.

That number was a stark difference from what DOH expected the program to be. Dominick Zurlo, the medical cannabis director for DOH, said originally the state estimated that around just 300 to 500 people would be enrolled in the program.

The jump, in part, came from the additional qualifying conditions added over the years. Post-traumatic stress disorder was added as a qualifying condition early on, opening the door for many new patients to come into the medical cannabis fold, Zurlo said.

And those patients came. In the most recent enrollment report from the department, PTSD is the qualifying condition for 55% of people enrolled in the program.

"Those were sort of some seminal points before the program really (started) to expand and without having commercial or recreational adult-use cannabis," Zurlo said. "The only way for individuals in New Mexico to obtain cannabis legally was through the medical program."

But a survey conducted by Zurlo, who has his doctorate in educational psychology, may have helped lead to some large changes in the state's medical cannabis program, particularly with the expansion of more producers across the state that followed shortly after.

The 69-page study, which was conducted roughly a decade ago, looked at delivery systems and cannabis quantities — and if they met the needs of the program's growing enrollment.

In previous years, dispensaries (back then they were called licensed nonprofit producers) were few and far between. And in the very early years of the program, patients would pick up cannabis from licensed producers similar to a delivery system.

Patients continued to come into the fold as the medical program gained traction.

The number of patients reached more than 19,000 by the end of 2015. By the end of 2020, the patient count stood at nearly 105,000 patients. The program's enrollment hit its peak by May 2022, coming in at more than 135,000 patients, DOH data shows.

Recent picture

May's record-high patient count was roughly 16 times the size of the program's enrollment just a decade earlier.

A large part of that was due to the addition of new qualifying conditions.

In 2019, a lawsuit by prospective medical patients against a medical cannabis program manager gave way to those outside of the state to apply for and receive medical cannabis cards. But not long after, in 2020, the Legislature amended the Compassionate Use Act to make clear that only New Mexico residents could obtain cards.

Trying to figure out where the medical cannabis program stands now is up for debate — one side saying the program is expected to take a hit with adult-use added to the fold; the other side saying the program is all but dead with very few options left to save it.

An updated count of medical cannabis patients in January shows the program has 108,513. But that enrollment number has dropped nearly every month since adult-use sales started in April of 2022.

Sales are still in the millions, though, with February data showing dispensaries across the state sold nearly $14 million in medical cannabis. It was the second lowest sales month since adult-use sales launched, the other coming in January.

Still, that number was about what the program produced in sales for some time before adult-use came online, with a Q3 report from 2020 showing medical cannabis sales were around $55 million — or an $18.3 million average between July and September. Patient counts were slightly less than 100,000 at the time.

Comparatively, Q3 sales last year was roughly $48.7 million when the patient count was above 100,000, Cannabis Control Division data shows.

And from April 2022 through January 2023, medical sales dropped by $3.6 million, data shows. Zurlo said the numbers show a drop off that they were anticipating.

But he cited other reasons for the decrease.

"Not only did we have recreational cannabis starting, but we also had those patients who had enrolled three years ago who may not have been actively participating in the program," he said. "What we're seeing right now is...those individuals who had been enrolled in the program not enrolling."

Where does medical cannabis go from here?

Zurlo, including others like New Mexico Cannabis Chamber of Commerce Executive Director Ben Lewinger and acting CCD Director Andrew Vallejos, believe the dip in enrollment and sales in recent months is more of a correction than a decline.

They said other states that have both medical and adult-use programs see their medical numbers — sales and enrollment — drop.

But Lewinger also attributes part of the decline, at least in respect to sales, to something else.

"I think there's a couple of things going on," Lewinger said. "The first thing is at the onset of COVID, there was a huge expansion of the medical cannabis program with tens of thousands of new medical cannabis patients who were enrolled in the program.

"And then number two, people in the cannabis program in the past we know were buying cannabis for people other than just themselves. We know that every cannabis card was probably more realistically serving two or three or four adults. And now those folks can buy legally on their own, so long as they're over 21."

Both Zurlo and Lewinger believe the program still has legs — and still serves an important purpose for the patients within it. They cited the benefits of being enrolled in the program, including not having to pay gross receipts or cannabis excise taxes, and higher potency cannabis products.

Additionally, Zurlo said quicker turnarounds for processing applications have also made joining the program more attractive.

But there are others who believe the program is nearing extinction.

Chad Lozano, a combat veteran who saw war in Iraq, has been a medical patient for PTSD for a decade. He said the state needs to better listen to the needs of patients in the program — or they will leave.

"If the state continues to ignore patients and ignore what we need, then the numbers are going to continue to dwindle," he said. "Patients will find other methods... cheaper ways to get cannabis."

Rodriguez said a big turnaround for the program would be getting health insurers to cover the cost of medical cannabis.

His company, Ultra Health, filed a class-action lawsuit with medical cannabis patients against a group of health insurers operating in New Mexico, in which the suit seeks insurance coverage for medical cannabis under a state law. The lawsuit, originally filed in state district court, was moved to federal court and is still awaiting an outcome. But the program is as good as dead if that effort fails, he says.

"Under the current trajectory, the New Mexico medical program is going to go the route of the dinosaur if we don't do something dramatic," he says. "I don't think that any further change in the medical program is going to be minor. I think you're going to see the program either shrink into nonexistence or fully recover by a major overhaul."