FILED IN MY OFFICE
DISTRICT COURT CLERK
8/16/2016 11:24:10 AM
STEPHEN T. PACHECO
Maureen Naranjo

STATE OF NEW MEXICO
FIRST JUDICIAL DISTRICT COURT
SANTA FE COUNTY
Nicole Sena, individually and as
Next friend to A.N., a minor, and
New Mexico Top Organics – Ultra Health, Inc.,
A New Mexico non-profit corporation,
Plaintiffs,
D-101-CV-2016-01971
No. D-101-CV-2016-________________
Case assigned to Thomson, David K.

v.
New Mexico Department of Health, and
Lynn Gallagher, in her official capacity as
Secretary-Designate,
Defendants.

COMPLAINT FOR DECLARATORY JUDGMENT AND JURY DEMAND
COMES NOW Nicole Sena, individually and as next friend of A.N., a minor, and New
Mexico Top Organics – Ultra Health, Inc., by and through their counsel Egolf + Ferlic +
Harwood, LLC, to complain against the Defendants for declaratory judgment pursuant to the
New Mexico Declaratory Judgment Act, NMSA 1978 § 44-6-1 et seq. The New Mexico
Department of Health (“the Department”) and Acting Secretary Lynn Gallagher (“Gallagher”)
operate the New Mexico Medical Cannabis Program (“the Program”) and promulgate rules for
the Program’s operation pursuant to the Lynn and Erin Compassionate Use Act, NMSA 1978 §
26-2B-1 et seq. (“the Act”). Among the duties imposed on the Defendants by the Act is a duty to
ensure a reasonably sufficient supply of medical cannabis for the demand of qualified patients to
treat their debilitating conditions. Despite the Defendants’ effort to change the rules governing
the Program in 2015 to address profound shortages of cannabis, the Program is still managed and
governed by an arbitrary and capricious production limitation that ensures there will never be an
adequate supply of cannabis in New Mexico. Shortages of medical cannabis are serious and
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 significant, yet the rules limiting the number of plants that a Licensed Non-Profit Producer
(“LNPP”) may grow constitute artificial constraints on both supply and demand in the medical
cannabis market. Under the current rules, the shortages and limits on medical cannabis products
will only get worse, and the Defendants will continue to fail to meet their statutory obligations.
In addition to the market-wide disruptions caused by the Defendant’s production limitation, the
arbitrary and capricious limitations on LNPPs create severe limitations and acute unavailability
of certain cannabis-derived products required by some of the most medically-fragile and needy
patients in New Mexico. The productions limits have created a dire situation for certain patients,
who simply cannot find the products they need and/or cannot obtain the adequate supply of
products they are lawfully entitled to access and maintain under the Act. The Plaintiffs prays for
a declaratory judgment from this Court that the rules, regulations and requirements relating to
limits on the number of cannabis plants LNPPs may grow are 1) arbitrary, 2) capricious, and 3)
void because they limit LNPPs such that the goals, purpose, duties and obligations of the
Program and Act cannot be fulfilled. As grounds for this complaint, the Plaintiffs state the
following:

Jurisdiction and Venue
1. At all times relevant to this complaint, Nicole Sena has been a resident of Bernalillo
County, New Mexico. She is the mother of A.N.
2. A.N. is a minor child, aged less than one year.
3. At all times relevant to this complaint, New Mexico Top Organics – Ultra Health,
Inc. (“NMTO”) has been a New Mexico non-profit corporation in good standing with
its principal place of business in Sandoval County, New Mexico.

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 4. At all times relevant to this complaint, the Defendants have been instrumentalities of
the government of the State of New Mexico with their principal place of business in
Santa Fe County, New Mexico.
5. The New Mexico Medical Cannabis Program (“the Program”) was created by the
Lynn and Erin Compassionate Use Act, Section 26-2B-1 to -7.
6. The DOH administers the Program. Section 26-2B-3(C).
7. Secretary-Designate Lynn Gallagher is the duly authorized Acting Secretary of the
DOH.
8. Secretary-Designate Gallagher is a proper party to this action pursuant to Section 446-13.
9. At all times relevant hereto, the Defendants have made their principal place of
activity in Santa Fe County, New Mexico. See NMSA 1978 38-3-1 (G) (1988).
10. Venue in this Court is proper.
11. This Court has jurisdiction over this matter as a court of general jurisdiction in Santa
Fe County, New Mexico.
Facts
12. The purpose of the Lynn and Erin Compassionate Use Act is to “allow the beneficial
use of medical cannabis in a regulated system for alleviating symptoms caused by
debilitating medical conditions and their medical treatments.” Section 26-2B-2.
13. The Act establishes a regulatory framework whereby the DOH licenses consumers,
caregivers, and producers of medical cannabis, while exempting them from criminal
and civil penalties for use of the medicine. Section 26-2B-4.

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 14. The Act states that every enrolled patient may possess an “adequate supply” of
medical cannabis, which is an amount sufficient to give an enrolled patient access to a
continuous uninterrupted three-month supply. NMSA 1978 § 26-2B-3(A) (2007).
15. Commensurate with this definition, the Act and its rules require the Defendants to
ensure that there is an adequate supply of medical cannabis grown and distributed in
New Mexico to meet the needs and demand of enrolled patients.
16. To obtain “registry identification cards” allowing them to use medical cannabis,
consumers must establish themselves as “qualified patients” per the terms of the Act.
See Sections 26-2B-3(G), 26-2B-7.
17. A.N., and her mother are duly enrolled in the Program as a patient and a caregiver,
respectively.
18. A.N. suffers from a rare form of epilepsy, a qualifying condition under the Act and its
Rules.
19. Ms. Sena has found only one treatment modality that provides relief to her daughter,
an oil derived from a strain of cannabis called “Haleigh’s Hope.”
20. Haleigh’s Hope is a product with high levels of CBD, a cannabis compound without
psychotropic effect, and little or no THC, the cannabis compound that is
psychotropic.
21. Since beginning treatment with Haleigh’s Hope, A.N.’s intractable seizures have
stopped, her cognitive development has progressed, and A.N.’s overall condition is
improving every day.

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 22. Ms. Sena believes that without access to Haleigh’s Hope, A.N.’s intractable seizures
would resume, her developmental progress would cease, and she would suffer
tremendously.
23. Ms. Sena has faced tremendous difficulty finding an adequate supply of Haleigh’s
Hope for A.N.
24. Ms. Sena and A.N. temporarily relocated to a neighboring state so that A.N. could
have access to a regular adequate supply of Haleigh’s Hope.
25. Ms. Sena has found that there is not an adequate reliable supply of Haleigh’s Hope in
New Mexico. When the product is needed by A.N., Ms. Sena is often forced to leave
New Mexico to find the medicine.
26. Ms. Sena believes that LNPPs in New Mexico would be able to provide an adequate
and regular supply of Haleigh’s Hope if there were not restrictive regulations placed
on their production.
27. Producing Haleigh’s Hope requires a volume of cannabis plant material that is far
greater than almost any other cannabis product. It requires at least four times the
amount of raw plant material as compared to other specialized products.
28. In the distribution system established by the Act, any person or entity seeking to
produce or distribute medical cannabis (excluding qualified patients growing solely
for personal use) must obtain a license from the DOH. See Section 26-2B-3(D).
29. To obtain a license, a producer must submit an extensively detailed application,
which includes the following:
a. Organizational information and materials, including proof that the producer is
a non-profit organization, copies of the producer’s articles of incorporation

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 and bylaws, verification that the producer’s board includes at least one
medical professional and at least three qualified patients; a list of all persons
having authority or ownership interest in the facility; a business plan; and the
identities of all creditors holding a security interest in the premises of the
producer;
b. Production and distribution information and materials, including a written set
of distribution criteria describing the method by which distribution will occur;
a complete description of the means the producer intends to safely dispense
the cannabis; a description and sample of the packaging the producer intends
to use, including a label that shall contain the name of the strain, batch, and
quantity, and a statement that the product is for medical use and not for resale;
and a description of the testing procedures the producer will use to determine
the quality of the product;
c. Facility information, including a description of the facility in which the
cannabis will be produced; its complete security features and devices; and
proof that it is not within 300 feet of a church, school, or daycare center;
d. Educational methods and materials, including a description of the producer’s
plan to educate qualified patients and their primary caregivers as to the
limitations of the Act and their right to use cannabis; a description of the
means the producer will use to make qualified patients and their primary
caregivers aware of the quality of the product; an explanation of the means the
producer will use to educate qualified patients and their caregivers about the
potential side effects; and a description of the ingestion options and

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 information on safe smoking techniques that will be provided to qualified
patients and their caregivers;
e. The proposed sales record form, demonstrating a place to record the name of
the purchaser, the date of the sale, and the quantity and price of cannabis sold;
f. Personnel records, including national and state criminal history screening
documentation for all individuals associated with the facility; samples of the
personnel file documents which include job descriptions, duties, authority,
responsibilities, qualifications, and supervisory information; employment
applications; employment contracts; records of disciplinary action; training
curricula on federal and state confidentiality requirements, professional
conduct, ethics, informational developments in the field of medical cannabis,
employee safety and security, and HIPAA certification; and
g. The Producer’s various policies and procedures. NMAC 7.34.4.10.
30. For calendar year 2016, the DOH has issued 35 producer licenses and license
renewals.
31. Each LNPP may grow a total of no more than 450 mature female cannabis plants,
seedlings and male plants. NMAC 7.34.4.8(A)(2).
32. As of June 2016, there were 26,568 individuals enrolled in the Program.
33. To gain licensure as a qualified patient, one must only submit his or her name,
address, and date of birth, written certification as to the debilitating condition, and
information about the primary caregiver and practitioner. See Section 26-2B-7(B).
34. When the Act was passed in 2007, there were only seven debilitating conditions
which qualified patients into the Program; as of the date of this filing, there are

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 twenty-one debilitating conditions. The additional debilitating conditions were added
by the DOH’s rule-making process.
35. The DOH conducted a study, the “Medical Cannabis Report – 2013” (“the DOH
Report”), in August and September 2013 to determine the levels of medical cannabis
usage and production in the Program.
36. 245 of the 698 total patients surveyed reported that they had needed more cannabis to
treat their conditions in the three months prior to the survey than what they had been
able to obtain through the Program.
37. The primary reason qualified patients were unable to obtain sufficient cannabis to
treat their conditions was because their licensed producer was out of product.
38. The second most common reason patients were unable to obtain sufficient cannabis to
treat their conditions was because it was unaffordable.
39. In the DOH Report, qualified patients described producer shortages as a common
occurrence.
40. Qualified patients described exorbitant prices through the Program, up to many times
the market rate “on the street.”
41. Qualified patients described being forced to decide between buying their medicine
through the Program and buying it “on the street,” where it was cheaper and more
reliably available.
42. On information and belief, despite the net increase in qualified patients since the
inception of the Program, up to one-third of patients once qualified have declined to
renew their licenses under the Program due to difficulties in the availability and high
cost of cannabis.

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 43. Sixty-five percent of the licensed producers surveyed reported that they had run out
of cannabis in the three months prior to the DOH Report.
44. The licensed providers turned patients away 6,643 total times due to a shortage in
cannabis in the three-month period prior to the DOH Report.
45. To accommodate for the shortage of cannabis, almost half of the licensed producers
had rationed their supply in the three months prior to the DOH Report, for a total of
6,020 times qualified patients were unable to purchase the amount of cannabis they
desired for treatment of their debilitating conditions.
46. The DOH Report calculated that, to satisfy the demand of current qualified patients,
its producers needed to have 5,110,726 grams of cannabis available per year.
47. Even allowing for a linear increase in production, the DOH projected that the current
number of licensed producers would have only 1,019,018 grams of cannabis—less
than twenty percent of the demand—available for the twelve-month period from July
2013 to June 2014.
48. In 2015, the DOH adopted new rules and regulations for, among other things, the
administration of the Program, adding new LNPPs, and limiting the total number of
mature cannabis plants each LNPP could grow.
49. The new rules allow each LNPP to grow up to 450 mature female cannabis plants,
seedlings and male plants.
50. The DOH has stated that the purpose of the new plant limit, which had previously
been only 150 plants, was to address the product shortfalls and supply limitations
identified in the 2013 DOH report.

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 51. The selection of 450 plants as the limit for each LNPP was arbitrary. No factual,
practical, scientific or economic data support this limit.
52. The great weight of the evidence regarding plant count limitations was against the
selection of 450 plants.
53. The great weight of the evidence supported a plant count limit much higher than 450
plants, as will be shown below.
54. Unfortunately, the new plant limits guarantee that the Program will never allow
enough cannabis to be produced to ensure an adequate supply.
55. Currently, demand for medical cannabis exceeds supply by at least 2.1 million grams
(4,522 pounds).
56. By early 2018, demand is expected to exceed supply by at least 6.2 million grams
(13,603 pounds).
57. To meet expected demand in 2018, each of the LNPPs would need to increase the
number of plants they grow by at least 600%.
58. Among others, these factors combine to make the current plant limitation
unworkable:
a. At least nine LNPPs are either not currently producing cannabis at levels
sufficient to meet modest patient demand, or they are not producing at all,
b. On average, LNPPs are not able to grow the maximum number of plants they
are allowed to grow,
c. The plant limitations create artificially high production costs, and
d. The plant limitations prevent LNPPs from achieving economies of scale and
higher efficiencies in production.

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 59. Patient demand for specialized strains of cannabis and specialized cannabis products
further exacerbates the medical cannabis supply crisis.
60. Compared to the time when the Act became the law, patients require cannabis in an
increasingly wide variety of form, concentrations and compositions.
61. Depending on a patient’s condition, she may require an edible form of a cannabisderived product with high concentrations of one cannabis compound and low
concentrations of another.
62. In order to produce the specialized products required and demanded by enrolled
patients, LNPPs must grow larger amounts of cannabis plants to be able to obtain
from them the required quantities of the cannabis compounds.
63. Individual enrolled patients, who are allowed to grow small quantities of cannabis for
their own use, are unable to produce specialized products due to lack of equipment,
experience, and raw cannabis plant material.
64. Thus, only LNPPs are able to produce the specialized products demanded by patients.
65. Thus, over time, more cannabis plant material will be needed to meet the demands of
patients who use products that contain higher concentrations of one or more
compounds derived from the cannabis plants.
66. In addition to severely constraining supply, the production limits cause much higher
prices for cannabis than would otherwise be found in a non-constrained market.
67. While supply, under the current regulations, of cannabis in New Mexico is strictly
limited, demand is not constrained and will grow rapidly over the coming years.
68. During the period from June 2015 to June 2016, the number of enrolled patients in the
Program grew from 15, 265 to 26,568.

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 69. There are several reasons to expect that this growth will continue or accelerate.
70. New Mexico’s ageing population will continue to grow. Up to 33% of the State’s
population will be over 60 years of age by 2030, which will mean a larger percentage
of the State’s population will have conditions that entitle them to possess a Program
card.
71. In addition to demographics, epidemiological trends will likely exacerbate demand
problems.
72. Increasing numbers of patients suffering from PTSD will place enormous strains on
the supply of medical cannabis.
73. Due to factors relating to income, military service, and incidents of domestic
violence, New Mexico has a larger-than-average percentage of the population
suffering from PTSD.
74. The rapidly growing number of patients suffering from chronic pain and who do not
wish to take pharmaceutical pain killers place additional upward pressure on the
supply of medical cannabis in New Mexico.
75. Increasing dosage needs will apply growing pressure on supplies of cannabis. As
patients require new products with higher concentrations of cannabis compounds, the
average dose per patient will increase.
76. Data from other states show that New Mexico has a lower-than-average percentage of
cannabis consumed in non-flower form. This is likely to change as the number of
patients grows and their demand for new products increases.

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 77. New Mexico has a low medical cannabis market penetration. As many as 630,000
New Mexicans have one or more qualifying condition, yet only 1.2% of the State’s
population participates in the Program.
78. As public acceptance of medical cannabis increases, a greater percentage of affected
persons is likely to participate in the Program.
79. Other states with medical cannabis programs have higher penetration rates than New
Mexico.
80. A study and economic model completed in August 2016 estimates that coming
changes in demand, market penetration, public acceptance of medical cannabis,
growing techniques, processes for extraction of cannabis compounds, and methods to
produce additional products will cause a supply deficit of 6.2 million grams by the
first quarter of 2018.
81. The study also found that there will need to be between 26,698 and 37,620 plants
under cultivation in New Mexico to meet the expected demand.
82. The Act requires, by its plain meaning and by implication, that the LNPPs grow and
distribute an amount of cannabis large enough to ensure an uninterrupted adequate
supply to the patients enrolled in the Program.
83. The Act does not require the Defendants to establish limits on the number of cannabis
plants grown and cultivated by LNPPs.
84. Contrary to the mandate of the Lynn and Erin Compassionate Use Act, the SecretaryDesignate is failing to ensure an adequate cannabis supply for qualified patients to
treat their debilitating conditions.

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 85. Even if fully implemented, the number of plants and licenses allowed by the
Defendants will be woefully insufficient to ensure an adequate supply.
86. Unless the arbitrary plant count is eliminated or greatly increased, by at least 600%,
there will be persistent and ongoing shortages of medical cannabis in New Mexico for
the foreseeable future.
87. Recognizing the serious problems caused by arbitrary plant count limits, other
neighboring states have either eliminated plant count limits, or they have adopted
limits that are tied to the number of patients enrolled in the program. The latter
approach gives reasonable limits to the number of plants grown, while also allowing
producers to meet demand as more patients enroll in medical cannabis programs.
Count One: Declaratory Judgment as to the Act
88. All allegations found in paragraphs 1-87 are realleged and incorporated here by
reference.
89. There exists an actual case and controversy between the Plaintiffs and the Defendants
regarding the Defendants’ creation and enforcement of rules promulgated by the
Department.
90. NMTO, Ms. Sena, and A.N. are suffering direct and immediate injury as a result of
the Defendants’ enforcement of the rules at issue in this case.
91. Under the current rules promulgated by the Defendants, NMTO is not allowed to
produce the amount of medical cannabis it wishes to produce to meet patient demand.
92. Under the current rules promulgated by the Defendants, NMTO is not allowed to
produce the amount of medical cannabis it would be able to produce if the plant limit
were not in place.

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 93. NMTO wishes to meet more patient demand, supply a broader range of products, and
offer a greater diversity of varieties of medical cannabis products but cannot due to
the Defendants’ regulations.
94. NMTO wishes to produce Haleigh’s Hope in a quantity that would give A.N. and Ms.
Sena an adequate supply but cannot due to the plant limitations imposed by the
Defendants.
95. The Defendants’ enforcement of the plant count limitation against NMTO causes
injury by forcing NMTO, in order to attempt to meet patient demand, to acquire
cannabis and cannabis products from other LNPPs at prices and costs much higher
than would be incurred if NMTO could grow more cannabis plants itself.
96. The injuries to NMTO described in this complaint are ongoing with no hope of
dissipation.
97. NMTO has, on multiple occasions, sought the permission of the Defendants to grow
more than 450 plants; these requests have been rejected.
98. NMTO has asked for the Defendants’ permission to grow additional plants to meet
the needs of certain specific patients; the requests have been rejected.
99. The Defendants have told NMTO that they will not increase the number of plants that
LNPPs may grown and have no plans to increase the limit in the future.
100.

This controversy is ripe for a decision by the Court because the rule at issue has

been enforced against NMTO.
101.

This controversy is ripe for a decision by the Court because the rule at issue has

been enforced to the detriment and injury of A.N. and Ms. Sena.

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 102.

This controversy is ripe for a decision by the Court because enforcement of the

rule at issue has caused injury to A.N. and Ms. Sena by limiting their ability to have
an adequate supply of the Haleigh’s Hope that A.N. requires.
103.

A.N. and Ms. Sena are injured by having to pay prices for the cannabis product

they need that are much higher than they would pay if New Mexico’s LNPPs could
produce more plants.
104.

A.N. and Ms. Sena are injured by having to endure product shortages or product

unavailability, which injures A.N. by slowing her recovery and putting her at risk of
serious seizures.
105.

The administrative action that resulted in the challenged rule has concluded.

106.

The Court may declare, on facts that are fully developed and on purely legal

grounds, that the Defendants rules will not allow for an adequate supply of medical
cannabis to be produced.
107.

No specialized fact-finding will be required for the Court to make that

determination.
108.

There is no exclusive statutory remedy available to the Plaintiffs in this matter.

WHEREFORE, the Plaintiffs respectfully request that the Court enter judgement in their
favor and against the Defendants, holding that the current plant limitation is arbitrary. The
Plaintiffs further respectfully request that the Court find that the current plant count limit should
be eliminated or greatly increased so that New Mexico’s LNPP’s may produce an adequate
supply of medical cannabis to meet the demands of New Mexico’s patients. The Plaintiffs also
respectfully request that the Court find that the Defendants must satisfy their obligation to ensure
an adequate supply of medical cannabis in New Mexico by allowing New Mexico’s LNPPs to

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 grow medical cannabis in a manner and quantity they believe to be necessary to ensure an
adequate supply. Finally, the Plaintiffs request that the Court award them their costs of action
and reasonable attorneys’ fees.
Respectfully Submitted,
Egolf + Ferlic + Harwood, LLC
By:________________________
Brian Egolf
123 W. San Francisco Street, Second Floor
Santa Fe, New Mexico 87501
(505) 986-9641
Brian@EgolfLaw.com

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