New Mexico regulators revoke the licenses of 2 marijuana grow operations and levies $2M in fines

Jan 2, 2024, 6:14 PM

ALBUQUERQUE, N.M. (AP) — New Mexico marijuana regulators on Tuesday revoked the licenses of two growing operations in a rural county for numerous violations and have levied a $1 million fine against each business.

One of the businesses — Native American Agricultural Development Co. — is connected to a Navajo businessman whose cannabis farming operations in northwestern New Mexico were raided by federal authorities in 2020. The Navajo Department of Justice also sued Dineh Benally, leading to a court order halting those operations.

A group of Chinese immigrant workers sued Benally and his associates — and claimed they were lured to northern New Mexico and forced to work long hours illegally trimming marijuana on the Navajo Nation, where growing the plant is illegal.

In the notice made public Tuesday by New Mexico’s Cannabis Control Division, Native American Agricultural Development was accused of exceeding the state’s plant count limits, of not tracking and tracing its inventory, and for creating unsafe conditions.

An email message seeking comment on the allegations was not immediately returned by Benally. David Jordan, an attorney who represented him in the earlier case, did not return a phone message Tuesday.

The other business to have its license revoked was Bliss Farm, also located in rural Torrance County within miles of Benally’s operation. State officials said the two businesses, east of Albuquerque, are not connected in any way.

The state ordered both to immediately stop all commercial cannabis activity.

“The illicit activity conducted at both of these farms undermines the good work that many cannabis businesses are doing across the state,” Clay Bailey, acting superintendent of the New Mexico Regulation and Licensing Department, said in a statement. “The excessive amount of illegal cannabis plants and other serious violations demonstrates a blatant disregard for public health and safety, and for the law.”

State regulators cited Bliss Farm for 17 violations. Regulators said evidence of a recent harvest without records entered into the state’s track and trace system led the division to conclude that plants were transferred or sold illicitly.

Adam Oakey, an Albuquerque attorney representing the group of investors that own the operation, told The Associated Press in an interview that the company had hoped the state would have first worked with it to address some of the issues before revoking the license.

“We did our best to get into compliance but we fell below the bar,” he said, adding that he’s afraid the state’s action might discourage others in the industry from coming to New Mexico.

The company already has invested tens of millions of dollars into the operation and will likely have to go to court to reopen the farm, Oakey said.

As for Native American Agricultural Development, regulators said there were about 20,000 mature plants on site — four times more than the number allowed under its license. Inspectors also found another 20,000 immature plants.

The other violations included improper security measures, no chain of custody procedures, and ill-maintained grounds with trash and pests throughout. Compliance officers also saw evidence of a recent harvest but no plants had been entered into the state’s track-and-trace system.

The violations were first reported last fall by Searchlight New Mexico, an independent news organization. At the time, Navajo Attorney General Ethel Branch told the nonprofit group that the tribe and the Shiprock area still deserved justice for the harm done previously by the grow operation that had been set up in northwestern New Mexico years earlier.

Federal prosecutors will not comment, but the New Mexico Attorney General’s Office confirmed Tuesday that in general it “continues to investigate, with our federal partners, potential criminal activity within the New Mexico cannabis industry.”

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New Mexico regulators revoke the licenses of 2 marijuana grow operations and levies $2M in fines