Unpacking Cannabis Packaging in New Mexico

Cannabis Practice Group – April Newsletter

Unpacking Cannabis Packaging in New Mexico

By: David Gottlieb

New Mexico’s recreational cannabis market is up and running, having generated roughly $10 million in its first week alone. With the industry still in its nascent stages, however, the state’s regulatory framework, overseen by the Cannabis Control Division (CCD), has yet to be tested at length. While compliance in the cannabis industry is often fraught with difficulties, the CCD rules for cannabis finished product packaging are an area of particular concern for local licensees.

Overview

The rules for cannabis finished product packaging address familiar issues – child-resistant containers, non-toxic containers, serving size, THC content, and marketing, though the scope of these rules is not entirely clear. All the packaging rules fall under 16.8.3.12(A) NMAC, which begins as follows: “Unless otherwise specified, edible or topical cannabis finished products shall meet the following requirements.” But what about concentrates, flower, and other products?

This is not entirely clear. Most of the rules specify that they apply to edible and topical products. Others do not. Subsections (3) and (5) are nonspecific, which may lead to confusion. Subsection (4) is the only rule to specify flower. Subsections (3) and (4) when read together create a clear distinction between child-resistant container requirements for edible cannabis finished products and flower. Subsection (5), which mandates that packaging be reusable or recyclable, is less clear in its scope. There are also rules specific to liquid cannabis finished products. All these falls under the heading addressing edibles and topicals only. This should be clarified.

For this reason, manufacturers should read the rules carefully to ensure they apply them to the right product type.

History

The CCD first proposed its cannabis packaging rules in December of 2021. The initial draft of 16.8.3 NMAC, however, sparked an outcry from cannabis manufacturers. Most were concerned that the proposed rules would lead to burdensome costs for both manufacturers and consumers, as well as have a deleterious effect on medical cannabis patients and the medical cannabis program as a whole.

As a result, the CCD held not one, but two public hearings on packaging in as many months. The final rules were drafted in only March, not even a month before the state opened its recreational market. A few of the attendees’ and respondents’ concerns were considered to some extent; many were ignored. But most of the rules remain in or close to their original form.

Below is a discussion of the final form of the rules that prompted the most debate at the public hearings.

Child-Resistant and Recyclable Containers: 16.8.3.12 A. (3), (4), (5), (11), (12), & (14) NMAC

Current Rule(s) Summary: Edible, topical, and liquid cannabis finished products must be packaged in resealable, child-resistant containers (compliant with 16 C.F.R. 1700.15 and 16 C.F.R. 1700.20). Flower does not have to be packaged in a child-resistant container, but that container must be resealable. Additionally, containers must be “compostable and recyclable, or made from recycled materials.”

These rules, though they drew significant opposition at the public hearing on December 30, 2021, remain largely in their original form. Initially, flower packaging was required to be opaque, but this is the only change. While child-resistant packaging is certainly the norm in the industry, local cannabis manufacturers have expressed concern about the rules’ combined effect: that manufacturers must find packaging solutions that are child-resistant AND recyclable AND cost efficient – seemingly conflicting priorities.

Though many manufacturers nationwide have embraced recyclable or recycled packaging, it remains difficult to procure and many of the materials commonly used in exit packaging, such as Mylar, are not recyclable. Furthermore, it is unclear whether this last requirement applies to only edibles and topicals, or all cannabis finished products. More clarity is needed to ensure proper compliance.

THC Content Limitation for Edible and Topical Products: 16.8.3.12 A. (6) & (7) NMAC

Current Rule(s) Summary: Recreational edible cannabis finished products cannot exceed 10 milligrams of THC per serving and 100 milligrams per package. Medical edibles do not have a THC content limitation per package, but they are subject to a cap of 50 milligrams of THC per serving.

The original version of the rule proposed in December of 2021 elicited the most controversy in that it applied the 10 milligrams per serving and 100 milligrams per package limit to recreational and medical products. Businesses and medical patients alike were aghast at the deviation from both the Lynn and Erin Compassionate Use Act, which legalized cannabis for limited medical purposes in 2007, and the Cannabis Regulation Act (CRA), which established the state’s current legal cannabis program, both of which explicitly prohibit any THC content limitation in medical cannabis products (though “apportionment” is permitted).

The CCD responded to the uproar by creating two separate rules. The final rules abide by the language contained in both the Lynn and Erin Compassionate Use Act and CRA, setting different standards for medical and recreational finished cannabis products. Recreational edibles are still capped at 100 milligrams of THC per package and 10 milligrams per serving. Medical products, on the other hand, have no THC content limit, but serving sizes are limited to 50 milligrams each.

Though the compromise is indeed welcome, many industry leaders still have concerns that this will complicate manufacturing and increase costs for consumers, patients, and licensees.

Packaging Targeting Minors: 16.8.3.12 A. (13) NMAC

Current Rule(s) Summary: Packaging cannot be designed to appeal to minors or contain any words referring to products normally associated with minors. Specifically, the words “candy” and “candies” are expressly forbidden.

Events in New York this past week demonstrate how relevant this issue will continue to be. A recent deluge of cannabis edibles with packaging nearly identical to non-cannabis products commonly consumed by minors has understandably raised concerns regarding packaging and public safety. Though it seems the deceptive packaging finding its way to New York is not produced by legally licensed manufacturers, these cases provide examples of the more specific dos and don’ts the CCD may have to address in the future.

Currently, the CCD attempt to tackle this issue seems limited in scope. The final rule only refers to one word (and its plural) – “candy” – that should not be used. While this does give manufacturers a great deal of discretion, it could lead to confusion. Additionally, it is unclear whether the rule is intended only for edibles and topicals, which is the default for the packaging rules. The rule does not specify any particular type of cannabis finished product. For these reasons, licensees may do well to proceed with caution.

The rule nearly mirrors 16.8.3.9 I. (3), which applies a similar standard to labels. That rule, however, allows the use of words commonly associated with products marketed to minors (including “candy” and “candies”), so long as those words identify the strain name of the cannabis finished product. This exception would be most applicable to cannabis flower labeling (“Candy Kush” immediately comes to mind), in that edibles and topicals are typically not identified by strain. That the rules on labeling appear to apply to all cannabis finished products unless otherwise specified, and the rules on packaging appear to apply only to edibles and topicals unless otherwise specified merely adds to the confusion.

Conclusion

Initially, complying with the new standards may prove difficult for manufacturers. Many, if not most, have inventory of packaging materials that were in compliance with the state’s medical program but are not compliant with the new regulations. For this reason, the CCD has provided licensees with a safe harbor: manufacturers may use packaging materials purchased before January 11, 2022, until October 1, 2022.

This is still only the beginning for the recreational market in the Land of Enchantment. It will take time for the CCD to establish an enforcement pattern that will provide licensees a predictable regulatory landscape.

David Gottlieb is Counsel with Parlatore Law Group. He focuses his practice on cannabis business law and can be reached at David.gottlieb@parlatorelawgroup.com.

The final version of 16.8.3 NMAC (Packaging, Labeling, Advertising, Marketing and Commercial Display Requirements for Cannabis Products) can be found in its entirety here.

 

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Cannabis Practice Group – April Newsletter