United States District Court, D. New Mexico
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND
31, 2017, Plaintiff New Mexico Top Organics - Ultra Health,
Inc. (Ultra Health) filed suit against three New Mexico State
Fair officials, Defendants Larry Kennedy, Dan Mourning, and
Raina Bingham (collectively, Defendants), seeking damages,
injunctive relief, and a declaratory judgment for alleged
violation of its First Amendment right to free
speech.Specifically, Ultra Health alleged that
Defendants impermissibly sought to restrict its
constitutionally protected speech and engaged in viewpoint
discrimination against Ultra Health by placing unreasonable
restrictions on Ultra Health's exhibitor application for
the 2017 New Mexico State Fair in violation of the First and
Fourteenth Amendments to the United States Constitution.
January 3, 2018, Ultra Health filed a motion for summary
judgment (Doc. 30), asking the Court to enter judgment in its
favor as to all claims. On February 9, 2018, Defendants filed
a cross-motion for summary judgment (Doc. 34) asking the
Court to find in favor of Defendants and to dismiss Ultra
Health's complaint. On October 10, 2018, the Court
granted partial summary judgment in favor of Defendants on
Ultra Health's claim for monetary damages, dismissing
that claim as barred by the Eleventh Amendment. See
Partial Summary Judgment (Doc. 43). On August 6, 2018 through
August 7, 2018 the Court held a bench trial. Each party
submitted Proposed Findings of Fact and Conclusions of
Ultra Health also filed a trial brief, an option that
Defendants declined. After carefully reviewing the trial
transcript and exhibits, the parties' briefing, proposed
findings of fact and conclusions of law, and the relevant
case law, the Court finds that Defendants' restrictions
as applied to Ultra Health were unreasonable and violated
Ultra Health's First Amendment right to free speech.
Accordingly, the Court will enter judgment in favor of Ultra
Health and will grant injunctive relief as detailed herein.
Plaintiff New Mexico Top Organics-Ultra Health, Inc. is a New
Mexico non-profit corporation licensed by the State of New
Mexico Department of Health (NMDOH) to produce, distribute
and dispense medical cannabis and cannabis-derived products
to patients enrolled in the NMDOH Medical Cannabis Program
under the Lynn and Erin Compassionate Use Act, NMSA 1978,
§§ 26-2B-1 to -7 (the Act).
Leigh Jenke is the Director of Quality and Compliance as well
as chairperson of the board for Ultra Health. (Tr. 5:14-18).
Rodriguez is the founder and CEO of Ultra Health, LLC, Ultra
Health's management company. (Tr. 5:24-6:4; 66:24-25).
“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” in the state of New Mexico. NMSA 1978,
Under the Act and implementing regulations, “[n]o
officer, employee, or approved contractor of a licensed
producer, approved manufacturer, approved courier, or
approved laboratory, nor any qualified patient licensed as a
producer or enrolled primary caregiver, shall be subject to
arrest, prosecution, or penalty in any manner for the
production, possession, distribution, or dispensation of
cannabis in accordance with [state regulations] and the
act.” N.M.A.C. 220.127.116.11(A) (“Exemption from
State Criminal and Civil Penalties for the Medical Use of
Cannabis”). However, “[p]articipation in the
medical cannabis licensing program by a licensed
producer…does not relieve the producer…from
criminal prosecution or civil penalties for activities not
authorized” by regulation and the Act. N.M.A.C.
“Production of medical cannabis and distribution of
medical cannabis [by a licensed non-profit producer] to
qualified patients or primary caregivers shall take place at
locations…described in the non-profit producer's
production and distribution plan approved by the
department[.]” N.M.A.C. 18.104.22.168(B).
Cannabis is classified under Schedule I of the Controlled
Substances Act (CSA), and therefore its possession and use
are criminalized under federal law. See 21 U.S.C.
Cannabis is also categorized as a Schedule I controlled
substance under New Mexico law, NMSA 1978, § 30-31-6(C),
and it is otherwise unlawful for a person to possess a
Schedule I controlled substance or drug paraphernalia in New
Mexico, NMSA 1978, §§ 30-31-23, 30-31-25.1. Under
the Act, however, qualified patients and licensed producers
are exempt from state prosecution for possession of cannabis
or paraphernalia. NMSA 1978, § 26-2B-4.
State of New Mexico holds an annual fair at the Expo New
Defendant Larry Kennedy is the Chairman of the New Mexico
State Fair Commission.
Defendant Dan Mourning is the General Manager of the New
Mexico State Fair Expo New Mexico. (Tr. 217:17-19).
Defendant Raina Bingham is the concessions and commercial
exhibits manager for the New Mexico State Fair. (Tr.
statutory purpose of the New Mexico State Fair is to
“advanc[e] the agricultural, horticultural and stock
raising, mining, mechanical and industrial pursuits of the
state.” NMSA 1978, § 16-6-4.
State Fair Defendants also articulated a goal of
“promot[ing] a safe and family friendly ticketed event
while complying with all state and federal laws.” (Pl.
Ex. 21; Tr. 136:5-6). This goal is not explicitly stated in
statute or regulation. (Tr. 138:13-24). However, in
addressing conduct of concessionaires and exhibitors, the
2017 State Fair Vendor Manual affirms that, “[t]he New
Mexico State Fair mission is to host a safe and
family-friendly entertainment environment for the State of
NM.” (Pl. Ex. 2 at 17; Tr. 180:4-15).
New Mexico State Fair is a separate government
instrumentality managed by the State Fair Commission
(Commission). See NMSA 1978, §§ 16-6-1,
Commission is responsible for adopting and enforcing rules
necessary to manage the State Fair. See NMSA 1978,
Commission has the legislative authority to charge entrance
fees for admissions, to lease stalls, stands, and restaurant
sites, and “do all things which by the commission may
be considered proper for the conduct of the state fair not
otherwise prohibited by law.” NMSA 1978, § 16-6-4.
public must pay an entrance fee to gain admission to the
State fairgrounds. Prospective vendors and exhibitors must
apply to the State Fair to seek approval to have a display
booth. Vendors and exhibitors whose applications are approved
must pay a fee to the State Fair to set up their booths. (Tr.
253:3-13; Pl. Ex. 1).
vendors and exhibitors who sign a space agreement contract
must comply with the terms in their contract as well as with
the terms in the manual that contains policies governing
concessions and exhibits at the New Mexico State Fair.
See N.M.A.C. 4.3.10.
2017 New Mexico State Fair Vendor Manual provided:
The Fair reserves the right to prohibit the sale and display
of any product the Fair deems objectionable. It will be the
sole decision of the Fair to determine whether an item is
offensive or in poor taste. The display, sale, or
distribution of weapons (firearms, knives, mace, martial art
items, chains, etc.), toy weapons, fireworks, drug-related
merchandise or paraphernalia, pornographic materials,
offensive wording or graphics of any type, and counterfeit or
‘knock-off' items are prohibited unless authorized
under the terms of the Space Agreement executed by the Fair.
(See Doc. 57, Stipulated Fact. No. 4; Pl. Ex. 2).
This prohibited items provision has been included in the
Vendor Manual since at least 2007. (Tr. 200:10-14).
2017 application form also stated: “Prohibited items
include but are not limited to: firearms, knives, swords,
mace, martial art items, fireworks, drug related merchandise
or paraphernalia, pornographic materials, offensive wording
or graphics, counterfeit or ‘knock-off'
items.” (See Doc. 57, Stipulated Fact No. 5;
Pl. Ex. 1).
Defendant Raina Bingham interprets “drug related
merchandise or paraphernalia” to refer to
“illegal drugs, ” including cannabis, the
possession of which is unlawful under federal law. (Tr.
Bingham is responsible for receiving, reviewing, and
ultimately rendering a decision on the applications submitted
by prospective vendors and exhibitors. (Tr. 124:25-125:8).
Generally, when Ms. Bingham has concerns about and rejects an
application, the applicant is not offered a contract and,
unless the applicant asks to speak to a supervisor about the
rejection decision, the process stops with Ms. Bingham. (Tr.
Bingham ultimately bases her decisions regarding whether a
proposed booth is or is not family friendly on her own
sensibility, but she uses the prohibited merchandise
provision in the vendor manual as a guideline for making this
determination. (Tr. 139:3-21).
August 2016 Ms. Jenke applied on behalf of Ultra Health for
exhibit space at the New Mexico State Fair. (Tr. 7:13-19).
Ultra Health saw the 2016 State Fair “as an opportunity
to educate…[w]e wanted to educate people on, you know,
what are qualifying conditions here in the State of New
Mexico, how you can apply for a card. You know, we like to
facilitate, I guess-we like to facilitate proper use within a
regulated system, and so reaching out to people in that kind
of venue is…a really, really good opportunity.”
(Tr. 9:3-9). Ultra Health wanted people to see “how we
make the medicine here, how it's grown, how it's
cultivated, so patients and people that are interested in it
can see where their medicine comes from. It was considered a
little bit of kind of a science fair presentation for the
public. We wanted to show how the manufacturing worked, where
the plants were grown, how they are grown, what the
facilities look like.” (Tr. 9:10-18). Ultra Health
deemed the State Fair “a perfect venue” because
medical cannabis is “an agricultural industry”
within the state. Also, on the “manufacturing side,
” Ultra Health wanted to show the lab, how things are
cultivated, and the different products that are made. (Tr.
second page of the Ultra Health's 2016 State Fair
application listed items that Ultra Health intended to bring
as “printed materials, ” “posters, ”
“plants, ” “microscope, ” “post
cards, ” “pens, ” “post-it notes,
” and “stress balls.” (Pl. Ex. 3).
Ultra Health submitted a proposed booth set up design to the
2016 State Fair in a separate email after submitting its
application. The proposed design indicated that Ultra Health
would exhibit a “cannabis clone, ”
“microscope, ” “educational materials on
the medicinal and economic benefits of cannabis, ” a
“rosin press lavender demonstration area, ” and a
“secure area where people can view cannabis
plants.” (Pl. Ex. 3). A cannabis clone is a portion of
the cannabis plant that is cut from the mother plant and used
to start a successive cannabis plant. (Tr. 17:7-9).
Bingham did not recall reviewing the Ultra Health booth
design prior to the 2016 State Fair. (Tr. 190:20-191:4; Tr.
When booth space became available a few days before the start
of the 2016 State Fair due to a cancellation Ms. Bingham
contacted Ultra Health. “Understanding their desire to
be part of the State Fair and also that they were poised and
ready to jump in at last minute's notice, which many
vendors at that point aren't prepared, but knowing that
they had made it very clear that they were still interested
in wanting to do that, they seemed like a good fit for that
space.” (Tr. 7:21-25; 191:5-25). The parties signed a
space agreement contract for the 2016 State Fair. (Pl. Ex.
September 8, 2016, the first day of the State Fair, Ultra
Health displayed a live cannabis plant in its exhibition
space. (Tr. 15:22-16:6). State Fair officials learned of the
plant and Ms. Bingham called Duke Rodriguez, CEO of Ultra
Health, LLC, and “explained to him that [she] did not
realize that that was their intention. And [she] explained to
him also that had [she] realized this, the application would
not have been approved the way that it was submitted. [Ms.
Bingham] told him that we couldn't keep - that he could
not have that plant in his booth, nor the
pipes.” (Tr. 194:5-14).
Bingham was not aware of any decision by the State Fair to
shut down Ultra Health's booth for the rest of the 2016
State Fair but did later become aware that Ultra Health had
vacated the booth location. (Tr. 194:15-24). “Because
of the misunderstanding, ” Ms. Bingham reimbursed the
contract fees to Ultra Health. (Tr. 194:25-195:5).
was New Mexico State Police officers who had approached the
booth and told Ultra Health to pack everything and exit the
premises. (Tr. 59:8-14). Ultra Health complied and did not
return for the remainder of the 2016 State Fair. (Tr.
Bingham indicated that had Ultra Health removed the cannabis
plant and the pipes, it would have been allowed to continue
to discuss its ...