Sigh.. we’d hoped that NM might be qiuetly doing it better but it looks as though this report suggests there’s plenty of challenges ahead
Once again as with many other states the issue is getting the handilng of of licenses under control.
States just don’t seem to have found the magic bullet to solve the issue.
Either too many or too few licenses ( in this case too many) , or too much money being charged, or too many hoops that need to be jumped through, or not enough hoops.
It’s a tough one and no one has solved it yet and as always a lot of the problems stem from the fact that a piecemeal approach across the country allows unsavoury types to exploit for profit. It appears the regulatory authorities are doing their best but they have been handed an imperfect system and limited tools to operate within it.
Cannabis Benchmarks write
New Mexico is no stranger to cannabis and cannabis legalization. The state passed the nation’s first medical cannabis law back in 1978, allowing limited use of the drug for some cancer patients. Cannabis was legalized for adult use in 2021 and the first licensed sales of recreational cannabis began in New Mexico on April 1, 2022.
In this article, an industry insider details some of the challenges that have sprung up in the last 18 months; namely, New Mexico’s legal cannabis market is grappling with an oversaturation of licensed businesses, while also seeing prices driven down by oversupply and illicit product from out-of-state making its way into the supply chain.
Low Barriers to Entry Lead to Hyper-Competitive Market
Looking at sales numbers, the first year-and-a-half of New Mexico’s adult use cannabis industry could be considered a success story for a relatively low-population state. In August, according to data from the state’s Regulation and Licensing Department (NMRLD), total cannabis sales in New Mexico – medical and adult use – reached a record $48.2 million, compared to $40.8 million in sales in August 2022.
For Ben Lewinger, however, the data tells only part of the story. Lewinger is Executive Director of the New Mexico Cannabis Chamber of Commerce. He noted that several factors are creating serious challenges for New Mexico’s cannabis sector.
One issue is the way the state established its adult use cannabis market, specifically the licensing process. “New Mexico took a very forward approach in the way that we legalized, in that we had very few barriers to entry for licensure,” Lewinger told Cannabis Benchmarks. “Instead of having a social equity program or social equity quota, social equity was built into the DNA of how our regulatory framework was designed. It was very easy for anybody who wanted a license to get a license. And the result is we have over 2,000 licensed operators in New Mexico, across cultivation, manufacturing, retail, and testing facilities.”
That relative ease in obtaining a cannabis license means there are currently over 1,000 approved dispensary licenses in the state. A NMRLD spokesperson told Cannabis Benchmarks that 610 of those retail licenses are active. In comparison, Colorado, with a population nearly three times as large as New Mexico’s, had 679 active adult use retailer licenses as of the beginning of September.
The oversaturation of retailers means that individual stores are capturing smaller slices of the overall pie in a state with a population of only 2.1 million. Lewinger described New Mexico as currently having a burgeoning, but, for the moment, unstable market where licensed businesses are seeing decreasing revenue. “There are a ton of retailers who [are bringing in] less than $25,000 in revenue a month,” he said. “We are starting to see those businesses close, left and right.” Additionally, according to Lewinger, New Mexico is currently producing more cannabis and cannabis products than there is demand in the state.
Illegal Cannabis in New Mexico Drives Down Legal Market Prices
Another challenge, Lewinger noted, is the “huge amount of illicit cannabis product” coming into New Mexico from California, Oklahoma, and other states that are also experiencing cannabis surpluses due to their own overproduction.
One of the state’s top cannabis companies recently told Lewinger that wholesale outdoor-grown flower is currently selling for anywhere from $1,000 to $1,200 per pound. At the same time, he said, “you can get pounds of Grade A flower for $300 that are coming in from Oklahoma, and you can put those into our state traceability software through loopholes. That has really driven the price of properly regulated, New Mexico-licensed cannabis into the ground.”
The flood of out-of-state, illicit cannabis also impacts prices of other cannabis products in the state. “When you have truckloads of flower and trim coming in from other states and introduced into the state traceability software illegally,” Lewinger pointed out, “some of that is turned into distillate and finished products, forcing the price for manufactured products to depress as well.” A manufacturer told Lewinger that the wholesale price for distillate in New Mexico was $9,000 a liter last year. Currently it’s $4,200 to $4,600 per liter of distillate.
New Mexico Cannabis Regulators Working to Weed Out Bad Actors
That said, Lewinger noted that the New Mexico Cannabis Control Division has dramatically tightened up its enforcement over the past several months. An NMRLD press release from July, for example, announced that the department had revoked the license of a cannabis retailer in Albuquerque for selling out-of-state cannabis products. According to the release, among the violations found at the dispensary in question were “possessing, receiving, and selling cannabis products that were not native to New Mexico and were marked with California stampings.”
Read the full report at
NEW MEXICO’S LEGAL CANNABIS MARKET GRAPPLES WITH OVERSATURATION, OVERSUPPLY & ILLICIT PRODUCTS
