Since New Mexico’s first licensed sales of adult-use cannabis began nearly two years ago, the state has seen a wave of dispensaries open up. For Sierra Hirtzel, General Manager at Akēso Botanicals in Las Cruces, legalization has made it easier for medical patients like her to have access to cannabis.
“I ended up in the hospital a number of years back. I had a massive internal infection. And my doctor at the time was not able to prescribe [cannabis] because he’s federally funded, but he knew my feelings on opiate painkillers and said, you know, I will do anything in my power to help you get that medical card because I know it will be better for you. And he was right. It was a painful recovery.”
Since New Mexico’s licensed sales of adult-use cannabis started in April of 2022, the industry has pulled in nearly one billion dollars in total sales according to the state’s Cannabis Control Division.
Sierra said while cannabis legalization was needed, the state didn’t implement enough regulation to protect New Mexican-owned businesses from out-of-state competition.
“New Mexico should have known what they were getting into,” she said. “It’s not like we’re the first state to do this. It should have been limited to New Mexico residents’ licenses for at least, I don’t know, one to five years before they let big money from out of state come in here. They got to give the local stuff the chance to actually survive. Otherwise, it’s just going to be businesses popping up and going down.”
Founder of Akēso Botanicals, Dr. Hilda Luz Chavez, echoed this sentiment. Dr. Chavez said that while cannabis legalization has been a net positive for the state overall, the Cannabis Control Division could do more to ensure a safe and competitive marketplace.
“There is no law enforcement side to the Cannabis Control Division. They barely have compliance [officers] as of last year. And so there’s a lot of openings for exploitation by illegal operators. And this year they’re starting to kind of crack down. But it still needs work.”
Dr. Chavez said that the City of Las Cruces is also partly responsible for the oversaturation of businesses, and should stop issuing permits that allow dispensaries to operate outside of set boundaries.
“The city started issuing these special use licenses. So now, why we picked this location is because it’s industrial. There are no churches, schools, or parks anywhere near us. It’s not the best location in terms of aesthetics, but it follows the rules. These people on Mesquite and on Main Street, there’s dispensaries that opened up right next to another dispensary or next to a church or neighborhood. They got special use permits, that’s not ok.”
When asked about the special use permits, Las Cruces City Councilor Becki Graham said that she voted twice in the past to remove the buffers that necessitate the majority of the permits, and that she’s empathetic to businesses that are struggling.
“I feel for retailers who maybe came in a little later, or were even there at the start, who feel like the competition is just getting to be too overwhelming. But I think one thing that the city has been great at is providing support through community development and economic development on the business side,” she said. “So what I can say is I think the city is providing great support for the businesses that are operating right now.”
According to data from the state’s Cannabis Control Division, nearly 3,000 cannabis licenses have been issued across New Mexico as of January 1st.
Duke Rodriguez is the CEO of Ultrahealth, one of the state’s largest cannabis operators. He said that the sheer number of cannabis businesses is simply unsustainable.
“Today in Colorado, they have a population of 5.4 million, and they have about 600 plus dispensaries. We are about 35% the population of Colorado. That tells you our sweet spot, when the market’s fully mature, is around 200, 250 stores statewide. That means 500 have to go away to find that market equilibrium. That is two-thirds. That is devastating.”
Rodriguez said that with the upcoming legislative session in New Mexico, putting a pause on the distribution of licenses won’t change much. Rather, he said the state needs to lower cannabis taxes and step up enforcement against illegal operators.
“If you are an unlicensed operator, your penalties should be significant. If you are a licensed operator who’s caught with illicit product from California, Oregon, Washington, Oklahoma, your license should be immediately suspended. Not a small fine or slap on the wrist. The penalties should be severe.”
KRWG reached out to the state’s Cannabis Control Division, and the division responded with the following written statement:
“The Cannabis Control Division doubled its compliance staff in July and performed more than 1,000 inspections of licensed cannabis businesses in 2023 alone. The division remains committed to protecting consumers by performing spot inspections, following up on all complaints, and holding bad actors accountable.”
As for Dr. Chavez, she said that she’s not worried about her business, but said anyone looking to break into the industry should be cautious.
“If anybody is interested in jumping into the green rush, so to speak, and they think they’re going to make millions of dollars, that’s not realistic. Any business, whether it’s a growing facility, or a manufacturing facility, or dispensary, it takes time to develop it. In an oversaturated state like ours, the risk is high.”
From a bird’s eye view, New Mexico’s cannabis industry may seem like it’s in a boom. But at the local level, many retailers may be taking on water, trying to stay afloat and survive current market conditions.
