Checking in on New Mexico’s weed industry

by DGO Staff

One year in, the state’s cannabis industry is thriving and raking in the dough

Well, it looks like New Mexico may be on its way to the cannabis throne in the Southwest region. As Colorado’s industry struggles, New Mexico’s recreational marijuana market has exploded in its first year, with sales surpassing a staggering $300 million, according to an announcement by Governor Michelle Lujan Grisham.

The state’s move toward legal cannabis started in April 2021 with the signing of the Cannabis Regulation Act, which legalized marijuana for adults in the state and laid the groundwork for regulated sales.

Fast forward a year to April 2022, and licensed recreational marijuana sales were booming in regulated dispensaries across the state. New Mexico regulators have now issued approximately 2,000 cannabis licenses, including 633 retailers, 351 producers, 415 micro-producers, and 507 manufacturers, as reported by the governor’s office.

“In just one year, hundreds of millions of dollars in economic activity has been generated in communities across the state, the number of businesses continues to increase, and thousands
of New Mexicans are employed by this new industry,” said Lujan Grisham in an April 3rd statement. “I’m excited to see what the future holds as we continue to develop an innovative and safe adult-use cannabis industry.”

Cannabis sales have remained consistent in the first year of legalization, with March hitting a record high of $32.3 million. Over 10 million recreational cannabis transactions have contributed more than $27 million in excise taxes to the state general fund and local communities.

Major cities like Albuquerque, Las Cruces, and Santa Fe have experienced the most robust cannabis sales — which is not terribly surprising, given the tourism and sheer volume of residents in those areas — while smaller communities like Clovis, Farmington, and Ruidoso saw over $7 million in adult-use sales. Border towns that touch on Texas, where recreational marijuana remains illegal, also had strong sales.

“I’m beyond thrilled that the industry has gotten off to such a strong start,” said Javier Martínez, a Democratic legislator and longtime legalization advocate, to the Albuquerque Journal. “We [legalized] it the right way.”

New Mexico’s adult-use cannabis industry has flourished in its first year, and Superintendent Linda M. Trujillo of the New Mexico Regulation and Licensing Department noted that regulatory enforcement will soon expand.

“With over 2,500 individuals holding a controlling share in a cannabis business, we recognize that our next step is compliance,” said Trujillo, who is currently overseeing the Cannabis Control Division (CCD) following the acting director’s departure. “We’ve been building the compliance aspect over the course of the last year.”

Reilly White, an associate professor of finance at the University of New Mexico’s Anderson School of Management, attributed the industry’s impressive first year to several factors, such as strong consumer spending, historically low unemployment, and additional state and municipal revenue sources from cannabis taxes.

Despite market analysts predicting some correction in New Mexico’s cannabis industry during its second year, which may cause some dispensaries to shut down, many remain optimistic about the industry’s long-term growth potential.

“Cannabis in New Mexico has a clear pathway to grow to more than half a billion dollars per year, particularly when compared to sales in states that legalized years ago,” said White. “However, the road ahead will be challenging. Market saturation may limit growth, causing many businesses to find their operations unsustainable. Economic uncertainty also plays a role, as it’s unclear how much consumers would cut back on recreational sales during times of economic stress. As the market matures, the industry will consolidate around the most successful companies, which will ultimately define New Mexico’s success.”

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