New Mexico will open its first adult-use cannabis dispensaries to the public on April 1. It legalized through its legislature in April 2021, in a major victory for a state movement dating back decades. And unlike New York, New Jersey or Virginia—all of which approved legalization measures last year, but won’t open sales until at least 2023—New Mexico has rolled out its cannabis market remarkably fast.
Notably, cannabis sales will be allowed everywhere in New Mexico. The law does not allow city or town governments to ban sales locally, whereas most other legal states give municipal governments that power.
New Mexico’s law has features that may benefit small businesses over big players.
Perhaps unexpectedly, police had a hand in this. “There were some law enforcement who expressed they didn’t want a ‘checkerboard’ enforcement of cannabis, so it made it easier to not have unequal laws across this huge state,” Emily Kaltenbach, the New Mexico state director for the Drug Policy Alliance, told Filter. She helped lobby lawmakers to ultimately approve the cannabis legalization bill.
“I think also people recognized the economic driver for local communities that really don’t have much of an economic base,” she added. “For example, a lot of border communities with Texas, I think they are going to see a lot of traffic coming from there.”
New Mexico’s law has features that may benefit small businesses over big players. There is no limit to the number of cannabis business licenses the state can issue, for example. That’s in contrast to states like Connecticut, which is rolling out its cannabis market with only 56 licenses total available for all businesses to compete over. In many states, established medical cannabis businesses that already operated before full legalization are privileged for a portion of available licenses, squeezing their availability for everyone else.
In another potential plus for entrepreneurs with limited resources, New Mexico will let businesses apply for whatever type of license they can handle and wish to pursue—whether that’s an industrial-sized grow operation or a simple delivery service.
Kaltenbach also described the state’s planned cannabis social equity program. “There is language mandating the department to come up with a plan to ensure that communities most impacted by cannabis prohibition have the support and technical assistance get into the industry,” she said.
The social equity program is not fully operational yet, and there’s no clear timeline. That’s a significant shortcoming.
The state has loosely defined who may be eligible—including people of certain races or ethnicities, people with marijuana convictions and people with low incomes, to name a few. And the benefits they will receive—including assistance in the licensing process, reduced fees and access to a “social equity fund”—are also outlined.
However, New Mexico’s social equity program is not fully operational yet, and there’s no clear timeline for when it will open for applications. That’s a significant shortcoming, given how fast the state moved to open dispensaries.
Returning to licensing, Kaltenbach further explained that she and other advocates wanted to avoid some of the problems that New Mexico has faced in its alcohol industry. “Alcohol licenses are capped and therefore they’re very expensive and they can be transferred,” she said. “If you have a very coveted alcohol license you can sell it for hundreds of thousands of dollars and transfer it to another entity. That’s not allowed under the NM law, so these licenses don’t become a commodity.”
One option for small businesses is to apply for a “microbusiness” license, and in fact a majority of licenses granted so far are for microbusinesses. Such license-holders are eligible for a special $5 million loan program to help them acquire start-up finances and equipment. State officials estimate that individual loans under this program will average about $100,000 each.
But Kaltenbach also warned of a potential problem facing microbusinesses: plant counts. State law limits mico-growers to grow only 200 plants at a time, and that can only be changed if lawmakers and the governor approve a new bill.
Other licensed growers can currently grow up to 16,000 plants depending on their license type, and these limits can be changed at any time by state officials. In fact, since legalization passed, the largest growers have already been pressuring state officials to dramatically increase plant limits—even threatening to sue to get their way.
There’s a bigger issue that can’t be fixed until lawmakers come back to the negotiating table: where tax money will go.
“Having the smaller craft cannabis producers is really key in a market like this,” Chad Lozano, a cannabis grower and host of NMCannacast, told ABC 7. “We’re going to have this corporate cannabis. It’s probably going to be very cheap.” Despite this concern, micro-growers will benefit from not having to pay “per-plant” fees.
Yet there’s a bigger issue that also can’t be fixed until lawmakers come back to the negotiating table: where tax money will go. Currently, cannabis taxes raised by the state will go to its general fund, to be spent however the state government wants. That’s unlike New York, for example, where the law requires 40 percent of all cannabis tax dollars to go into a special fund to help reinvest in disadvantaged communities.
It’s important to know where that money is going. In states like California, cannabis tax revenues have helped fund more policing to enforce cannabis laws—which is exasperating, considering the whole point of legalization is, or should be, to end the criminalization of this drug.
Despite promising aspects to New Mexico’s model, then, serious questions remain about how it will shake out, and much work remains to be done if the goal is an equitable market.
“Earlier versions of the legislation that we worked on included funds that would support equity licenses, go back to housing, supporting people who are formerly incarcerated,” Kaltenbach said. “We are going to have to advocate and organize to try to get some of the general fund money reinvested back into communities.”
The Influence Foundation, which operates Filter, previously received a restricted grant from the Drug Policy Alliance to support a Drug War Journalism Diversity Fellowship.