New Mexico’s cannabis industry is divided by fears of market saturation

Budtenders Sebastian Torrez, left, and Hannah Renick sell products to customers at the Ultra Health cannabis dispensary at 7401 Menaul NE. (Roberto E. Rosales/Journal)

Arizona had about 73 licensed adult dispensaries when recreational sales began in early 2021.

Colorado had 156 licensed retail stores in 2014 when sales began, according to data from the state Division of Marijuana Enforcement.

Meanwhile, New Mexico has more than 200 retail establishments statewide, Division of Cannabis Control spokeswoman Heather Brewer told the Journal, and counting.

That includes newly licensed mom-and-pop retail stores, as well as locations of New Mexico’s 30-plus legacy operators that previously operated under the state’s medical program and are now preparing to serve a larger population when sales begin for Adults.

But the question is: Will New Mexico’s adult retail market become oversaturated?

That depends on who you ask.

Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, said he’s not worried about the state’s adult-use retail market becoming oversaturated.

“New entrants will bring healthy competition,” Lewinger said, adding that people entering the cannabis industry for the first time are living the “American dream.”

But ask Duke Rodriguez, CEO and founder of Ultra Health, the state’s largest vertically integrated cannabis company, and he’ll give you a different answer.

“It’s going to be New Mexico’s nightmare,” Rodriguez said.

How many dispensaries?

The state is promoting some 228 retail operations across the state as of Tuesday. A retail license holder may operate multiple storefronts under that license.

But pinning down the number of actual physical storefronts is tricky, and the official count may be underestimating those locations.

The Smoke City Dos smoke shop is located in a strip mall on Airport Road in Santa Fe. According to the Division of Cannabis Control, the business was approved for a retail cannabis license. (Eddie Moore/Diary)

When the Journal requested detailed numbers on the number of business locations Albuquerque and Santa Fe currently have, the state sent a document outlining a list of store locations for legacy operators and newly licensed cannabis businesses.

To make navigation difficult, the state licensing portal search does not currently include all data on legacy operators and their retail locations. Robert Sachs, deputy director of CCD, said in an email that the licensing portal is expected “to be fully operational with all data (including legacy licensees) no later than early April.”

The building at 2903 Agua Fria in Santa Fe on Wednesday. According to the Division of Cannabis Control, Endo LLC was approved to sell adult cannabis at this location. (Eddie Moore/Diary)

Meanwhile, Albuquerque city spokeswoman Maia Rodriguez says legacy operators account for 48 storefronts in the city after checking data from the state Department of Health. Fifty-five more retail locations have received city approval, including some new locations from legacy carriers and newly licensed retailers.

In the meantime, Ultra Health has been tracking numbers on its own. Using data from the state licensing portal and accounting for legacy operators with retail stores throughout New Mexico, Ultra Health estimates that about 311 retail stores are currently licensed in the state. Of that number, 110 are in Albuquerque and 25 in Santa Fe, said Marissa Novel, director of marketing for Ultra Health.

“The saturation is now mathematically verifiable,” said Duke Rodríguez. “It’s not going to get better, it’s only going to get worse.”

Rodríguez estimates that, with the population of New Mexico and the number of retail establishments throughout the state, “we are looking at about 12 months to have to reduce close to 100 establishments or more.”

‘Ample Supply’

Brewer said the division doesn’t expect everyone to open on April 1.

“Licensees can choose to open some locations on April 1 and not open others until later this year,” Brewer said, adding that, “Based on current supply data, the Division of Cannabis Control is confident there will be a ample supply, no oversaturation. the day of the inauguration.”

In fact, that’s the case for Canvas Organics, which plans to open one store at a time, said co-founder Billy Giron.

Giron, who also opened CBD Boutique in 2015, said he and his business partner have received approval for a retail license that will allow them to operate six locations in the Albuquerque area. But the plan is to start with a store, Girón said. The necessary city approval for zoning delayed the construction and equipping of their first store, but they have remained positive throughout.

“It feels like we’re trying to pull off some kind of miracle right now to make it work,” he said.

Fortunately for Giron, Canvas Organics was able to find a supplier of cannabis products and will have a supply ready by the time sales begin. He said finding cannabis flowers and concentrates has been more difficult to find with the limited number of growers and manufacturers currently in the state, but as the months go by, he expects the number of products for retailers to increase.

Rodriguez said smaller retailers have been reaching out “almost daily” asking for products to outfit their stores. To him, that indicates a need for more supply.

“(State regulators) are not going to be the ones to feel the pain,” Rodríguez said.

Brewer said that the way the legislation was written prohibits CCD from placing a cap on future retail licenses and that an amendment to the legislation would have to be made. But it is possible that the division could increase the number of plants again if necessary.

“We’ve heard concerns ranging from overstock fears to predictions of product shortages,” Brewer said. “However, based on the state’s market analysis, CCD believes that current supply will be adequate for opening day and that the market will quickly settle into a balance of supply and demand that meets the needs of businesses and consumers. consumers”.

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