NEW MEXICO (KRQE) – With preparations for the new recreational cannabis industry underway, New Mexico is getting closer to reaping the potential economic benefits of a new industry. But who has the best shot at benefitting from the new law?
To find out if small businesses and minorities are likely to get a slice of the market, KRQE News 13 spoke with the superintendent of the New Mexico Regulation and Licensing Department and several experts to learn what opportunity-providing provisions exist in the new law.
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“The way that the legislation was set up and drafted was to try to ensure that small entrepreneurs — including producers, small manufacturing plants, [and] retailers — had an opportunity to enter the market without a huge overwhelming investment,” says Linda M. Trujillo, the superintendent of the state Regulation and Licensing Department. That’s the group that will regulate cannabis in New Mexico. “I believe that this is one avenue of diversifying our economy,” she adds.
The new law uses the term “microbusiness” to distinguish small cannabis producers who have 200 mature plants or less. The licensing fees to start a cannabis business depend on the business size, but microbusiness licenses may cost around $1,000 to $2,500 per year, according to the new law. Overall, the fees are relatively small compared to the other start-up costs to enter the industry, says Trujillo, and the state is currently working on setting up an online application portal to make the application process easy.
“There’s room, I think, in this industry for a lot of different sized players,” says Kelly O’Donnell, an economist and University of New Mexico School of Public Administration professor. But licensing isn’t the only thing standing in the way of would-be cannabis startups.
“One of the major concerns, particularly with it remaining illegal at the federal level, is the financing is really hard to come by,” says O’Donnell. “Folks who have access to financing have this massive competitive advantage.”
The U.S. Small Business Administration’s (SBA) is generally the go-to place for small business resources, including funding. But the federal agency “can’t provide any assistance or guidance,” says John Garcia, the district director for the SBA’s New Mexico District Office.
Despite potential funding challenges, the new law is intended to support small business owners, including minority entrepreneurs. New Mexico Senator Jerry Ortiz y Pino, who co-sponsored the new law, explained that the same provisions intended to support small business owners should support entrepreneurs of every ethnicity.
“Part of the thinking behind this bill [is] that we would utilize some of the revenues to try to foster economic diversification and support for minorities,” he says, “so that they might benefit from what we think is going to be the economic boon that cannabis legalization will provide.” Ortiz y Pino also sponsored a new law to expunge criminal marijuana records. Together, he says these two new laws work to help New Mexico’s minority populations.
“We’ve given access to the market — very inexpensive access to producing — and hopefully this will benefit minority communities. With the expungement provisions, we’ve torn apart the barriers to people with prior cannabis-related convictions. They can get into this [industry] on the same ground as somebody who’s never been convicted of a drug-related offense in the past,” he explains.
In Colorado, criminal background check requirements were one of the largest barriers to employment in the cannabis industry, according to a 2020 AnalyticInsight report. The data shows that 83.3% of the 244 employees surveyed thought that background checks were a barrier; 64.4% thought that startup costs were a barrier to entering Colorado’s industry.
To lower the barriers to entry for New Mexico’s new industry, Linda M. Trujillo from the state Regulation and Licensing Department says they’ll soon rework an existing small business resource guide from the state’s Economic Development Department to ensure that there are resources for would-be cannabis entrepreneurs. “We’re gonna have to go and make sure that our state economic development partners are able and willing to participate in helping those entrepreneurs with things like business plans,” she says. “I think that’s how will we get that diversity, is that you have resources that are available at the local level — in the community — that are trusted and that people feel comfortable going to.”