ALBUQUERQUE, N.M. (KRQE) – It’s been a little over six months since recreational cannabis sales began in New Mexico. Retailers have sold more than $135 million in product, and the state has over 1,500 licensed premises.
After a seemingly big start for the state’s new industry, you might wonder what’s next? Should New Mexico expect more, or is cannabis now at its peak?
To find out what’s on the horizon, KRQE News 13 spoke with retailers and regulators. One of their conclusions? There’s still some room for the industry to grow.
In a saturated market, there may still be some room
Leading up to the start of legalized sales, there was a flurry of would-be retailers and producers applying for licenses, setting up businesses, and building retail locations. While not everyone was licensed and ready for the first day of sales, thousands of licensees quickly had their operations up and running.
Now, Andrew Vallejos, the acting director of the Cannabis Control Division, says the state probably won’t get too many new applications moving forward. The bulk of cannabis businesses have probably already entered the industry.
“As we go forward, we probably won’t expect to see very many more new applicants get into the market,” Vallejos says. “I think we’ll see some consolidation of operations.”
But that doesn’t mean the industry is done growing. After seeing promising results in the first few months, some retailers are now looking to expand.
“We’re turning a profit,” says Rodrigo Ramirez with Canvas Organics in Albuquerque. “We’re gonna work on our second store, which is going to be located on Eubank in between Central and Southern.”
Ramirez says that competing with the largest retailers in the state can be tough for smaller businesses. But he chalks up the success of their first location, on San Pedro Drive, to what he calls a “high class” experience.
“Older people . . . we’ve heard that they don’t like going into smoke shops. They don’t like going into ‘head shops’ because it’s got that vibe, and they feel like they’re doing something wrong all the time,” Ramirez explains. “So, we cured all that. They go into our place, and they just feel like they’re buying jewelry.”
Despite optimism, there is some concern that the industry is getting crowded. Duke Rodriguez, the president and CEO of one of the state’s largest retailers, Ultra Health, says they expect some smaller businesses to close in the next year or so.
“There’s going to be a settling out and there’s probably going to be about 200 dispensaries that could close in the next 12 to 18 months,” Rodriguez says. “If you do the math and you look at Arizona and you look at Colorado, our market can comfortably support about 200-plus dispensaries. And we’re way over 400.”
Expanded experiences could be coming soon
Beyond retail, one niche where there still appears to be some room for growth is the consumption lounge business. Outlined in the original bill legalizing cannabis in New Mexico, consumption lounges are café-like businesses where cannabis can be served and consumed.
The state already has a handful of licensed consumption lounges. But more are on the way.
FireFlower, a cannabis company planning on both growing and selling their own product, is looking to get a consumption lounge operating in Albuquerque by next year. The plan is for their lounge to use the former TD’s strip club on Eubank Boulevard.
“Our idea for a consumption lounge is that right now, there’s just so many experiences that seem to either be enhanced or benefit from the consumption of cannabis,” says Jess Franz from FireFlower. “Things that come to mind are yoga, films, gaming, music, dancing, food pairing — really any form of art.”
Franz says that they’re also planning to use the consumption lounge space for cannabis education. For example, they hope to help users see and learn where their cannabis is coming from in order to remove some of the stigma around cannabis use.
Michael Sanchez, a retailer and producer, has been trying for months to get a consumption lounge opened in Downtown Albuquerque. He says he’s made progress on getting the Electric Café opened, but it’s not quite ready yet.
The idea is to have a space for more than just cannabis. He hopes to rent out space for events like birthday parties and concerts.
People that buy cannabis, “they come to the dispensary, they don’t want to go home,” Sanchez says. “They want to have fun. They want to hear comedy. They want to hear poetry, they want to be engaged.”
Regulators looking to keep consumers safe
The relatively new Cannabis Control Division (CCD) within the state’s Regulation and Licensing Department, was created by the state when cannabis was legalized in 2021. The department is responsible for creating industry-wide rules, licensing cannabis businesses, and inspecting ongoing cannabis operations to make sure they comply with the law.
As the industry was getting its footing and retail sales began, the CCD had their hands full with reviewing and approving license applications. But now that the number of applicants has eased, the CCD says they’re looking to expand enforcement.
“We’re bolstering our testing requirements,” CCD Acting Director Andrew Vallejos says. “And we’re requiring all growers to test their product, and that gives the consumer a little bit of confidence that that there’s not anything unwanted in that product.”
The CCD’s compliance and inspections operations are meant to keep consumers safe. But the work is also aimed at combatting the illicit cannabis market.
“There’s an illicit market in every state. And really what you’re trying to do is to try to provide a product that is tested and safe,” Vallejos says. “You’re really trying to combat an illicit market.”
To do that, the CCD says they’re checking licensed grow operations to make sure the number of plants they’re actually growing matches the number they’re licensed to grow. And for processors, the CCD is looking for cleanliness and checking to make sure no prohibited substances make it into gummies or other edible products.
The CCD will also monitor retailers. But Vallejos says the focus really is more on growers and producers. “Retailers aren’t going to be inspected quite as vigorously as the grow operations and manufacturing,” he says.
More producers means better quality . . . and lower prices
Now that some of the early-to-license producers have had a chance to get their grows up and running, some in the industry say New Mexico’s market is seeing an increase in weed on the market. And they say some of it is “seriously good.”
“These new growers are coming out with some seriously good flower,” Rodrigo Ramirez from Canvas Organics says. That means the big producers who are already in the market are “going to have a run for their money,” Ramirez says.
And with more product available, there’s an expectation that the price will drop. That could be good news for shoppers.
Already, data from priceofweed.com shows that the per-ounce price of weed has dropped in Albuquerque from July to August. The data is far from perfect (it comes from inconsistent user submissions), but it seems to show what some in the industry are saying: Prices are dropping.
“What what we see happening right now is the price per pound is going down,” Ramirez says. And he estimates the drop he’s seen is somewhere around 20% to 30%.
That doesn’t mean cannabis is going to be cheaper everywhere. After all, Ramirez points out that the price really depends on the quality and type of the product. But he predicts that there’s going to be even more price drops in the future.
“It’s just a question of time. I’d say it’s taken about a year and three months and those new people [in the industry] are going to be fully operational,” Ramirez says. “So that’s when we’re gonna see huge drops [in price] per pound.”