Ready, set, grow: Producers prepare for ‘canna-biz’ to begin in New Mexico

SANTA FE, New Mexico - Cannabis might be legal to grow and smoke in New Mexico, but you can't buy the plant for recreational use in the Land of Enchantment just yet.

“The sales are not going to be able to go live in January," said Superintendent Linda Trujillo, the secretary of Regulation and Licensing in New Mexico. "I can tell you that.”

When the state voted to legalize the drug recreationally this year, lawmakers tasked Trujillo with establishing a brand new system to license the sales of cannabis by April 1, 2022.

“I knew that cannabis would be legal this year just as much as the rest of us knew the pandemic was coming," Trujillo admitted. "To implement cannabis was not on my radar at all.” 

As of late November, 122 aspiring growers across the state have submitted applications, according to the department.

"It's been a huge learning curve," Trujillo said. "It’s a new industry, but there are some industry standards we’ve been able to glean from other states.”

Getting started

“It’s been a tough row to hoe," said Kevin Lutz, who co-founded High Noon Cannabis this year in the northwest corner of Doña Ana County with his neighbor, Herman Ortiz.

The new business partners are devoting 70 acres of land in Garfield to growing cannabis with a hydroponic system, a method of farming that does not use soil. Ortiz said the land has been in his family for five generations.

“Our great-great-great-great-great grandfather is buried on the property," Ortiz said. “My hope is that just like the Hatch Valley is known for the best chile in the world, we're going to be able to grow some of the best cannabis in the world.” 

Lutz and Ortiz had been preparing to start their business for more than a year, but to grow for recreational use, they had to wait for their license approval in October.

“The medical folks, they’ve already had their licenses," Lutz said. "Even though they have to submit the same rules that we do, they’ve already got it ready to go.”

Multi-million dollar players

“My heart is really in these plants," said Armando Rascón, overlooking a handful of the thousands of plants he cultivated for medical consumption at Ultra Health's 14-acre Bernalillo campus.

The 37-year-old told ABC-7 he originally began growing cannabis as a teenager in his apartment.

 “At that point, it was very frowned upon," Rascón said. "It was still very much illegal.”

Now, Ultra Health has 23 dispensaries and a 300-acre footprint across New Mexico. The company is projected to make $60 million in revenue this year from medical sales alone. However, the state of New Mexico placed a limit of 10,000 plants produced by each company.

“The state is capping the potential of the program," Rascón said.

Ultra Health might be responsible for producing 10,000 plants and 22 strains of cannabis, but Rascón said he believes the company will have to buy crops from smaller farmers because he predicts there will not be enough for recreational sales.

“Unfortunately, there will be a shortage," Rascón said. "That shortage will come from the cap on the number of plants that producers are able to grow.” 

Protecting medical users

“We’re not feeling there’s going to be a shortage," Trujillo said. She said in the first few days of sales, some dispensaries may run low on inventory, but she doesn't believe it will be long-term.

Trujillo told ABC-7 that she did not decide on the 10,000 plant limit - lawmakers wrote that stipulation into the legislation. However, she said other states saw a drop in value when producers were able to grow an unlimited supply of cannabis.

“What happens when you have an overflow is the market declines, the cost of cannabis drops," Trujillo said. "People lose out. Their businesses suffer.”

To protect the state's tens of thousands of medical users, she said dispensaries will be required to sell 25% of their products for medical use for all of 2022. In 2023, that requirement will drop to 5% of sales for medical use. The state has the ability to increase that to 10% if there is a shortage.

"We have some triggers that we can move in order to prevent a shortage," Trujillo said.

However, Trujillo said the black market will likely still exist.

"Other states haven't seen that go away," Trujillo said. "Our responsibility, and we take it very seriously, is to try to bring an illicit industry into the light and have it be managed through state."