Efforts to implement the legalization of adult-use cannabis in New Mexico made new progress this month as regulators issued the first license to cultivate recreational marijuana in the state. Tony Martinez, the CEO of Mother’s Meds, announced in a statement last week that the New Mexico Regulation and Licensing Department had issued a license to the company to operate as a cannabis cultivator on November 1.
The company will join 34 other cannabis producers previously licensed by the Department of Health to cultivate medical marijuana, many of which will also grow adult-use cannabis. On Wednesday, a spokesperson for the state’s Cannabis Control Division (CCD), which is overseen by the department, confirmed that the license had been awarded pending a background check of the applicants.
“Mother’s Meds has been issued a cannabis producer’s license and that license will go into effect as soon as all background check requirements are met,” division spokesperson Heather Brewer said in a statement quoted by the New Mexico Political Report. “The Cannabis Control Division is excited to start issuing licenses and looks forward to public announcements and celebrations of new businesses as the Division works to stand up a thriving adult-use cannabis industry in New Mexico.”
Martinez credited the “hard work, due diligence and adaptability” of the company’s staff and San Juan County’s “business friendly attitude” for the first cultivation license being issued to Mother’s Meds, which is doing business as Lava Leaf Organics. He added that the company “will continue to comply with all CCD rules and regulations” as it gets cannabis production up and running.
Rather than hiring a substantial number of employees, Martinez said the company will operate by contracting with cannabis industry professionals.
“My least favorite part of business is placing a value on another person’s efforts and talents; this model allows people more control over their destiny and to work with us, not for us,” Martinez wrote in a statement. “I believe this will allow our community to attract and retain more talented professionals than our competitors.”
More Than 1,500 More Cultivation License Applications Still Pending in New Mexico
Since the CCD begin accepting applications for adult-use cannabis producers in August, more than 1,500 potential applicants have initiated the detailed and time-consuming process. More than 1,000 applications were started for licenses to operate microbusinesses, which are limited to growing no more than 200 cannabis plants at a time.
“We’re off to a great start,” John Blair, the deputy superintendent for the New Mexico Regulation and Licensing Department, told local media earlier this month. “I don’t know that we could have anticipated what the demand was going to be other than knowing there really seems to be a great excitement across the state.”
State regulators continue to accept applications, and Blair noted that regulators have not established a cap on the number of licenses issued, a practice common in many jurisdictions with legal marijuana production.
“We don’t have any limit on the number of people that we’ll license for any of the cannabis businesses,” he said. “If a million New Mexicans want to get a license, we would license a million people.”
Completing the application, however, is not a simple process. Johnathan LeDuc, an applicant hoping to produce medical and recreational marijuana in Los Alamos, said that the CCD required him to submit a social and economic equality plan, a government identification card, a current business license, a fire inspection report, zoning approval, proof of business premises ownership, a diagram of the location, a water and energy use plan and a demonstration of water rights.
“It’s quite a daunting process. The application is very, very thorough, and there’s a lot of steps and requirements,” he said. “I have basically only been able to submit my application provisionally.”
No Guarantee of Success
While there is no limit to the number of licenses that can be issued to cultivate adult-use cannabis in New Mexico, receiving one does not guarantee a successful business. A.J. Sullins, a New Mexico resident who owns cannabis companies in several other jurisdictions and is now applying to produce marijuana in his home state, said that market forces and production costs are likely to lead to many business failures.
“There’s going to be quite a few people who have received licensure and their costs are outweighing their revenue because they didn’t plan for a low-cost production,” he said. “And they’re going to start to get consolidated or washed out within a three-year period. I saw the same thing happen in Arizona.”
Sullins added that even businesses with millions of dollars in investment can have difficulty competing with large multistate cannabis operators.
“There’s about one or two large players out there who are absolutely dominating the market,” he said. “I hate to use the word, but almost ‘monopolizing’ the market. So competition is definitely steep at the top.”