New Mexico continues to pump out new cannabis licenses, but some business owners worry that the market is already oversaturated as it is and that the state should halt granting new licenses until things even out.

According to the New Mexico Cannabis Control Division’s (CCD) cannabis reporting portal, the state has approved 2,814 cannabis business licenses since the drug was legalized in 2021. Over 1,000 of them are dispensaries.

Albuquerque residents are more than familiar with the sight of cannabis dispensaries. It might seem like there’s one on every corner. There are 243 dispensaries in the city. In comparison, there are only about 140 liquor stores in the city.

While it might be a weed smoker’s dream come true, it can spell doom for local business owners. The state’s cannabis law does not limit the amount of licenses that the CCD can issue, and the division has said on a number of occasions that it plans to issue as many licenses as there are qualified candidates.

A year ago, then-acting director of the CCD, Andrew Vallejos, told The Paper. that the agency does not plan on halting new licenses, because the architects of the Cannabis Regulation Act (CRA) had intended to leave the door open for anyone who wants to enter the industry.

“The point is to give people the opportunity to get into the industry, and then let the industry sort out who the winners or losers are—not the state of New Mexico,” Vallejos said.

Robert Jackson, executive director of Seven Point Farms, tells The Rolling Paper. that the number of dispensaries is getting out of hand. 

“It’s absolutely, fundamentally detrimental to the health and longevity of the industry,” he says.

According to Jackson, market oversaturation is hurting local and minority businesses, despite the political rhetoric that was attached to the passage of adult-use legalization.

“The powers that be touted this equity program, but what they’ve done is set us up for failure with mass saturation,” he says. “So folks that were already marginalized—who put in everything they had—have to compete in a closed market.”

He points out that marijuana businesses don’t have the same safety nets that companies in other industries enjoy.

“You can’t claim bankruptcy, because cannabis is illegal,” says Jackson. “So, they’re just ruining lives. People will put in their retirement and put in their last dime, and they’re never going to see it again. They’ll lose it. It’ll go to the back taxes, and then it will go to servicing debt for the rest of their lives. Because they can’t actually claim bankruptcy.”

Jackson says oversaturation is hurting everyone in the industry—both big and small companies alike—“but the only people who are going to make it through are the people that can afford to operate in debt.”

Duke Rodriguez, CEO of Ultra Health, says that no other state faces this bad of a saturation problem. 

“The NM market is the most saturated adult market in the entire country. There is no arguing that point,” he wrote in an email to The Rolling Paper.

Ultra Health is one of the biggest producers in New Mexico, but it’s still feeling the pressures of market saturation—namely, increased competition and the devaluation of product.

Some producers are saying that a pause on new licenses could go a long way to help with the issue. Jessie Hunt, a spokesperson for R. Greenleaf and Everest, told The Rolling Paper. that a pause would give struggling businesses a chance to get their heads above water and breathe.

“The challenge that we’re facing is that there are so many retail licenses, particularly in certain markets, that a lot of companies are unable to even cover their costs,” says Hunt. “Something like 60 percent of the companies are reporting less than $25,000 of revenue, which is just an impossible equation for survival.”

She says that while there needs to be a pause, there also needs to be a set time limit so the state doesn’t risk completely halting the issuance of licenses. She suggests a 12-month pause is a possible answer, but she also says that the CCD should be given the power to declare licensing pauses whenever it’s appropriate rather than only doing it once.

“We really think that the CCD should have the ability to pause issuing licenses to stop adding fuel to that fire and just let the market stabilize,” Hunt says.

But Rodriguez says it’s too late to fix the problem.

“The genie is out of the bottle, and it’s too late to be wasting time, energy and brain cells debating a pause or cap on licenses,” he says. “It’s now a new game. The great American Dream is absolutely a New Mexico nightmare. We cannot simply unring the bell nor can more regulations make it better. Regulators led us to this crisis and they are not the folks to count on fixing the problem.”

Rodriguez’s sentiment is echoed by Jackson.

What’s the best way to fix oversaturation? 

“Hop in a hot tub time machine and allow us to control licenses,” Jackson says. “It was in the bill, but then in a special session it got taken out. God knows why. And now here we are, and the damage is done.”

Meanwhile, the CCD has asked that legislators fix the Cannabis Regulation Act to clarify who has authority to act against businesses that violate cannabis regulations in an effort to battle illicit sales of out-of-state cannabis—another issue that is hurting businesses that operate within the rules and undercutting their profits.