Monday, May 29, 2023

Border Towns Could Rock the Socks Off Mary Jane

Producers Need to Use Everything in the Cannabis Cash Cow but the Moo for Weed Sales


“I want you to knock the socks off of this industry. It’s not green and red anymore”—as in chile—“it’s green and green.” This was Gov. Michelle Lujan Grisham's message of encouragement for people preparing to invest in the state’s recreational cannabis business at June's New Mexico Cannabis Legalization Conference. The governor predicted New Mexico’s cannabis sales would eventually top the amount sold in Colorado. If Colorado's town of Trinidad is an example of what can happen along the borders of New Mexico, get ready to rock and roll with Mary Jane. Hopefully there will be enough weed produced around the state to supply everyone’s needs.

Due to its proximity (eight miles) to the Texas border where recreational pot is not legal, a rural town like Clovis can expect economic growth after the legalization of adult-use marijuana in the state. “I think the expectation from a lot of citizens and from other municipalities around the state is that there’s probably going to be quite a few dispensaries opening up just because of our proximity to Lubbock and Amarillo. So, I think we plan to see a fair amount of business,” Jared Morris, Clovis city attorney stated.

When cannabis was legalized in Colorado, towns like Trinidad, Antonito and San Luis realized, if cannabis businesses were opened in small towns along the state’s borders, they could attract customers from Kansas, Nebraska, New Mexico, Texas, Utah and Wyoming—where pot remained against the law, was hard to obtain, but was still popular with locals. Now, with cannabis legalized in New Mexico, there are bunches of cannabis shops along the Colorado-New Mexico border that could go up in smoke as New Mexico takes over its own reins.

Trinidad, Colo., is an example of how marijuana entrepreneurs can take advantage of being a border town that sells weed. They have 25 cannabis dispensaries in a town of close to 9,000 people, according to Last year almost $71 million in cannabis sales rolled through their dispensaries’ registers.

The Colorado-New Mexico border scenario is likely to be repeated across the country. However, the border business model will be tested as New Mexico’s legalization threatens local Colorado governments, the rural dispensary owners and their employees that have come to rely on the cannabis tax revenue and jobs the industry provides.

New Mexico is poised to take a major piece of the cannabis market away from Colorado’s border towns. Incentives to buy cannabis in the Land of Enchantment are stacked in its favor. Initially New Mexico will tax cannabis at a rate lower than Colorado, and consumers in New Mexico will be able to purchase up to two ounces of pot per store, compared with Colorado where customers can only buy one ounce per day. New Mexico will not allow counties, cities and towns to opt out of recreational marijuana sales as Colorado did.

“The legalization of adult-use cannabis paves the way for the creation of a new economic driver in our state with the promise of creating thousands of good paying jobs for years to come,” Gov. Michelle Lujan Grisham predicted. “We’re ready to break new ground. We’re ready to invest in ourselves and the limitless potential of New Mexicans. And we’re ready to make this industry a successful one that helps transform New Mexico’s economic future for the better,” she said.

For the first full fiscal year of recreational marijuana sales starting in July 2022, the Legislative Finance Committee stated in their March fiscal impact report that sales could produce an estimated $19.1 million in net tax revenue for the state and $9.4 million for local governments. Fiscal year 2023 through 2024 predictions could see $30.1 million in net state tax revenue and $15.1 million for local governments. While it will not replace oil and gas sales, that’s a chunk of change that will make a large contribution to the state’s budget and workforce.

“This is the right model for New Mexico because it creates a local, sustainable and regulated industry while at the same time protecting our public health, road safety and the well-being of our youth,” said Superintendent Linda M. Trujillo of the state Regulation and Licensing Department, which will oversee and manage the new industry. “The standardization and statewide regulation that comes with a bona fide industry will protect consumers. In addition, local jurisdictions will be able to enact reasonable zoning, land use and other business requirements.”

Ultra Health has already opened up new dispensaries in Clovis, Clayton and Sunland Park, N.M. These towns are on the route Texans take heading out to have a Rocky Mountain High getaway. These small rural towns could become the “in” place overnight.

There could be a problem supplying enough cannabis to fuel the market as everyone gets their ducks in a row. On Sept. 1 New Mexico will start accepting applications from retailers and producers. However, with sales scheduled to start in April 2022, there could easily not be enough time for existing and new producers to fulfill what could be an unprecedented demand in the state. With over 70 percent of the state favoring the legalization, it’s a real possibility.

“Our focus right now is on the medical patients and ensuring that they have an adequate supply of cannabis, and that they are getting the information and support they need,” David White, founder and director of the nonprofit Organica, told The Paper.

There’s very little that goes to waste in Organica’s growing process. “We have learned to use everything but the 'moo' of the cow,” he said. Through testing, they discovered their  trim still represents a good harvest of 15 percent cannabinoids. They now use it as biomass in a method called "ice hashing" to process the trim into oil for many different concentrated products. Medical Cannabis Provisions in the HB2 law have some measures in place to guarantee there is enough medical cannabis for those in the program. However, it's still a crap shoot whether there will be enough to go around.


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