November 8, 2021

The clock is ticking for new cannabis producers

As New Mexico regulators comb through applications for cannabis businesses and craft further rules and regulations, some industry hopefuls as well as industry veterans are starting to get nervous about timing. 

By law, the New Mexico Regulation and Licensing Department must start issuing cannabis production licenses by Jan. 1, 2022. On April 1, 2022, recreational-use cannabis establishments are expected to open their doors. But, according to some cannabis producers, that timing makes things difficult. Some who are still waiting for their applications to be approved said it would be impossible to start selling cannabis products on the first day if they are not licensed before the start of next year. 

For Alyssa Pearson and her partners who are planning on starting a vertically integrated cannabis establishment, the idea of being ready to stock shelves on April 1 is daunting. Pearson, who is in the process of moving back to her home state of New Mexico, has been watching the new industry unfold from afar. She and two other cannabis business applicants told Growing Forward, the collaborative cannabis podcast between New Mexico Political Report and New Mexico PBS, that they are already coming to terms with not being ready to go by next spring. 

“If we’re growing in 2021, I would be shocked,” Pearson said. “And it’s unfair to me and my business partners quite frankly, because they have the space set up. They have been working their butts off since June to be ready.”

At least for Pearson and her company Dr. Green Organics, the wait time has just as much to do with local regulations as it does with state regulations. 

“We have the capital, we have the team, we are ready to extract, we are ready to make edibles, we are ready to go,” Pearson said. “It’s just a matter of when we get zoning approval in the town that we’re in, and it could be another four to six weeks before we even get the zoning approval.”

Pearson and her business partners are seeing firsthand an issue that providers have raised numerous times since June when the Cannabis Regulation Act went into effect, which is that RLD requires local approval before issuing a cannabis business license. But in many cases, local governments want to see approval from the state before issuing a business license. 

RLD superintendent Linda Trujillo acknowledged that issue and earlier this year said the department would issue provisional approvals in certain cases to get the proverbial ball rolling. 

Matt Muñoz, who is one of three business partners starting Carver Family Farm, has been featured in a few Growing Forward episodes and has first-hand experience with what he calls a “chicken and egg” scenario in which both local and state regulators are waiting on approval from each other.  

Muñoz said he and his partners have budgeted a 90-day timeline to have cannabis products ready for sale. 

“We have to have our license by the end of the year for us to have product ready to go April 1,” he said. 

Muñoz said he anticipates the only businesses that will be ready to open their doors for adult-use cannabis on April 1, 2021 will be the medical cannabis businesses that have been licensed by the state for years and already have plants in the ground. 

But at least two proprietors of New Mexico medical cannabis companies who NM Political Report previously spoke with said they are also going to be stretched thin.

Duke Rodriguez, the president and CEO of Ultra Health, has long called for eliminating limits on cannabis cultivation for providers. This year, RLD approved rules that allow cannabis producers to grow 8,000 plants and up to 10,000 plants in certain cases. But when NM Political Report spoke to Rodriguez in September, he said even 10,000 plants per producer will not be enough to support sales for the more than 100,000 medical cannabis patients in addition to the many non-patients that are expected to increase demand. Rodriguez said the only viable way producers can keep a steady stream of cannabis is to set up a perpetual grow operation. In other words, Rodriguez said, for an operation limited to 10,000 plants many producers will plant cannabis in increments so that there are always plants ready to harvest. But that means after about four months the first harvest will be a fraction of the total capacity allowed.   

“On the 17th week, I take down my first 1,000 plants,” Rodriguez said. “Not 8,000 [plants],1,000 [plants].”

Rodriguez added that besides growing times, harvested cannabis still has to be dried and cured before being tested and in some cases manufactured into edibles or extracts. 

“People forget how long it takes for us to make that inventory available,” Rodriguez said. “Everybody says the seed to harvest is three, four months. That’s only part of the exercise. I have to get you from a seed to the shelf, which includes the curing and drying time that’s not part of the growth period.”

When Rodriguez spoke to NM Political Report in September, he said unless cannabis production is significantly expanded, the state is headed for a cannabis shortage in April. 

And while a shortage of cannabis can be an inconvenience for those who are not medical cannabis patients, those who are patients often need it to function.

Willie Ford, who runs the cannabis management and consulting agency Reynold Greenleaf and Associates, in September said he agreed with Rodriguez that the state is headed for a “crisis” when it comes to cannabis supply. Ford said it’s often understated how important the plant can be to some patients.  

“I understand that it’s a hard sell to get people to understand how important cannabis can be to patients,” Ford said. “A lot of people don’t understand that people rely on this stuff for their quality of life, just to get up in the morning and be able to live like a normal person.”

RLD spokesperson Heather Brewer told NM Political Report that the department and its Cannabis Control Division is working diligently to issue licenses to applicants. 

“The Cannabis Control Division is excited by the enthusiasm around the adult-use cannabis industry,” Brewer said. “CCD’s professional staff is preparing to issue new producer licenses. We are working closely with all producer-license applicants to ensure that they receive a timely license approval and can start gearing up to maximize the economic opportunities created by New Mexico’s cannabis industry.”