Not long after the U.S. Supreme Court’s decision that abortions are not a right covered by the U.S. Constitution, award-winning actress Bette Midler posted to Twitter a doctored picture of a New Mexico welcome sign. Added to the sign were the words, “We’ve got chile, weed and reproductive rights,” referring to the fact that state lawmakers removed a criminal penalty for abortions and that the state legalized recreational-use cannabis. Hours later, Gov. Michelle Lujan Grisham’s reelection campaign jumped on the opportunity and reposted the picture with the added words, “And we’re going to keep it that way.”
If Lujan Grisham’s Republican opponent and former television meteorologist Mark Ronchetti wins the election in November, it’s likely that he will push for a change to the state’s abortion law, but his campaign has said little about whether he would push for changes to the state’s Cannabis Regulation Act.
Medical cannabis patients and cannabis business owners who spoke with NM Political Report about cannabis and the upcoming gubernatorial election had various views on how each candidate might impact the current law, but most agreed that there is still more work to be done when it comes to the state’s cannabis industry.
Alyssa Pearson, the chief operating officer of the cannabis company Dr. Green Organics Co., said her business is in the final stages of opening a cannabis retail store in Mesilla Park, in Southern New Mexico. Pearson declined to discuss who she plans on voting for in the upcoming election, but said she hopes lawmakers and the governor address what she sees as needed changes to the current law.
“At this point, all that needs to be done to kill small businesses like ours is ambivalence,” Pearson said. “I know that that’s something that my business partners and I would never want to do, is vote for somebody who could potentially jeopardize the feasibility of the social equity mission of cannabis, because that’s, for us, such a huge thing.
After almost five full months of recreational-use cannabis sales in New Mexico, experts say the initial revenue projections were slightly higher than what is now expected.
During a Legislative Finance Committee meeting on Wednesday regarding revenue projections, New Mexico Taxation and Revenue Secretary Stephanie Schardin Clarke told lawmakers that the state’s general fund is expected to see about $22.7 million in revenue by the end of the current fiscal year from the state’s cannabis excise tax with an expected 10.6 percent increase each year after that. According to the committee’s chief economist though, the current projection for Fiscal Year 23 is about $5 million less than what was projected last December. The committee’s own analysis of cannabis tax revenue also projected that cannabis business licensing fees will generate about $5 million in FY 23, which began on July 1.
There was almost no mention of cannabis revenue from committee members, but the head of one prominent cannabis producer said the new projections are a sign of overly limited cannabis production and a too-high cannabis excise tax rate.
Duke Rodriguez, the president and CEO of the cannabis company Ultra Health, said the current limit of 20,000 plants per cannabis cultivator is still not enough to support the demand in the state, which he said contributes to higher cannabis prices that are not competitive with the illicit market.
“Prices need to fall, quantity needs to increase and quality has to be maintained at the same time,” Rodriguez said. “But we need a per gram price of around five, pre-tax, and we’re already above 10. So, until we get a more competitive product in the marketplace, we’re not going to see that demand appear.
Believe it or not, Sunland Park, a southern New Mexico city with a reported population of just 17,000, has an entertainment district. The city’s entertainment district is currently home to an amusement park and a horse racetrack with its own casino and hotel.
The city is so close to El Paso, Texas that it is oftentimes hard to tell where the two cities’ boundaries are without looking at a map. In fact, just north of the Sunland Park Racetrack and Casino, is the Stateline restaurant, which has an El Paso address, but a portion of the restaurant actually lies in New Mexico. Across the Rio Grande from the racetrack are just a few examples of how El Paso blends in with Sunland Park.
In one neighborhood there are a series of streets that start in New Mexico, but dead-end in Texas, making it nearly impossible to get to several houses in Texas without first traveling through Sunland Park.
The seemingly invisible border between the two cities is one reason some in Sunland Park are excited about an expected influx of cannabis retail stores in Sunland Park after adult-use cannabis became legal this year. There are currently only a few operational cannabis dispensaries in Sunland Park, but according to some accounts, there are nearly 30 more companies looking to open for business within walking distance from both Mexico and Texas.
While it’s abundantly clear that recreational-use cannabis is still illegal in Texas, there is a gray area when it comes to the legal status of cannabis in Mexico.
After less than a year in the position, the director of New Mexico’s Cannabis Control Division has left the division.
A spokesperson for the state’s Regulation and Licensing Division, which oversees the Cannabis Control Division, confirmed that Kristen Thomson resigned from her role as director of the division.
In an email to NM Political Report, regulation and licensing spokesperson Bernice Geiger said Thomson’s resignation was in effect immediately.
“Yesterday, June 16, 2022, Kristen Thomson submitted her resignation from the position of Director of the Cannabis Control Division of the Regulation and Licensing Department (RLD). Her resignation was effective at that time,” Geiger wrote. “We thank Kristen for her service to the Cannabis Control Division and the State of New Mexico and wish her success in her future endeavors.”
Prior to working for the Cannabis Control Division, Thomson was a lobbyist in Colorado. According to her lobbying company’s website, cannabis was one of a handful of issues Thomspon worked on.
Geiger did not specify the reason for Thomson’s sudden departure but in a phone interview on Friday, Thomson said she never planned on the division director role being a “forever job” for her.
“I am a creator, not a regulator,” Thomson told NM Political Report. “That just was never going to be the role for me.”
Thomson said she has long had a passion for helping to come up with “big policy ideas” that help to create positive economic change on the community level and that she had not imagined that she would ever head a government agency.
When the state Legislature debated the New Mexico Cannabis Regulation Act, many lawmakers raised concerns about the health and safety of the public in a post-legalization world. Some expressed concerns about ingesting too much cannabis, while others raised concerns about intoxicated driving in a state that already battles with some of the worst rates of alcohol-related deaths in the nation.
In theory, state agencies can require education programs for those who work in the cannabis industry in order to help ensure the public’s safety. And the Cannabis Regulation Act lays out a framework for education standards within the state’s cannabis industry. But currently, there are no rules or regulations for cannabis servers working at consumption lounges that are designed for on-site cannabis consumption and one cannabis educator said she thinks the state is increasing the liability of some business owners.
The Cannabis Regulation Act includes benchmarks for what is referred to as a “cannabis server education program curriculum.” Some of those standards include subjects like how cannabis interacts with other substances like alcohol and illegal drugs, how to spot “problem cannabis product users” and the impact cannabis has on a person’s ability to drive safely. The law also requires that any cannabis server education program be approved by state regulators.
But according to the state’s Regulation and Licensing Department and its Cannabis Control Division, there are no specific standards in place beyond what’s in the statute, even though regulators have already begun accepting applications for cannabis consumption lounges and have licensed one company to sell cannabis for on-site consumption. Further, the Cannabis Regulation Act requires that the Cannabis Control Division “begin licensing cannabis training and education programs no later than January 1,2022.”
New Mexico recreational-use cannabis companies, for the first time, are required to file their gross receipts and cannabis excise taxes in one week. It’s unclear exactly how much the state is set to collect, but cannabis regulators reported more than $20 million in recreational-use sales for the month of April.
Since an announcement from the New Mexico Taxation and Revenue Department earlier this month, though, it seems that most if not all recreational-use cannabis companies may have under-collected taxes from customers compared to what those companies will owe. For some companies that could mean cutting costs on things like packaging and raising prices. For at least one company, it will mean a formal appeal with the state.
On May 5, the state’s Taxation and Revenue Department issued a press release with specifications on how the newly established cannabis excise tax will be calculated with state gross receipts taxes. The guidance from the department was to apply the 12 percent cannabis excise tax to total sales before figuring in the roughly 7 to 8 percent gross receipts tax.
New Mexico cannabis businesses are expected to pay cannabis excise and gross receipts taxes by the end of this month. But the state’s Taxation and Revenue Department is also expected to issue about $15 million dollars worth of gross receipts refunds to medical cannabis companies that paid those taxes prior to the enactment of the Cannabis Regulation Act, which legalized recreational-use cannabis. State Taxation and Revenue Secretary Stephanie Schardin Clarke told NM Political Report that while the estimated refund amount may sound like a lot of money, it is a fraction of the estimated $31.5 million the state is expected to collect from non-medical cannabis sales. Further, she said, the estimated $15 million in gross receipts refunds is an even smaller fraction of what the state sets aside for reserves.
In the grand scheme of things, we have something like an $8 billion general fund budget, give or take,” Schardin Clarke said. “So there are other things that happen all the time that are just ups and downs in that revenue base.”
The tax refunds are the culmination of a years-long legal dispute between the Taxation and Revenue Department and Sacred Garden, a long-time medical cannabis producer.
A New Mexico cannabis company that was ordered to cease operations at one of its Santa Fe facilities can now resume its operation.
According to a letter from Cannabis Control Division Director Kristen Thomson to cannabis company Sacred Garden, state regulators lifted a previously issued cease and desist order on April 27.
“Sacred Garden has remedied, or has initiated appropriate plans to remedy, all violations cited by the CCD related to imminent hazards to public health and to Sacred Garden employees,” Thomson wrote.
The cease and desist order was issued by the Cannabis Control Division on March 24, after two reported instances of mold found on products from Sacred Garden and division staff reportedly found conditions that would pose a risk to the public at the Santa Fe facility.
Days after the Cannabis Control Division issued the cease and desist letter to Sacred Garden, the cannabis producer filed a request for an injunction to counter the division’s order. Initially, a Santa Fe state district judge ordered the division to allow Sacred Garden to sell manufactured products, such as extracts and edible products, until the Santa Fe facility was deemed safe to fully reopen. In a subsequent hearing, the judge criticized the Cannabis Control Division for not articulating a clear path to compliance. Sacred Garden’s lawyer accused the division of adding additional requirements to remove the cease and desist order between hearings.
During the initial hearing, the lawyer for the division said an inspector could go back to the Sacred Garden facility in a week to verify the safety issues had been fixed. But during the next hearing, the division’s attorney said Sacred Garden would need to find an air quality specialist to ensure there were no excessive mold spores in the facility.
The judge gave the Cannabis Control Division about a week to come up with and complete a testing regime that would produce results by last week.
A New Mexico cannabis producer asked to halt a majority of its operations by the Cannabis Control Division after reports of mold is still barred from selling its cannabis flower, for at least another week. In a hearing on Wednesday, Santa Fe state district judge Bryan Biedscheid ordered cannabis regulators and cannabis producer Sacred Garden to try and come up with an agreeable way to move forward in the ongoing case by the end of the day on Thursday.
Biedscheid said he was not going to rule on a motion filed by Sacred Garden asking for an injunction to allow the company to continue selling dried cannabis flower. But Biedscheid did call on the state’s Regulation and Licensing Department and its Cannabis Control Division to actively work with Sacred Garden to come up with an acceptable testing “regimen” that can be completed by next week.
“The department cannot continue to sit back. And this is the perception of this court, that it is sitting back and waiting for it to be presented, in some fashion, with results it finds satisfactory,” Biedscheid said. “It must take action to see that its concerns are addressed in a way that does not cause unnecessary delay, and other irrevocable harm to the plaintiff.”
The ongoing legal dispute stems from a cease and desist letter the Regulation and Licensing Department sent Sacred Garden just days before legal adult-use sales were to begin in New Mexico.
Cannabis producers in New Mexico have their collective eyes on daily sales numbers to determine what sort of demand there will be moving forward a week after recreational-use sales started.
The New Mexico Cannabis Control Division reported more than $5.2 million in combined medical and recreational-use cannabis sales and more than 87,000 transactions in the first three days. The division is expected to release more numbers Friday morning.
In addition to the hype of first-time adult-use sales, the state’s cannabis industry will likely face a spike in sales on April 20, or 4/20, which is usually the biggest day of the year for cannabis sales. While some producers told NM Political Report that they are set for the weeks and months to come, one of the state’s largest cannabis companies predicts the state is headed for a “severe shortage” of cannabis, and soon.
“I say we’re 20 days out on the low end, about 25 on the high end,” Ultra Health President and CEO Duke Rodriguez said.
State law defines a cannabis shortage as a situation when supply is “substantially” less than the three month period leading up to the effective date of the Cannabis Control Act.
But Rodriguez, who has long warned about an impending shortage and has advocated for an unlimited cannabis production limit, said the cannabis shortage he is warning about is different than the statutory definition. Rodriguez said the shortage will likely emerge as limited supplies of certain products or cannabis cultivars. He also said that those types of shortages will impact large businesses like his and trickle down to smaller businesses, who likely can’t weather reduced sales, which will ultimately impact those who rely on cannabis as medicine.