Growing Forward: It’s not easy being green

The nascent New Mexico cannabis industry is generally expected to contribute tens of millions of dollars to state revenue this year, but some new cannabis businesses are learning firsthand how hard it can be to raise enough capital to operate. 

This week’s episode of Growing Forward, the collaborative cannabis podcast between NM Political Report and New Mexico PBS, examines the financial difficulties cannabis businesses face and a state program that aims to help alleviate those difficulties. 

Mathew Muñoz, the chief innovation and finance officer for cannabis microbusiness Carver Family Farm, said he and his two business partners were able to raise about $350,000 from private investors but that all three partners also contributed a large portion of their personal savings. That’s because, Muñoz said, “there’s absolutely no traditional funding in this environment.” 

“You can’t go to a bank,” Muñoz said. “Even though we have a cannabis bank, they don’t do any type of lending to cannabis businesses.”

And it’s not just businesses that sell cannabis that have felt the impacts of a lack of traditional funding. Barry Dungan, the cofounder of cannabis testing lab Rio Grande Analytics, told Growing Forward that he was unable to secure a mortgage on his home despite the fact that his business does not sell cannabis products and the process of testing cannabis renders it essentially useless. Dungan said he, like many others, had to turn to a less traditional way of financing his home, which came with “a much higher rate” than traditional lenders generally charge. 

“Because of the federal designation, banks don’t want to mess with it,” Dungan said. 

Over the past several years, a common refrain from politicians and representatives of the cannabis industry is that because cannabis is federally illegal, many traditional banks will not open accounts for cannabis businesses and none of them will issue loans to cannabis businesses. 

But Lonnie Talbert, a former Bernalillo County Commissioner and current division director of specialty banking with First Federal Bank in Jacksonville, said the reason banks generally won’t associate with cannabis businesses is not quite as straightforward as the legal status of cannabis. 

“The amount of misinformation and disinformation that is out there regarding the ability to bank cannabis customers and cannabis businesses is more than the correct information that’s out there,” Talbert said.

Growing Forward: Cannabis testing takes center stage

The third episode of Growing Forward’s fourth season is out just in time for April 20, or 4/20, the unofficial holiday for many cannabis users. 

Growing Forward is a collaborative podcast between New Mexico PBS and NM Political Report, all about cannabis in New Mexico. This week, the podcast examines, for a second time, cannabis testing. 

Growing Forward spoke with Barry Dungan, the CEO of cannabis testing lab Rio Grande Analytics last season. But with adult-use sales that started this month, Dungan is preparing for an increase in business and a second location in Las Cruces. 

In addition to a new location and increased business, Dungan will likely soon see a new competitor. TriCore recently confirmed that a new and separate subsidiary had plans on opening a cannabis testing facility in Albuquerque. 

“They’re going to be competition, don’t get me wrong,” Dungan said of the new testing company. “I’m definitely a little worried about that.

Growing Forward: First day of adult-use sales

As expected, many cannabis dispensaries around New Mexico saw lines out the door and one company kicked off the first day of recreational-use cannabis sales at midnight. Customers in New Mexico made more than $5 million in cannabis sales, either medical- or recreational-use, during the first weekend of legal adult-use sales, according to state regulators. 

Growing Forward, the collaborative cannabis podcast between NM Political Report and New Mexico PBS was in the field on opening day to talk with both dispensary operators and new customers about what legalization means to them. 

To mark the occasion, Gov. Michelle Lujan Grisham visited Everest Apothecary in Albuquerque. Lujan Grisham greeted the dozens of people in line and later spoke with reporters about the historical day. 

“This is what New Mexicans said they wanted,” Lujan Grisham told reporters. “They said they wanted it well before I was running.”

The dispensaries that opened their doors to adult-use cannabis customers were largely legacy cannabis producers that have been licensed by the state’s Medical Cannabis Program for nearly a decade or longer. But one newly licensed business, Carver Family Farm, was able to cultivate enough cannabis to open its doors on April 1.   

Andrew Brown, Carver Family Farm’s co-owner and chief cultivation officer, told Growing Forward that his company is doing fine under the state’s requirement that microbusinesses like his have no more than 200 mature plants.

Growing Forward launches fourth season

Growing Forward, the collaborative cannabis podcast between NM Political Report and New Mexico PBS, launched its fourth season on Tuesday. 

With the first legal adult-use sales slated to begin on April 1, Growing Forward checked in with Kristen Thomson, the state’s Cannabis Control Division director, about a failed cannabis bill and what it means for the state’s cannabis industry.  

SB 100 would have increased production limits for smaller cannabis companies as well as allowed those businesses to sell products grown by larger production companies. The bill also aimed to clean up language in the Cannabis Regulation Act to allow legacy cannabis producers to switch their tax status from non-profit to for-profit. Up until last year, the state’s Department of Health, which oversees the Medical Cannabis Program, required medical cannabis producers to register as non-profit companies. “It’s certainly unfortunate that the statute was not amended during the session, but the Cannabis Control Division remains as committed as we ever have been in supporting small local entrepreneurs starting out in the industry,” Thomson said. 

But as far as businesses switching their status, Thomson said they will have to wait until the next legislative session to possibly get that chance. 

At the end of this year’s 30-day legislative session, one cannabis microbusiness told NM Political Report that there was an incentive to switch license types in order to grow more cannabis. Thomson told Growing Forward that the division plans on working out a way for those microbusinesses to change their business classification without having to go through the entire licensing process again. 

“The intent is not to make anybody go through the whole application process again,” Thomson said. 

But, she added, the Cannabis Control Division has to ensure the process is done in a way that can be tracked for auditing purposes.      

Part of the impetus of SB 100 was to create parity between larger producers with production limits regulated by rules and regulations and microbusinesses with production limits written into law.

Growing Forward: End of the year and looking onward

It’s been nearly eight months since New Mexico Gov. Michelle Lujan Grisham signed the Cannabis Regulation Act and cannabis sales are expected to start in about four more months. 

Throughout this year, Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, has been following the progress of both applicants and state regulators and highlighting issues that have arised since April. 

In the last episode of the 2021 and the podcast’s third season, Growing Forward takes a look at one major issue that surrounds almost all aspects of life in New Mexico: water. 

Growing Forward spoke with John Romero with the Office of the State Engineer’s Water Allocation Program. While lawmakers debated legalization earlier this year, many raised concerns over how much water the new industry would use. Romero said the exact amount is still unknown because “it’s still relatively new to us and it’s pretty new nationwide,” but that some studies have shown “it’s right around six gallons per plant, per day, for the growing season.”

Securing legal access to water is one of the requirements to obtain a cannabis business license and, in some parts of the state, that means securing water rights. And for Romero and his team, that means a batch of requests from the state’s Cannabis Control Division to verify applicants have legal access to water rights. And that, Romero said, adds work to a department with a budget that is already stretched thin. 

“This has created an extra workload or additional workload for our agency, because we’re having to review these permits that come in for the water rights aspect, for the validity, and we’ve received at least about 30 of them so far,” Romero said.

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.

Growing Forward: Consumption areas

While the New Mexico Regulation and Licensing Department is working towards finalizing rules and regulations for cannabis businesses, local governments around the state are also doing some fine-tuning of their respective zoning laws. 

The state’s new Cannabis Regulation Act prohibits municipalities and counties from limiting things like the distance between a cannabis establishment and schools, but also allows those local governments some leeway in zoning ordinances. The City of Albuquerque for example was able to limit the density of cannabis establishments through its zoning plan. 

Most of the types of establishments cities and counties are taking into consideration had predecessors under the state’s medical cannabis law. But other types of businesses, like cannabis consumption areas, are a new concept to local governments. 

The Bernalillo County Zoning Commission, for example, recently approved a proposal that would ban outdoor cannabis consumption areas. The proposal still has to go through the Bernalillo County Board of Commissioners before it becomes official, but Erica Rowland has been front and center trying to educate officials on why indoor-only consumption lounges may not be a good idea. Rowland spoke against the proposal at the last zoning meeting and told Growing Forward, the collaborative podcast between NM Political Report and New Mexico PBS, that she aims to open a sort of cannabis country club.      

“What I’m looking for is really to embrace the cannabis lifestyle that we have become so accustomed to as being patients,” Rowland said. 

Rowland likened forcing cannabis consumption areas indoors to forcing users “back in the cannabis closet.”

The idea of cannabis consumption areas is not as new as many think.

Growing Forward: Cannabis testing

In two weeks, the New Mexico Regulation and Licensing Department, by law, must start accepting applications for non-medical cannabis cultivation licenses. But an often overlooked aspect of the cannabis industry is testing. 

The state Department of Health has long had a list of testing requirements for medical cannabis, but now that nearly all aspects of cannabis is overseen by a new department, lab operators like Barry Dungan of Rio Grande Analytics are anxiously waiting for new testing standards. Dungan began his career in cannabis testing after a stint as a researcher at New Mexico State University. He and his partners started Rio Grande Analytics in Las Cruces, but earlier this year, the company moved to Albuquerque to be more centrally located. 

Dungan told Growing Forward, the collaborative cannabis podcast between NM Political Report and New Mexico PBS, that he’s mostly still operating under the DOH rules, but that he needs advance notification of rule changes from RLD. 

“The stuff that we need to buy are things that are in state labs and crime labs and forensic labs,” Dungan said. “This isn’t, go to the used car lot and just get one.

Growing Forward: New Mexico’s Green Rush Part 2

About a month after New Mexico legalized cannabis use and possession, and about eight months until sanctioned sales are expected to start, there is little doubt that many New Mexican’s are eager to get a foothold in the state’s newest industry. 

The state’s Regulation and Licensing Department is still in the process of finalizing rules and regulations for cultivation licenses and is expected to impose further rules for testing standards, retail sales and consumption areas. But that hasn’t stopped some from preliminarily looking for warehouses or land to grow cannabis. Others looking to get into the cannabis industry have begun consulting businesses. 

Growing Forward, the collaborative podcast between New Mexico PBS and NM Political Report that looks at cannabis in New Mexico, spoke with several people hoping to get into the new industry earlier, rather than later. The day after the state’s Cannabis Regulation Act became official, P2M, a cannabis business consulting firm, hosted a legalization conference in Albuquerque. 

The company is made up of Albuquerque City Councilor Pat Davis, Matt Kennicott, who previously worked for former Gov. Susana Martinez and Patricia Mattioli, who has worked as a consultant for medical cannabis companies. 

Mattioli said there are numerous other parts of the cannabis industry that often go overlooked and that don’t need extra certification from RLD’s Cannabis Control Division.  

“You’ve got accountants, you’ve got insurance, you’ve got training,” Mattioli said. “So, the job creation that’ll go on for the next 10 years is huge.

Growing Forward: Green Rush Part 1

By law, the New Mexico Regulation and Licensing Department has about a month before it has to start accepting applications from businesses looking to enter the new, non-medical cannabis industry. The state’s Cannabis Regulation Act, which was signed into law in April, legalized the adult-use and possession of cannabis as well as home-cultivation. The new law also allows for commercial sales, but leaves much of the specifics up to rules and regulations. 

RLD has to start accepting applications for cannabis business licenses no later than Sept. 1 and start issuing licenses no later than Jan. 1, 2022.