Recreational cannabis sales aren’t set to begin until April of 2022 in New Mexico. Nevertheless, that doesn’t mean there aren’t initial concerns about upcoming sales. New Mexico Regulator Linda Trujillo spoke with reporters recently about potential shortfalls the recreational market may see initially.

Sales

Linda Trujillo is the top cannabis regulator in New Mexico and the Superintendent of the Regulation and Licensing Department. She said stores will most likely run out of recreational cannabis products. “It’s highly likely we will run out of cannabis in the first week, if not the first two weeks” after legal sales begin. Trujillo called this the “Krispy Kreme” effect. When a Krispy Kreme opens in town, people will line up for hours to get a donut because it’s new and exciting. Trujillo says the same thing will most likely happen to the cannabis industry. Demand will fall after the initial craze of cannabis being legal. 

To cover the amount of cannabis needed, Trujillo predicts New Mexico would need 500,000 plants or more. This estimate comes from other states when they legalized recreational cannabis sales over the past nine years. 

But if New Mexico retailers can’t keep up with the demand, it will lower the revenue the state will receive. New Mexico regulators predict the state could receive up to $50 million in tax revenue from the potential $300 million in sales. 

Should the industry fall short, New Mexico regulators are warning lawmakers to brace for a growth failure rate of at least 18 percent. “It could be higher,” Trujillo added. It means what the state expects the cannabis industry to grow will fall short because of the supply shortage. This growth failure will in turn hinder the cannabis industry in the state. Suppliers won’t meet demands and people will look for other places to get cannabis, including the black market. 

“The unfortunate truth is you are going to see the black market infiltrating into the legal grows,” Senator Cliff Pirtle, R, said.

Other Concerns

Regulator Trujillo also spoke about concerns for local producers. The start up cost could be upwards of $50,000-$75,000 for a small business. “The biggest challenge producers are going to face is that startup cost,” Trujillo said. “The access to capital is almost not available. My fear is that individuals who are interested in getting into this industry are going to take measures like cashing out their retirement or taking out second mortgages on their homes or taking out their family life savings.”

There are concerns the only businesses that can begin and start up are larger companies already established in several states. Locals won’t get the chance to enter the booming industry. 

However, the cannabis regulatory team hasn’t been decided yet, so things can change. “I thought we would have done this months ago,” Trujillo said. “It’s a little disappointing to me that it has taken so long to do it.”

When the team is in place and rules can be officially established, it may be easier for local retailers and farmers enter the industry. Things can only change once that team is in place 

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