Gov. Michelle Lujan Grisham has a message for people preparing to invest in the state’s fledging recreational cannabis business.
“I want you to knock the socks off of this industry,” she told 300 attendees at the New Mexico Cannabis Legalization Conference on Wednesday.
Lujan Grisham said she wants people around the country to say, “Have you heard about New Mexico? It’s not green and red anymore” — as in chile — “it’s green and green.”
She predicted New Mexico’s cannabis eventually will top the product sold in Colorado. That state’s governor, Jared Polis, once challenged Lujan Grisham to a taste-off to find out once and for all which state grew the best green chile.
Lujan Grisham made her brief remarks at the Albuquerque Convention Center, where the two-day event is being held. The conference brought together established cannabis businesses and potential entrepreneurs for a series of presentations, workshops and study sessions all centered on the myths, realities and challenges of a brand-new industry.
State lawmakers approved legislation during a special session this year to legalize the possession and use of recreational cannabis for adults 21 and over, as well as to create a legal industry for cannabis production, manufacturing and sales. Possession and use of cannabis, as well as growing a limited number of plants for personal use, became legal Tuesday. But sales remain illegal.
The state Regulation and Licensing Department, tasked with developing rules for cannabis producers, manufacturers, retailers and others for a future commercial market, held a virtual public hearing Tuesday on the first draft of rules for growers.
Many prospective cannabis microbusiness operators told the agency the proposed rules — which would require license applicants to provide proof of water rights, security provisions and a facility — would make it difficult for newcomers to break into the industry.
Lujan Grisham — who said she favored legalizing cannabis back when former Gov. Gary Johnson, a Republican at the time, attempted to legalize it in the 1990s — spoke of her efforts to rally state lawmakers to get the job done this year.
Legislation introduced during the regular 60-day session stalled, leading the governor to call for a special session at the end of March.
“People were exasperated,” she said, adding she made it clear she expected a measure to make its way to her desk. She signed the successful bill into law in mid-April.
Now, she said, it’s up to entrepreneurs to make the industry a reality: “That challenge now is squarely in your laps.”
Some who attended Wednesday’s event said they intend to tackle that challenge head on.
Cid and Medina Isbell of Madrid said they are prepared to invest at least $800,000 into opening a fully integrated cannabis operation in the village south of Santa Fe. Starting in the spring, they intend to grow, manufacture and sell cannabis on their 30-acre property, which has a well.
They attended the conference to meet other growers and get ideas for their operation, they said.
During a public forum at the conference, some established medical cannabis operators spoke of the difficulties they faced in the beginning. When one of the panelists told an audience of about 60 people to prepare to spend $1 million breaking in, several people gasped.
Cid Isbell, who attended the session, wasn’t so surprised. But, he said, he has spoken with many prospective cannabis growers who seem to have little sense of what they are getting into.
“It’s hard for people to understand just how complicated it is,” he said. “It’s complex to make money at this. A lot of people think they’re gonna jump in and make money right away.”
Early state reports on the economic impact of the new industry said it is likely to create 11,000 jobs.
A Legislative Finance Committee report in March predicted recreational marijuana sales in the industry’s full fiscal year, starting in July 2022, will produce $19.1 million in tax revenue for the state and $9.4 million for local governments.
The following year could be more lucrative, with up to $30 million in tax revenue for the state, the report said.
But some economics experts warn New Mexico cannabis sales could drop dramatically after a brief boom, especially if the federal government or other neighboring states — such as Texas — legalize recreational use.
Matt Kennicott, a partner in P2M Cannabis Group, a consulting firm in Albuquerque, said he thinks the new industry will “take off like wildfire.”
“I think people have been waiting for this opportunity for a long time, not just entrepreneurs but people who enjoy the product,” he said. “We’ll probably blow the projections out of the water … on every level, including economics.”
The challenges, he said, are numerous.
“Anytime you get into a regulated industry, there’s a lot of compliance stuff that has to be done on the front end,” he said.
“You’re going to see people run into capital issues. They sort of have to have cash up front.”