CLAYTON — As Ernest Sanchez grew up in this small town, the place was full of life.
“When I was a kid, all these places were open,” Sanchez, 67, said while driving past a series of old red-brick buildings toward the center of Clayton.
“That used to be a drug store,” he said, pointing to a large building a few blocks from the train tracks. “It had one of those old soda fountains. You’d sit at the counter, get a Coke or an ice cream while Mom and Dad did the shopping.”
That image of Clayton has all but disappeared. The pharmacy and most other stores of Sanchez’s youth have closed. Main Street is now a series of shuttered businesses, reflecting the steady economic decline of a place that once depended upon ranching and the railroad for its livelihood.
“This is my home,” said Sanchez, who became mayor in hopes of revitalizing his hometown. “I don’t want it to die.”
Life support for Clayton may soon be coming from an unlikely source: marijuana.
With recreational cannabis about to become legal in New Mexico, Clayton and other economically struggling towns near the Texas state line hope they’ll see a windfall to capitalize on with a large and conveniently located customer base just over the border to the east and south.
“It’s going to help us, absolutely,” said Sanchez, driving past a medical cannabis dispensary along U.S. 87 — a popular route for Colorado-bound Texans who cannot legally purchase cannabis in their own state. “Logic tells us: Why would I want to go all the way to Colorado to buy marijuana when I can get my stuff here?”
As small towns in New Mexico ponder an uncertain future, the arrival of legal cannabis cannot come too soon. Clayton, with a population of about 3,100, no longer is the vibrant town of Sanchez’s youth, when ranching not only brought in more money but kept younger people at home deep into adulthood.
That’s no longer the case. Union County, of which Clayton is the seat, has seen its population stagnate; its 2019 numbers are almost identical to what they were in 1990. During the same period, Santa Fe County’s population increased by 50,000, according to U.S. Census Bureau data.
“When I was a child, 50 percent of the children at school were coming in from ranches or the surrounding county,” Sanchez said. “Now you see big old buses with one or two kids.”
Economic opportunities are slim. In Clayton, the median household income is about $30,000 a year, nearly $22,000 less than the state average.
“Many of our young people moved to cities for work,” Sanchez said. “Can you blame them?”
But legal marijuana — and the Texas customer base — give people here cause for hope.
Good to be a border town
Those in the marijuana industry and economists say the experience of Trinidad, Colo., in the years since Colorado became the first state to legalize recreational cannabis, could be instructive for towns like Clayton.
Trinidad, located on Interstate 25 not far from Raton, has done well in selling marijuana to people from New Mexico and Texas. Though Clayton is not on an interstate, its spot on U.S. 87 gives it reasonable out-of-state traffic from which to draw, mostly from Texas.
“It’s pretty clear looking at data from other states such as Washington, Colorado and Oregon that cross-border sales are common,” said Kelly O’Donnell, an economist and professor at the University of New Mexico School of Public Administration.
With New Mexico sharing some 500 miles of border with Texas, the market is vast. And close.
“The population of Texas within 90 miles [of the New Mexico border] is almost the population of New Mexico,” said O’Donnell. “We have a lot of evidence that folks are traveling long distances to purchase cannabis. It’s not unreasonable to assume that a significant fraction of those individuals would go to New Mexico instead.”
“Our studies show that 40 [percent] to 42 percent of all adult-use cannabis will be derived from out-of-state purchases, particularly Texas,” said Duke Rodriguez, founder of the New Mexico-based cannabis company Ultra Health, which opened a dispensary in Clayton in 2018. “The impact on towns like Clayton could be measurable.”
Many cannabis companies are counting on it. In recent years dozens of medical dispensaries (poised to become recreational once the law goes into effect) have opened up near the Texas border. There are shops in Clovis; Portales; Ruidoso; Hobbs; and Sunland Park, just a few miles from El Paso.
“We could anticipate a good bump in revenue once recreational sales begin,” said Mayor Javier Perea of Sunland Park, whose office is located across the street from an Ultra Health medical dispensary.
For his part, Rodriguez said be believes the Sunland Park location will be one of the state’s busiest once recreational sales begin.
Ultra Health has 25 medical dispensaries in New Mexico, and the company is close to completing a new greenhouse in Bernalillo. It recently purchased 350 acres of land and 1,500 acre-feet of water rights in the state and last week entered into a contract to buy a nearly 180,000-square-foot building in Southern New Mexico that will be used for post-harvest activities, including curing, drying, packaging and manufacturing cannabis products.
“Those investments wouldn’t be necessary if we didn’t believe in the Texas impact on cannabis in New Mexico,” said Rodriguez, whose company plans to open 10 more dispensaries by the end of the year.
Many of Ultra Health’s shops are located in towns and cities that will serve the Texas market.
“For New Mexico to succeed, it will require taking advantage of traffic patterns,” said Rodriguez.
Clayton is poised to do just that.
“We’re 10 miles from Texas and 10 miles from Oklahoma,” said April Gallegos, director of the chamber of commerce and tourism in Clayton. “There is a lot of potential.”
That anticipation is echoed throughout town.
“Texans won’t have to travel the extra two hours,” said Geovanni Swagerty, a Clayton resident who works for Ultra Health, standing behind a glass counter displaying large jars of cannabis, THC-laden gummies and other medical marijuana products. “They will just come here.”
Ultra Health’s arrival in Clayton in 2018 was an economic bright spot even before the prospect of legalized marijuana became real. At 3,000 square feet and with a price tag of nearly $2 million, it represented a lofty investment in the town’s potential.
“If we were going to change the hearts, minds and pocketbooks of Texans, we had to demonstrate, in a very large way, our commitment to Clayton and the Texas market,” Rodriguez said.
As Sanchez drove past the Ultra Health dispensary, he couldn’t help but take an admiring look.
“They really went all out,” he said, gazing at a sleek, modern building that sticks out amid the modest wood houses and red-brick buildings of his town. “When we look at this, we see the improvements that can take place here.”
The Trinidad experience
Sanchez has long cast a covetous eye at what cannabis tourism did for Trinidad, about 100 miles away.
“We got our neighbors to the north,” said Sanchez. “It had a big impact on them.”
Trinidad last year raked in over $70 million in cannabis sales, generating $3.5 million in marijuana tax revenue. Its 26 dispensaries — the highest concentration in Colorado— serve a mostly transient clientele.
“Ninety-five percent of customers are from out of state,” said Joseph Keneda, manager at the downtown dispensary The Green Solution.
“Look at the license plates,” said Fletcher Orie, pointing to a line of parked cars near his appliance repair and parts shop in downtown Trinidad. “You’d think you’re in Texas.”
Kimberly Schultz, owner of Trinidad’s first dispensary, Higher Calling, said recreational marijuana sales have helped fuel the town’s economic upturn. In the past seven years, historic buildings have been renovated, new restaurants have opened and numerous jobs have been created for the town’s residents, she said.
“Trinidad has become an attraction,” said Schultz. “It’s keeping our families intact and keeping our kids here. That is so important for a small town.”
For Sanchez, whose roots in Clayton stretch to the 1800s, those are words to live by. He said he’s seen many young people in the town, including his own four kids, move to larger cities as the economic situation in Clayton and other towns in Eastern New Mexico deteriorated.
“It isn’t what it was when I was a child, or even what it was when my kids were growing up,” he said, maneuvering his truck through the potholed streets in the direction of the nearby Northeast New Mexico Detention Facility, a state prison that is the town’s primary job creator. “Our children want to get a decent job. They end up in Albuquerque, Santa Fe or Las Cruces. It’s the same story I hear from all these communities.”
He said more marijuana-derived revenue would be used for general improvements.
“Our streets need some help,” he said.
But that’s not all. The town’s infrastructure — pipes, and roofs for certain — is old.
“When I became mayor, every roof in town leaked,” the mayor said.
Gallegos, the director of the town’s chamber of commerce, said she hopes cannabis legalization not only will increase revenue but also help fuel tourism.
“You’d never know this little town exists unless you have a reason to come here,” she said in her office. On the walls are pamphlets highlighting nearby attractions, including Clayton Lake State Park and Dinosaur Trackways, Capulin Volcano National Monument and the 105-year-old Luna Theatre.
“Hopefully,” she added, “this will be a reason.”
Sanchez wants to commission an artist to paint over the faded mural on the wall of the old pharmacy. The current scene depicts cowboys and a wagon train, a reminder of Clayton’s frontier past. The new mural would be of dinosaurs, like those that roamed in the area millions of years ago.
“It would get people to go visit the tracks,” said Sanchez, speaking of the dinosaur footprints found in a sandstone feature outside of town.
Sanchez said he is aware of the potentially fleeting nature of the cannabis economy. Trinidad likely will be dealt a considerable blow when New Mexico dispensaries are in operation. If Texas someday decides to legalize recreational cannabis, the same thing could happen in Clayton.
“It’s something we’ve [the city trustees] considered and talked about,” said Sanchez. “But look what it could do for us today. Nobody knows what tomorrow brings. You plan for the future, at least I do, but we could use some help now!”