New Mexico Adult-Use Industry Could Face Cannabis Shortage

Two New Mexico medical cannabis producers speculate that there could be a cannabis shortage crisis when recreational sales begin in the state next year.

The speculation comes after the New Mexico Regulation and Licensing Department (RLD) and the Cannabis Control Division (CCD) stopped approving new cannabis facilities until further regulations were finalized later this year, the NM Political Report reported.

According to the news outlet, the CCD is prohibited from accepting new applications on or after June 29, 2021 and it will not process any applications until the state finalizes regulations for similar license types.

Some producers believe that putting a pause on expanding the number of production facilities will worsen the state’s shortage issue—an issue some rural areas in New Mexico have already experienced due to a cap on the number of plants cultivators can grow, the news outlet reported.

Duke Rodriguez, the president and CEO of Ultra Health, a medical cannabis company, told the NM Political Report that data compiled from his company determined that the state could run out of cannabis days after adult-use sales launch on April 1, 2022. He said allowing existing medical cannabis producers to expand operations could only fix part of the problem.

RELATED: New Mexico Prepares For April Launch of Adult-Use Cannabis Sales

While the CCD is currently accepting license applications, Rodriguez told the news outlet that it might be too late to ensure there isn't a cannabis shortage for patients, as it takes at least five months from the time plants get in the ground to when they hit the shelves.

"We're going to be short. The (Department of Health) DOH led us to a historical shortage," Rodriguez told the NM Political Report. "Unfortunately, the clock has struck midnight, so now we will have a painful supply outlook for greater than a year. Math is hard to deny."

And Willie Ford, the managing director of Reynold Greenleaf and Associates, a medical cannabis consulting and management firm, typically disagrees with Rodriguez's fight for increased production, according to the news outlet; however, Ford now sees eye to eye with Rodriguez, and said the state needs to allow producers to move faster to prevent a shortage when adult-use sales begin next year.

The state's newly established rules require cannabis producers to set aside at least 25% of their supply for medical cannabis patients; however, according to the NM Political Report, several cannabis retailers across the country following this rule ran out of product on the first day of adult-use sales. And Ford said he doesn't believe the state will regularly enforce the law due to not tracking sales properly.

In 2017, the NM Political Report found that the "DOH was either unable or unwilling to track sales between producers, leading to further questions about how much cannabis is available at any given time."

Ford also stressed that it takes at least five months to get from seed to sale and doesn't believe producers can move as fast as they are expected to.

"We have to be able to build out this facility and get it approved, and get the lights turned on, get plants put in and get a growth cycle to occur. That's a five-month affair right there," Ford told the news outlet. "And then pull the material out, actually dry it, cure it, bag it, process it, and have it ready to go to market. It's just not going to happen."

Potentially adding to the state's supply issue is a current rule implemented by a state district judge, which now allows New Mexico medical cannabis patients to purchase up to 2 ounces of cannabis at a time, instead of the previous 8 ounces of cannabis during a 90-day period; however, the RLD and DOH have a couple of weeks to overturn the rule, according to the NM Political Report.

And as Cannabis Business Times previously reported, the CCD adopted its final rules for cannabis production on Aug. 24, which allows producers to grow up to 10,000 plants at a time.

A spokesperson from the RLD told the news outlet that up to 10,000 plants per producer should be enough to suffice the state's cannabis market; however, the rule is not set in stone as the spokesperson said the CCD plans to continually evaluate plant count and production to ensure there is an adequate supply for patients and recreational users.

However, Ford told the NM Political Report that he doubts state’s adult-use industry will thrive once it begins next year.

"I just want to make sure that people remember that the governor and the administration and the RLD have all said that they will do whatever it takes to make sure that we don't run out of medicine on April 1," Ford told the NM Political Report. And if that means they have to push back rec[reational-use] sales because we're not ready, that's on them, that's not on us," Ford said. "We are trying to get this done."