Business
New Mexico’s adult-use marijuana sales bolstered by tourism, Texas residents
It’s been a little more than a year since New Mexico launched adult-use marijuana, with sales topping $300 million during the initial 12 months.
The state brought in a record $32 million in recreational sales during March alone and is well on its way to reaching $400 million for 2023, as projected by the 2023 MJBiz Factbook.
Large population centers – including Albuquerque, Las Cruces and Santa Fe – are driving much of those sales, according to data from the New Mexico Regulation & Licensing Department.
Stores located in Albuquerque accounted for nearly 31% of total adult-use sales between August 2022 and February 2023.
That number increases to more than 36% if sales from nearby metro communities – such as Bernalillo and Rio Rancho – are included.
Either way you slice it, the Albuquerque market is dominating marijuana sales in New Mexico.
For example, Sante Fe, which was second in sales between August 2022 and February 2023, accounted for only 7% of the total recreational marijuana sold in the state.
And while total sales might be lower in smaller municipalities, retailers in border and tourist areas are bolstering the emerging market – with some stores actually performing better when taking population into account.
MJBizDaily took a visual dive into New Mexico marijuana sales data by city, ZIP code and store location. Here is what we found:
The changing medical market
Medical marijuana sales declined with the launch and growth of New Mexico’s recreational market – as is typically the case after the launch of adult use.
For example, the same pattern emerged in neighboring Arizona in 2020.
MMJ sales in New Mexico declined 25% from April 2022 to January 2023, with dispensaries recording $13.8 million in January.
Sales did recover in March, to $15.4 million, but are still down $2 million from last April.
Overall medical marijuana sales might be declining, but the average sales per transaction from patients outpaced the average for recreational shoppers.
The amount spent on MMJ per transaction in March was $53.50 versus $44.60 for adult-use products.
The per-transaction gap has stabilized since the launch of recreational sales, but it will be an interesting statistic to follow as the adult-use market expands in the coming years.
Where recreational sales are happening
If you remove Albuquerque and other population centers from the equation, the story of recreational sales in New Mexico has been tourism and Texas.
Sales in border communities such as Clovis, Hobbs and Sunland Park are outpacing what would be expected given their smaller populations – a clear indication that Texans are crossing the border to purchase marijuana from New Mexico.
The same pattern can be seen with tourist destinations such as Carlsbad, Ruidoso and Taos.
The impact can be seen more clearly when looking at ZIP code data.
Sparsely populated Sunland Park, situated on the border across from El Paso, is home to two of New Mexico’s leading store locations based on total recreational sales.
Ultra Health and Everest Cannabis Co. brought in almost $6.1 million in combined sales from August 2022 to February 2023.
While impressive, the figures are even more meaningful when factoring in the number of residents in the area.
The per-person recreational marijuana spend (sales divided by population) for Sunland Park’s 88063 ZIP code was $1,044, topping any other New Mexico ZIP code.
Other border towns also performed well.
The per-person spending for ZIP codes in Clovis (88135) and Hobbs (88240) were $499 and $258, respectively, much higher than those in Albuquerque and Santa Fe.
Tourism also buoyed per-capita spending in less densely populated areas of the state.
Ruidoso ($546), known for its skiing, and Taos ($598), a popular art and history destination, both outperformed for the number of people living in their respective ZIP codes.
Leading locations
While recreational marijuana remains illegal in Texas, it pays to have a store on the border.
Recreational marijuana sales in individual border stores outpaced their cohorts in New Mexico’s more populous cities such as Albuquerque.
Ultra Health’s Sunland Park location sold almost $3.6 million recreational marijuana between August 2022 and February 2023.
Urban Wellness, the top-selling Albuquerque store, brought in $1.95 million for the same time period.
In fact, almost half the top 20 revenue-generating stores in New Mexico are located in cities bordering Texas, such as Anthony, Hobbs and Sunland Park and Hobbs.
The remaining stores on the list are located in tourist destinations or in populations centers.
If previous adult-use launches are any indication, New Mexico’s recreational market should experience consistent growth for the foreseeable future.
The likelihood of Texas legalization remains slim, so don’t expect any shifts from current sales trends given that out-of-state customers help drive New Mexico marijuana sales.
Source: https://mjbizdaily.com/new-mexico-adult-use-cannabis-sales-bolstered-by-tourism-texas/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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