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Minerva Canna has been around for 14 years and was in the medicinal marijuana business before the state legalized recreational cannabis in 2022.

It’s not just Briones providing a dour assessment of market conditions.

“This industry is generally on life support at this point,� said Duke Rodriguez, president and CEO of New Mexico Top Organics-Ultra Health, the state’s largest cannabis company. “Anyone who denies that is not being honest about the real situation.�

Like each of its seven stores across the state, Minerva Canna’s two locations in ·è¿ÍÖ±²¥ Fe — in high-profile spots downtown and on Cerrillos Road — will be shuttered Oct. 21. Sacred Garden Dispensary, which also has shops in ·è¿ÍÖ±²¥ Fe, will be going out of business Sept. 21. Its seven stores in the state will continue to operate at their existing locations but under different ownership, said Zeke Shortes, the company’s president.

“We are giving up the business because the state really screwed us all,� Shortes said. “I just can’t lose money anymore.�

Ultra Health, Sacred Garden and Minerva are all “legacy� companies that had operated medical marijuana dispensaries before New Mexico legalized recreational retail sales, a move that prompted the number of dispensaries to grow rapidly.

To borrow a phrase from Ian Aarons, a co-owner of the Endo dispensary on Agua Fría Street, it’s been something of a “gold rush.�

“Both Minerva and Sacred Garden were two of the original licensed nonprofit producers from the medical cannabis industry, and once we’ve legalized for recreational use, it’s definitely more competitive than it was,� said Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce.

‘Most dense state’ for cannabis

Gov. Michelle Lujan Grisham signed legislation legalizing recreational marijuana use in 2021 and sales began the following year. According to the state Regulation and Licensing Department’s Cannabis Reporting Online Portal, combined recreational and medical marijuana sales have totaled around $1.3 billion, with $92 million of those sales recorded in ·è¿ÍÖ±²¥ Fe.

Marijuana for medical use was legalized in 2007. Marijuana Business Daily, a Colorado-based cannabis business news outlet, reported New Mexico had 34 licensed nonprofit, vertically integrated medical marijuana operators — meaning they cultivate their products — in 2021, with 123 dispensaries.

The number of businesses has surged.

As of Sept. 3, the Regulation and Licensing Department had issued 3,071 cannabis licenses across New Mexico to 1,006 retailers in a state with around 2.1 million people.

This is what stands out to Briones and Shortes.

Compare that number to Colorado, with a population of 5.1 million, where retail marijuana sales began in 2014: There are 903 active marijuana retail licenses in the state, which breaks down into 677 adult recreational licenses and 335 medical licenses, according to a dashboard operated by the Colorado Marijuana Enforcement Division last updated in July.

For further contrast, Arizona, with its 7.4 million residents, has around 180 dispensaries, according to a map from the state’s Department of Health Services.

“We [New Mexico] are the most dense state in the country for combined medical and adult licenses,� Rodriguez said. “So those operators closing down, it’s nothing more than the tip of the iceberg.�

Rodriguez has been a continual critic of the state’s decision not to limit the number of retail licenses it approves.

Andrea Brown, a spokeswoman for the state Regulation and Licensing Department, wrote in an email, “The Cannabis Regulation Act (CRA) was established to make the industry equally accessible to anyone who wanted to own and operate a licensed cannabis business in New Mexico.�

Under that model, the state has seen proven success with more than $1 billion in revenue generated in just two years, she added.

In April 2022, when adult recreational sales went live, medical sales totaled $17.3 million and recreational sales hit $22.1 million. That trend — recreation sales just exceeding medical sales — remained consistent for several months.

That has changed dramatically, however, with adult recreational sales now far outpacing medical sales, according to data from the Regulation and Licensing Department’s Cannabis Control Division.

Recreational sales climbed to $38.9 million in August, while medical sales languished at $12.1 million — about $5 million less than than in April 2022.

“I think the incentive of not having to pay gross receipts tax [on purchases] for a medical license holder is in a lot of cases not enough for people to renew their [medical marijuana] license,� Lewinger said, reflecting on the data.

Saturation and illegal sales

Briones said the state had been warned about the conditions he says prompted him to shut down Minerva Canna’s stores: Last year, more than 100 cannabis businesses and supporters wrote a letter to the Governor’s Office asking for a halt on new licenses for retailers, signaling shops were struggling to take root.

Lewinger said he is supportive of the way the state rolled out recreational legalization in terms of making entry into the industry accessible. But missing from the legislation, in his view, was “a key piece that specified that the Regulation and Licensing Department had the ability to throttle new licenses based on market conditions.� He said the New Mexico Cannabis Chamber of Commerce will continue to push for that provision.

Briones said the state “has no idea that they are destroying this industry by continuing to issue an indeterminate amount of licenses.� He added “anyone who wants one can get one,� and that is “not good for the industry.�

The letter from cannabis businesses says law-abiding cannabis retailers are competing with a still-vibrant illicit market and a “saturation of regulated and illegal cannabis products in New Mexico.�

People in the industry say the state needs to do a better job of breaking up illegal cannabis activity.

Brown wrote in an email the Cannabis Control Division “performed a record-setting number of inspections in the first half of 2024.�

She added, “The CCD routinely assesses what is working and explores ways to find additional resources needed to hold bad actors accountable. We will continue to work with lawmakers to revise the CRA as industry needs evolve, including discussing adding language that would give the CCD the ability to seize, embargo, and destroy illicit and illegal cannabis products when found.�

Gov. Michelle Lujan Grisham in March signed a bill that makes several major changes to the Cannabis Regulation Act, including giving the Cannabis Control Division more enforcement power.

That same month her office issued a news release celebrating the fact that weed had become a $1 billion industry.

“This is a huge milestone for New Mexico’s cannabis industry,� the governor said in the statement. “Nearly two years after beginning sales, New Mexico is on the map as a premier hub for legal and safe cannabis and the thriving business community that comes with it.�

As a smaller retailer, Endo hopes to find its niche in the wider dispensary scene, Aarons said — a shop with a community feel, to the extent that he often finds he knows about half of his customer’s names.

“It’s so hyper-crowded that you really have to hit the nail on the head. There’s no room for error,� he said.