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Earlier this year, many cannabis industry insiders and supporters asked the state to issue a temporary halt on issuing new licenses for cannabis retail businesses.
They may get their wish.
Two lawmakers are working on a bill that would make what they call needed changes to the state’s Cannabis Regulation Act — including a provision allowing the state Regulation and Licensing Department, which oversees the industry through its Cannabis Control Division, to put a hold on approving new cannabis retail licenses.
The proposed initiative, part of a discussion draft bill still being worked out, comes less than six months after more than 100 cannabis businesses and supporters wrote a letter to the Governor’s Office asking for a halt on issuing new retail licenses.
They cited concerns about an oversaturation of the market and said the cannabis industry is experiencing “extreme instability” since recreational sales became legal in April 2022.
The signers asked the state to set up a mechanism to “pause new cannabis licensees and provide regulators with a safety valve to turn the application acceptance process back on” once the legal market has stabilized.
Jessie Hunt, who helped spearhead the letter, said in an interview she would like to see legislators go further than that — she and others are pushing legislation that would initiate an eight-month halt to new licenses.
She said that will give the state Regulation and Licensing Department time to analyze the situation and catch up on its regulatory requirements.
“We really believe there should be a pause until the market stabilizes,” Hunt, a spokeswoman for both R. Greenleaf Organics and Everest Cannabis Co., said.
Rep. Alan Martinez, R-Bernalillo, said he also supports efforts to impose a temporary halt because he thinks “there are a lot of people who invested their life savings who are now looking at losing everything because there is a cannabis shop on every corner.”
Martinez said he wants lawmakers to take their time figuring out the specifics “so we don’t flood the market again.”
The issue of possibly regulating the number of retail licenses first came up as lawmakers and cannabis supporters hashed out details to find a way to legalize the sale, use and possession of recreational cannabis in 2021.
One early bill included legislation that would have allowed the Regulation and Licensing Department to find a way to do that if needed, but that language fell by the wayside as the Cannabis Regulation Act was rewritten.
Sen. Katy Duhigg, D-Albuquerque, and Rep. Andrea Romero, D-Santa Fe, brought the idea up again during an interim Courts, Corrections and Justice Committee hearing earlier this month. Duhigg told lawmakers they were looking for a way to “appropriately limit licensure” when the market gets “wonky.”
Duhigg said in the interview Wednesday she believes there are a lot of New Mexican cannabis retailers who are “not making it. We have a situation where there is a supersaturated market and a race to the bottom [in terms of pricing] to get consumers, and that’s something only the really big guys can absorb.”
According to the Cannabis Control Division website, New Mexico has approved over 1,000 cannabis retail licenses, though that does not mean all of them are operating. There are over 40 in Santa Fe.
Duke Rodriguez, president and CEO of New Mexico Top Organics-Ultra Health, the state’s largest cannabis company, initially supported including language in the Cannabis Regulation Act letting it cap licenses. He warned of there being too much product and said many mom and pop sellers would likely go out of business.
But now, he said in an interview Wednesday, it’s too late to consider any sort of pause, an initiative he calls “at best naive.”
He said, based on his research, of the 1,000 licenses in play “probably 700 are active and operational and the other 300 possess a right to open and there is no pause language to stop them, so you are just talking about new applicants at a future date.”
Duhigg and Romero said they do not support a mandatory license stop.
“I’m not in favor of limiting retail licenses,” Romero said in an interview. “I think it’s great to let the Regulation and Licensing Department have that power [to issue a halt] to provide a check and balance approach to how we run the show.”
Todd Stevens, director of the Cannabis Control Division, wrote in an email Wednesday that his department is working “with all interested parties to consider all sides of this issue and make a thoughtful recommendation.
“The idea of a license moratorium is a complex issue that must be weighed carefully to determine the short-term and long-term impacts on existing and potential future licensees under the Cannabis Regulation Act, as well as potential impacts on consumers,” he wrote.
Duhigg and Romero are also suggesting other changes to the Cannabis Regulation Act, based on what they said during the committee hearing.
Those proposed changes include:
Romero said it’s not unusual for lawmakers to revisit legislation and revise it based on what they have seen happen since a law went into effect.
“Every state that has legalized cannabis since its inception has gone back to its cannabis laws every single year and made changes,” she said. “When you set up an entirely new industry, you will learn things.”
She said she and Duhigg have been in contact with Gov. Michelle Lujan Grisham’s office, as well as with the Regulation and Licensing Department, about their proposal, which they hope to introduce during the 30-day legislative session scheduled to start in mid-January.
Though 30-day sessions are focused on the budget and the governor has the right to introduce or reject any legislation not tied to the budget, Romero said she feels confident the cannabis bill will get a hearing.
