Legislators who want recreational cannabis in New Mexico have just a few days to get a bill to Governor Michelle Lujan Grisham’s desk before the legislative session ends March 16th. Even if it doesn’t pass, the bill’s arrangement — which establishes a network of cannabis dispensaries owned and operated by the state — could serve as a national model for other states, for better or worse.
It wasn’t always this way. When legislators in the state House first introduced a bill for recreational cannabis in January, state ownership wasn’t part of the plan. There were restrictions on where dispensaries could be located relative to schools and churches, and cities and counties could ban them outright, but it presumed a privately run business model. This is basically how industries have been set up in the nine other states have have legalized recreational sales. (Vermont legalized, but has not yet established a commercial market.)
Less than a month later, the state Senate rolled out its version, which mandated the state operate all cannabis retail operations. Under this framework, the state would license private growers of cannabis and manufacturers of cannabis products. The state’s retail stores would then accept products from manufacturers on consignment for resale, meaning manufacturers would be paid back after the products were sold. The main reason: Concerns over children accessing legal weed.
The House modified its bill to mirror the Senate’s version, and it passed a floor vote last week. Now the only thing standing in the way of a legal cannabis industry with state-run commercial sales in New Mexico is the Senate, where the bill is currently held up in a legislative committee.
While it’s never been done for recreational cannabis, over a dozen states have similar models for alcohol sales, including Utah and New Hampshire. State Sen. Cliff Pirtle, one of the sponsors of the senate bill, says his legislation was inspired by these examples. In his view, it’s a more effective means of regulating children’s exposure to cannabis advertising and products.
“In the [alcohol markets] that are controlled,” Pirtle tells Rolling Stone, “producers and wholesalers put their product on [state-run] shelves, and it allows for better oversight and regulation of product placement and store location.”
He points out that prices would still be set by private producers and manufactures. A person could even obtain both a license to produce and manufacture, which Pirtle foresees as creating a “farm-to-table” style niche market.
“We wanted to ensure plenty of competition so that people could go into the business—the only thing we wanted to ensure was protection for children and public safety, and that’s where state-run stores came into play,” Pirtle says.
Throughout 2018, legislators met with medical dispensary owners and cannabis policy advocates in the state to draft a bill for this session. The pivot to state-run stores wasn’t a major part of the discussion, but the House’s willingness to follow the Senate’s lead may have had to do with the latter’s historic reluctance to endorse legalization measures.
“The reason I think there is a lot of bipartisan support [for the state store model] is concern about a dispensary popping up on every corner,” says Emily Kaltenbach, the executive director of the state’s Drug Policy Alliance chapter, who lobbied for a legalization bill year last year.
One caveat to the state model, Kaltenbach says, is that the bill actually does include a provision for opening up private pot shops if there’s no state-run store within 25 miles. The person operating the store would have to be licensed to grow or manufacture by both the medical cannabis program, which was established in 2007, as well as the state’s adult use program, which would be regulated by a different part of the state government.
“The state will wake up and realize they have to use the existing [medical dispensary] network,” says one dispensary operator.
For Duke Rodriguez, whose dispensary Ultra Health operates 23 medical cannabis dispensaries in the state — by far the largest network in New Mexico — this exception leaves enough wiggle room for medical dispensaries to push the state into scrapping the public retailer model. As a result, he’s supportive of the legislation, even though he’s spent years pushing for established medical dispensaries to be first in line for adult-use retail licenses.
“I think in a fairly short time frame, the lack of infrastructure, the lack of capital, the lack of execution, will prove itself quickly enough that the state will wake up and realize they have to use the existing [medical dispensary] network as provided by Ultra Health and other providers,” Rodriguez says. “The dream of legalization is important, but I think the details behind state owned stores is at this point unproven.”
Another owner, Zeke Shorts of the Sacred Garden dispensaries, more or less agreed with Rodriguez’ assessment.
“I think it’s ludicrous, but I’m not super freaked out like other producers, because I think the state just won’t be able to get their proverbial shit together to have an actual high class recreational model,” Shortes tells Rolling Stone.
As of now, says Pirtle, the bill is low in priority for the senate finance committee, which has to approve it before sending to the Senate floor. That means the bill might die in committee before getting put up for a full vote. If that happens, the legislation will be shelved for at least another year. New Mexico would then have to keep waiting for recreational cannabis and the estimated $60 to $70 million in revenue it would bring in.