Ultra Health CEO Duke Rodriguez questions NM’s cannabis claims
March 15, 2024 at 1:44 pm MDT
When I saw Gov. Michelle Lujan Grisham’s March 5 press release proclaiming “Cannabis in New Mexico officially a billion-dollar industry” and referring to the “thriving business community” of cannabis licensees, I immediately thought of the movie A Few Good Men. Specifically, I thought of the classic exchange between Tom Cruise’s Navy JAG lawyer and Jack Nicholson’s Marine colonel: “I want the truth!” “You can’t handle the truth!”
I thought of that scene because the governor’s press release fails to tell the truth about the state’s cannabis market. I want New Mexicans to learn the truth about their cannabis industry, and although that truth may be hard to handle, we all must face it sooner or later.
The truth is that New Mexico’s regulated cannabis market is not thriving, but barely surviving. The truth is that New Mexico’s cannabis sales are likely headed for decline and contraction, rather than growth.
Now, it is certainly true the cannabis market has grown since April 2022 in certain places. Smaller towns along the Texas border did see large sales increases over the past two years. However, the central metro areas experienced a much different reality. In April 2022, Albuquerque did $14.9 million in combined medical and recreational cannabis sales, Las Cruces did $3.7 million, and Santa Fe did $3.5 million. Sadly, nearly two years later for the most recent month of February 2024: Albuquerque is flat at $15 million, Las Cruces is down to $3.2 million, and Santa Fe is down to $2.9 million. Those numbers come from the Cannabis Control Division’s own Cannabis Reporting Online Portal.
This means that over the past two years, the cannabis market in New Mexico’s three largest and most stable population centers has not grown. It has stayed flat and even shrunk by a million dollars. At the same time, the number of retail locations has exploded. The proverbial pie has not gotten bigger, but the slices for each business have gotten a lot smaller.
Every cannabis enterprise must face this truth to responsibly evaluate the trajectory of its business. After two flat years in most places, additional growth is, frankly, not likely. A continued decline in overall cannabis revenue is the more likely scenario. If cannabis licensees do not face this truth—if they cannot handle it—then they will be in for a very rude awakening in 2024, 2025, and beyond. Likewise, municipalities that build cannabis taxes into their budgets need to plan for flat or even declining cannabis tax contributions.
If cannabis licensees want to reverse these trends and start growing the pie again, they will need to analyze why overall revenue has stagnated everywhere that is not within fifteen miles of Texas. Inflation in the rest of the economy may mean cannabis consumers spend less on weed. Cheap fentanyl may pull the most desperate into its terrible vortex. Cannabis licensees operating in the red may sell under the table and out the back door. The cannabis trend may simply have peaked. Whatever the reasons, cannabis licensees cannot create solutions to these challenges until they acknowledge the problem.
I wish I could look at the world through the same rosy glasses that the Cannabis Control Division wears. But I am like the character in A Few Good Men: I want the truth, and I think that all New Mexicans are entitled to it.
On second thought, maybe I am more like Colonel Jessup: I think that a lot of people don’t want the truth because deep down in places they don’t talk about at parties, they fear what might happen to New Mexico’s cannabis industry.
Duke Rodriguez is the president and CEO of Ultra HealthCannabis
