MJBizMag January 2022 - 44

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The law legalizing adult-use cannabis
essentially states that any recreational
marijuana business license application
that is done properly will be
granted.
" If you turn in an application that
is complete and sound, you will be
granted a license, whether it's retail
or any license, " said Ben Lewinger,
executive director of the New Mexico
Cannabis Chamber of Commerce in
Albuquerque. " Anybody who submits
an application that is complete and
sound will get a license. "
While the program has
successfully fulfilled a desire to
encourage applications for small
businesses-more than 1,500
cultivation applications have been
submitted since August, when the
application period opened-it has
done less to curb the entry of big
businesses and MSOs.
" There's no residency requirement,
and there are definitely lots of MSOs
who are making inroads into the
state, " Lewinger said. While many big
operators and MSOs can be respectful
competitors, there's also a concern
that other applicants might try to
horde licenses and monopolize the
program to the detriment of small and
local operators.
While that concern is valid,
Lewinger said, regulators have put
in safeguards meant to prevent big
companies from monopolizing the
market. Most notably, production
limits will be in place for a few years,
he added.
The idea is that production caps,
combined with the unlimited licenses,
will create a market with many small
producers and a few big producers
each growing relatively small amounts
of cannabis.
Lewinger also noted that New
Mexico's Legislature will convene this
month for a 30-day session. " Closing
those loopholes " that allow big
companies to monopolize the market
44 January 2022 | MJBizMagazine
" is a priority. " " Everything is focused
on making it possible for these microlicenses
to be successful. "
" For new mom-and-pop stores
coming into market, capital
investment is the single-biggest
obstacle. There's just not a lot of
capital in New Mexico. There is
definitely a risk of out-of-state
operators coming in and operating
on economies of scale that make it
impossible for local operators to be
competitive on price, " Lewinger said.
" The flip side of that coin is we are
naturally and intrinsically supportive
of homegrown businesses, " he said.
" I would always bet on them
against any big, multistate operator
who thinks they're going to come
in and be able to relate to the New
Mexico audience without doing their
homework. "
BEST SECTORS
Cultivation is the only license type for
which regulations have been written,
while rules for the other license
types were set to be released after
this issue went to print. Lewinger
believes cultivation and other sectors
will have ample opportunity for small
businesses.
The micro-cultivation license allows
license holders to grow up to 200
plants. License holders that want to
scale up operations in the future can
apply for a license in a larger tier at
that time.
" For lots of people, that 200-plant
microbusiness (cultivation license) is
just going to be a one-year jumpingoff
point to full commercial licensure.
Maybe in Year Three, you have 5,000
plants in the ground. But many will
just want to stick to 200 plants per
year, " Lewinger said.
The move to adult-use demand and
production will require more testing
labs, Lewinger noted. " As we move
from medical to adult use, there is
going to be a big need for additional
testing capacity, " he said.
CPG BRANDS AND RETAIL
At the same time, only a modest
number of existing medical operators
manufacture products and have
storefronts. That leaves an open
playing field for both infused product
makers and retail entrepreneurs,
Lewinger said.
" If you have a novel product, the
potential to do well is there. Anybody
that has a very clear vision for a
customer experience will eventually do
very well with a retail license, " he said.
When it comes to locating a
storefront, executives will have to
navigate a patchwork of zoning laws
that makes some municipalities
less inviting than others. That said,
Lewinger believes many areas that
are currently restrictive will loosen
regulations once they see benefits,
such as tax revenues.
One area that was prohibitive
initially but has since embraced
the industry-and offers lots of
opportunity-is Curry County in
eastern New Mexico, on the Texas
border, Lewinger said.
" That border along Texas represents
a huge opportunity for cannabis
tourism. There's a big rush to set up
retail operations along the border, "
he said.
While Lewinger sees opportunities
in the consumer packaged goods
and retail sectors, supply issues
early in New Mexico's recreational
program could be hard on some small
businesses. But those that survive
their first year or two are likely to reap
the rewards.
" For retailers and manufacturers,
it may be difficult to get product
initially. So, I think the biggest need
we have right now is production, "
Lewinger said. " As soon as our adultuse
market equalizes and comes into
balance, I think every single license
type is going to present a unique
opportunity for anybody who has a
very clear vision of what they want
their business to be. "
MJBizMag January 2022

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