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SANTA FE – The head of New Mexico’s chief regulatory agency said she fears a lack of access to bank loans and other financing will keep local residents from entering the new cannabis industry and competing with out-of-state companies.
Linda Trujillo, superintendent of the state Regulation and Licensing Department, told legislators Monday that her agency is working “behind the scenes” to examine how the state can help ensure startup money is available to New Mexicans who want to launch a marijuana business.
But legislative action might be necessary next year, she said.
Trujillo said she fears New Mexicans will cash out their retirement savings to come up with the $50,000 to $75,000 she estimated it would take to start a business with a micro-producers license.
“The biggest challenge producers are going to face is that startup cost,” Trujillo said. “The access to capital is almost not available.”
Commercial sales to adults 21 and over are set to begin by April 1. The state’s medical marijuana program was established in 2007.
Ensuring the new industry isn’t dominated by out-of-state interests is among the challenges New Mexico legislators are wrestling with as they prepare for sales to begin.
Members of the Economic Development and Policy Committee heard from Trujillo and others during a hearing Monday at the Capitol.
Sen. Cliff Pirtle, a Roswell Republican and farmer, asked Trujillo about reports that out-of-state companies are already snapping up New Mexico farmland.
Trujillo said she didn’t have hard data, but that she’s heard anecdotally about a “tremendous” amount of people looking for warehouses, land and water rights.
Matt Muñoz, chief innovation and finance officer at Carver Family Farm and a board member of the New Mexico Independent Cannabis Association, said the regulatory structure in New Mexico doesn’t make it easy on micro-businesses, which must meet all the same requirements as “corporate cannabis,” he said.
Muñoz projected start-up costs would run into the hundreds of thousands, well beyond Trujillo’s estimate.
“It’s a huge upfront cost,” he told legislators.
Trujillo on Monday also outlined the work her agency is doing to prepare for the launch of cannabis sales by April, including the establishment of new rules and an advisory committee.
The Regulation and Licensing Department, she said, may need another 55 to 60 employees to help staff its cannabis division.
Trujillo projected about $300 million in annual sales for the industry, 11,000 new jobs and $50 million in new revenue for the state budget. New Mexico legalized recreational cannabis for adults in late June, allowing for possession of up to 2 ounces of cannabis or an equivalent amount of extract. Personal production of up to six mature plants per adult is also now permitted.
But commercial sales aren’t yet allowed, and the state is set to begin accepting applications for production licenses later this summer.