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New Mexico’s Cannabis Legalization Could Hurt Colorado Dispensaries

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Last month, New Mexico became the seventh state since November to end cannabis prohibition, as Governor Michelle Lujan Grisham signed a bill into law legalizing recreational cannabis for adults 21 and older. While this is a win in regard to cannabis and criminal justice reform, the neighboring state’s legalization of cannabis could very well affect Colorado dispensary sales.

Colorado legalized cannabis in 2014, and since then, business has generated more than $10 billion in sales with billions more in tax revenue. In addition, it has helped Colorado’s tourism industry, with an abundance more people coming to the state post-legalization specifically to consume cannabis products.

With New Mexico now moving to legalize adult-use cannabis, dispensaries especially in border cities just north of New Mexico may see the most effects, as they typically rely on the “border model” to survive.

“Right now, about 45 percent (of customers) came from Texas, 20 percent came from New Mexico,” Michael Evans, the general manager of The Other Place is Greener dispensary, tells Denver7. “When New Mexico does go legal, we will literally be cut off at Raton Pass. They’ll have no reason to continue driving through New Mexico to come enjoy the benefits of our recreational marijuana.”

Another factor going forward is the difference between Colorado cannabis law versus the new laws coming to New Mexico. Colorado’s law specifically allows municipalities and cities to enact ordinances to prohibit social consumption of cannabis and, sometimes, if dispensaries are allowed to operate within their jurisdictions.

New Mexico’s law explicitly denies local governments from prohibiting cannabis companies to start shop. It also allows for “cannabis consumption areas,” upon state approval, so people are allowed to consume cannabis in designated hotel rooms, casinos, cigar bars, tobacco stores, etc. This is something that is not yet allowed in Colorado.

“Trinidad has been a boom bust city. Right now, we’re in a boom, and we need to be doing everything we can do not to bust and that is getting ahead of these other states,” Evans says. 

While many foresee a shift, especially for dispensaries in border cities, business owners likely have a little bit of extra time to plan: New Mexico’s market is expected to launch in April 2022.