New Mexico regulators have issued the first license for recreational cannabis cultivation in the state, allowing further progress in efforts to legalize adult-use cannabis. Tony Martinez, the CEO of Mother’s Meds, announced in a statement last week that the New Mexico Regulation and Licensing Department had issued a license to the company to operate as a cannabis cultivator on November 1.

It will be joining 34 other licensed cannabis producers by the Department of Health, which can also cultivate adult-use marijuana. On Wednesday, a spokesperson for the state’s Cannabis Control Division (CCD), which is overseen by the department, confirmed that the license had been awarded pending a background check of the applicants.

“Mother’s Meds has been issued a cannabis producer’s license and that license will go into effect as soon as all background check requirements are met,” division spokesperson Heather Brewer said in a statement quoted by the New Mexico Political Report. “The Cannabis Control Division is excited to start issuing licenses and looks forward to public announcements and celebrations of new businesses as the Division works to stand up a thriving adult-use cannabis industry in New Mexico.”

Martinez credited the “hard work, due diligence and adaptability” of the company’s staff and San Juan County’s “business friendly attitude” for the first cultivation license being issued to Mother’s Meds, which is doing business as Lava Leaf Organics. He added that the company “will continue to comply with all CCD rules and regulations” as it gets cannabis production up and running.

Martinez stated that Martinez will not hire a large number of people, but instead contract with professionals in the cannabis industry. 

“My least favorite part of business is placing a value on another person’s efforts and talents; this model allows people more control over their destiny and to work with us, not for us,” Martinez wrote in a statement. “I believe this will allow our community to attract and retain more talented professionals than our competitors.”

New Mexico still has more than 1,500 Cultivation License applications

Over 1,500 people have applied to the CCD for licenses as adult-use marijuana producers since August when they opened accepting applications. Over 1,000 microbusiness license applications have been filed for licensing to grow cannabis.

“We’re off to a great start,” John Blair, the deputy superintendent for the New Mexico Regulation and Licensing Department, told local media earlier this month. “I don’t know that we could have anticipated what the demand was going to be other than knowing there really seems to be a great excitement across the state.”

Blair stated that state regulators accept new applications and have not set a limit on how many licenses can be issued. This practice is common in legal cannabis production jurisdictions.

“We don’t have any limit on the number of people that we’ll license for any of the cannabis businesses,” he said. “If a million New Mexicans want to get a license, we would license a million people.”

The application isn’t easy to fill out. Johnathan LeDuc was an applicant who wanted to plant medical and recreational marijuana in Los Alamos. The CCD required that he submit a plan of social and economic equality, a government ID card, current business licensure, and proof of premises owner.

“It’s quite a daunting process. The application is very, very thorough, and there’s a lot of steps and requirements,” he said. “I have basically only been able to submit my application provisionally.”

There is no guarantee of success

Although there are no restrictions on the number of cannabis licenses available in New Mexico for adult-use cultivation, they do not guarantee success. A.J. Sullins from New Mexico, who has cannabis companies in other areas, is applying for marijuana production in his state. Sullins said market forces and high production costs will lead to business failures.

“There’s going to be quite a few people who have received licensure and their costs are outweighing their revenue because they didn’t plan for a low-cost production,” he said. “And they’re going to start to get consolidated or washed out within a three-year period. I saw the same thing happen in Arizona.”

Sullins stated that even multistate operators can be difficult to beat, especially for businesses investing millions.

“There’s about one or two large players out there who are absolutely dominating the market,” he said. “I hate to use the word, but almost ‘monopolizing’ the market. So competition is definitely steep at the top.”