New Mexico’s cannabis industry is battling criminal exploitation and regulatory failures

Despite generating over $1 billion in sales since the legalization of recreational cannabis 29 months ago, New Mexico’s cannabis industry is battling serious regulatory challenges. A year-long investigation by KRQE Larry Baker has uncovered serious regulatory problems in New Mexico’s cannabis industry that have attracted lawbreakers and criminal networks.

Lack of regulatory oversight

According to the report, the Cannabis Control Division (CCD) is under-resourced, with only nine inspectors overseeing 3,000 licensed cannabis businesses. This staffing shortage has left many operations uninspected, allowing criminal enterprises, some linked to international criminal networks in Mexico and China, to thrive without oversight. This gap could be due to the state licensing process.

In a podcast interview with KRQE, Duke RodriguezCEO of Ultra healthNew Mexico’s largest cannabis operator emphasized the seriousness of the situation, revealing that two-thirds of the state’s cannabis activity remains illegal. He criticized the state’s licensing system, describing it as an ineffective “honor system” in which applicants receive licenses on the assumption that they do not violate regulations.

Rodriguez explained that inspections only occur after the license is issued and the business is already in operation. The state can only intervene if irregularities are discovered during these checks. “You won’t see this anywhere else in the country,” Larry Barker added, pointing out that delays in enforcement often leave companies operating for 12 to 18 months without proper oversight.

Changing the state’s regulatory approach

Rodriguez also noted that such violations would have resulted in immediate license suspension or revocation under the old medical cannabis program. However, since recreational cannabis was legalized, a lack of enforcement has allowed illegal businesses to flourish unchecked. “The lack of enforcement is hurting the state’s economy,” he said, adding that the regulated market is struggling to compete with its illegal counterpart.

“The state has simply taken its hands off the steering wheel…simply issuing a license to anyone who checks the boxes. And that’s exactly what they did,” Rodriguez said. He added that while Gov. Michelle Lujan Grisham Although the state celebrated the $1 billion mark in legal cannabis sales in March 2024, most sales were driven by political optics rather than a healthy market. The CCD’s limited ability to collect fines or close fraudulent businesses further complicates the situation.

Systemic lack of enforcement

Barker’s research found that only about 10% of cannabis companies consistently comply with reporting requirements. Even if the CCD takes action, it finds it difficult to enforce penalties. Barker cited that a cannabis farm was fined $1 million for rule violations, but it remains unpaid and the farm continues to operate. “They have the power to impose fines, but not to collect them,” Barker explained, citing the Regulatory Department’s limited powers.

Rodriguez shared those concerns, saying the state’s lack of enforcement has encouraged a rampant illegal market. “We’re just creating this overly illegal, illicit black market,” he said, noting that the number of rogue operations likely exceeds what has been uncovered so far.

Cover photo created with AI