Cannabis

Many medical pot producers are seeing green

Some in N.M. raked in millions during this year's second quarter

By Steve Terrell
sterrell@sfnewmexican.com
Posted 9/4/18

Patients in New Mexico's Medical Cannabis Program spent more than $31 million on their medication in April, May and June of this year, according to second-quarter reports submitted …

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Cannabis

Many medical pot producers are seeing green

Some in N.M. raked in millions during this year's second quarter

Posted

Patients in New Mexico's Medical Cannabis Program spent more than $31 million on their medication in April, May and June of this year, according to second-quarter reports submitted by producers to the state Health Department.

Some of the highest revenue numbers come from medical marijuana producers doing business in Santa Fe. These include Minerva Canna Group, which has a total of four stores around the state; Sacred Garden, which has dispensaries in three cities; and Fruit of the Earth Organics, whose sole dispensary is on Early Street near downtown Santa Fe.

While most nonprofit medical marijuana producers made profits, 12 of them -- more than a third of the licensed producers in the state -- reported being in the red when it comes to net profits for the quarter. Five of those reported losses of $100,000 or more. Shift New Mexico, which has one store each in Santa Fe and Albuquerque, reported the biggest net loss in the second quarter: $195,472.

Just two years ago, when the state Health Department began publishing quarterly revenue reports of producers in the Medical Cannabis Program, total sales were only $10.2 million in the first quarter of 2016, according to the Santa Fe Reporter. Back then, there were only 23 licensed producers, compared with 34 who filed reports for the most recent quarter. The number of registered patients was only about 25,000, compared with more than 58,000 as of the end of July, the Health Department reports.

State Sen. Cisco McSorley, D-Albuquerque, who carried the bill that created the Medical Cannabis Program, said he's not surprised by the success of marijuana dispensaries.

"Medical marijuana has exploded in acceptance," he said in an interview last week. "People of my generation and young people have long accepted it. Now older people are using cannabis for medical purposes. It's almost universally accepted."

Emily Kaltenbach, director of the state branch of the national nonprofit Drug Policy Alliance, said the large sales numbers for medical marijuana shows more people are finding the drug "a legitimate medicine for many conditions." Medical marijuana, she said, has been helpful in getting many people away from opioids and other stronger, more dangerous medicines.

The most successful producer in the state -- in terms of gross sales -- in the latest batch of financial reports was Urban Wellness, which has two dispensaries in Albuquerque. Those two shops sold nearly $5 million in marijuana products in the second quarter.

In terms of net profits, Compassionate Distributors, which operates four dispensaries in southeastern New Mexico, was No. 1. The company had a net profit of more than $671,000. R. Greenleaf, which has five shops in Albuquerque and one in Grants, netted just a few hundred dollars less.

Santa Fe's Fruit of the Earth Organics, one of the city's oldest dispensaries, opening in 2011, was the highest-grossing producer in the state with only one retail location during the last quarter.

Lyra Barron, owner of Fruit of the Earth, expressed surprise when she learned this fact from The New Mexican.

Barron said Friday she thinks one reason for her success is that her marijuana is grown organically outdoors on property in Santa Fe County, "with the birds and butterflies." Most producers grow in greenhouses.

"We only have 350 plants," she said. Producers are allowed to grow up to 450 plants. She described her plants as "giant trees," saying some are 15 feet tall. This allows Fruit of the Earth to produce more marijuana from fewer plants.

"One thing this allows us to do is properly cure the plants," she said. "Marijuana should be cured for six months to a year."

The entire budget for the Medical Cannabis Program is derived from annual fees paid by producers. This year, the state took in $2.91 million in producer fees. Most producers -- those growing the maximum allowed -- pay an annual fee of $90,000. The handful of producers growing fewer plants pay as little as $40,000 for their annual license.

McSorley said the amount of money spent on marijuana would go through the roof if the state legalizes recreational use of the drug for adults.

"With New Mexico sitting next to Texas, which may not legalize marijuana in our lifetimes, it would be a huge boon, not only for government coffers but also for the tourist industry," he said. "People would come here [from Texas] in caravans. It'll help mom-and-pop hotels and restaurants."

Although legislative efforts to legalize recreational marijuana have fizzled in the New Mexico Legislature in the past, McSorley said he believes there are now enough votes among state lawmakers for legalization.

Kaltenbach has been sitting on a task force charged with recommending changes to the Medical Cannabis Program to an interim legislative committee. Some possible recommendations, she said, include adding more conditions that qualify patients for the program, such as opioid addiction; eliminating a requirement that patients must reregister every year; and increasing access for patients in rural areas, including Native American pueblos and reservations.

McSorley in 2017 introduced a bill that contained similar recommendations. But it never got out of the Legislature.

"The [cannabis] industry is becoming more sophisticated," Kaltenbach said. "And the patients are better informed about seeking out products that work."

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