Business

Fewer Texans, Less Money: New Mexico Could Cut Into Colorado's Already-Falling Pot Sales

Red Barn Growers, a dispensary in Santa Fe, New Mexico.
Red Barn Growers, a dispensary in Santa Fe, New Mexico. Google Maps screenshot
Colorado could see fewer Texan tourists going forward, and the marijuana industry will likely pay the price.

New Mexico's recreational marijuana dispensaries can start opening today, April 1. And although it's never been viewed in the same vein as Colorado, the first state to allow adult-use marijuana sales, New Mexico is well-prepared for a recreational sales launch.

Medical marijuana has been legal in New Mexico since 2007, and approximately 118 dispensaries have been operating under that framework across the state. Under state law, all 118 of those stores are licensed to sell recreational marijuana starting  April 1. In contrast, back when Colorado's recreational sales launched on January 1, 2014, only about forty stores were licensed and ready for business.

But Colorado definitely made up for lost time. Today, Denver alone has well over 200 recreational and medical 200 pot shops. Colorado Springs has around 120 that are medical-only.

Yet neither of Colorado's two biggest cities come anywhere close to having the highest number of dispensaries per capita. That distinction belongs to Trinidad, a town with fewer than 9,000 people and 26 dispensaries. Trinidad is located off Interstate 25 just miles north of the New Mexico border, and dispensary owners and town officials are open about the number of tourists from neighboring states who frequent their stores — not just from New Mexico but Texas, as well.

"We'd certainly feel the hit, but it's all good for the progression. To say it'll be the same in Trinidad, I don't think so. If you ask any store down there, they all see a decent amount of business from the New Mexico and Texas side of things," Rich Kwesell, co-owner of southern Colorado's Strawberry Fields dispensaries, told us in 2021.

New Mexico already has its own versions of Trinidad, with border towns like Clayton and Las Cruces close to Texas, where marijuana is still illegal. Lines were already developing at stores in those towns last night, as media outlets in El Paso, Texas, were alerting readers to the closest pot shops in New Mexico.

Trinidad's government has prepared for drecreased marijuana tax revenue in future years, putting away around $4 million of 2020's marijuana revenue into a rainy day fund while working to attract more diverse businesses, festivals and public events, including such Denver-based businesses as Sexy Pizza and Mutiny Information Cafe, as well as the Chief Bicycle & Comedy Festival

The industry could feel the ripple effect statewide. Tourists, including Texans, make up a sizable portion of dispensary customers everywhere from Denver to mountain resort towns. Governor Jared Polis doesn't shy from recognizing that, either; he's jokingly asked Texas not to legalize recreational marijuana because of the impact on Colorado's economy.

Even without before New Mexico entered the recreational marijuana market, Colorado dispensary sales have been declining since last summer, with marijuana industry leaders and Colorado economists anticipating a downturn through 2022 in comparison with big years in 2020 and 2021.

Two factors could help alleviate the drops in revenue: Colorado Springs voters may have a recreational sales ballot question in front of them this November, and Grand Junction, a key town for travelers on the Western Slope, is set to open its first recreational dispensaries this year. But as the saying goes: Everything is bigger in Texas, including your weed budget.

According to 2018 research from the Colorado Tourism Office, someone motivated by marijuana to visit Colorado spends nearly $200 more per trip on average than someone who doesn't care about Colorado cannabis.  And which state was responsible for the most marijuana tourists? Not New Mexico. Texas.
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Thomas Mitchell has written about all things cannabis for Westword since 2014, covering sports, real estate and general news along the way for publications such as the Arizona Republic, Inman and Fox Sports. He's currently the cannabis editor for westword.com.
Contact: Thomas Mitchell