Dec. 20—Matt Chadwick knew a few years ago that he had to find a strategy to grow his business, Top Crop Cannabis, in an Oregon market that was becoming increasingly saturated.
Chadwick, the CEO and founder of Top Crop Cannabis and Dark Matter, opened a second store in a small farming town bordering Idaho, transforming the location into one of the best performers in the Northwestern United States. He brought that same playbook to New Mexico, opening a Top Crop in Las Cruces in late 2022 and a Sunland-based Dark Matter, the top-performing store in New Mexico, by the following year.
His story is one of success in New Mexico’s adult-use cannabis industry, which has had its share of ups and downs over the past two years and eight months since legalized sales started. It comes as the state’s businesses have reached a milestone of their own: selling $1 billion in recreational marijuana despite an industry that has dealt with its own share of market saturation.
“The way we look at it is, it’s very much relationship-based. You treat your employees good, you treat the customers good, you treat your vendors good, then you’re going to establish yourself very well in the market,” he said. “And that’s kind of our motto of how we approach everything — is to treat everyone accordingly.”
A regulated industry
Gov. Michelle Lujan Grisham and Democratic legislators pushed the Cannabis Regulation Act passed the finish line during a 2021 special session, opening the doors to a new industry in recreational cannabis.
Later that year, businesses began to get licensed and sales to consumers over 21 started just a few months later in April 2022. Like any new industry, adult-use cannabis was still finding its way — fluctuating around $21 million and $28 million in sales through December 2022.
By March 2023 recreational cannabis sales surpassed $32 million for the first time and exactly a year later hit a record-high $39.5 million, according to data from the state’s Cannabis Control Division, which regulates the industry. Last month, which was the last recorded sales period from the CCD, the state’s licensed retailers sold $36.6 million in recreational marijuana.
Andrea Brown, a CCD spokesperson, wrote to the Journal in an email that sales figures are self-reported by licensees either manually or by using automated tools that connect to the state’s track-and-trace system, BioTrack.
She said CCD is “not required to report sales information,” adding that the division does so because of an “abundance of interest from the public and to provide transparency to the industry, media and other stakeholders.”
“The accuracy of the self-reported data may vary depending on inventory reconciliations and reporting adjustments,” Brown wrote. “As such, the data is subject to potential variability. It is incumbent on the licensee to report accurate information.”
Brown said CCD Director Todd Stevens and RLD Superintendent Clay Bailey were not available for an interview.
In a statement, Stevens said the sales figures show “overwhelmingly that consumers are glad to be able to purchase cannabis from licensed cannabis retailers rather than illicit market sources.”
New Mexico’s sales are anchored by a regulatory structure that has created a low barrier to entry for many entrepreneurs in the state, which has led to a hefty store count of more than 1,000 licensed retail premises as of November.
Roughly 694 of those stores were actually operating last month, according to Bill Sluben, who runs the firm The Data Heard, which tracks cannabis data in the state.
Stevens, who took over the role of director in late 2023, touted the opportunity for entrepreneurs, however, saying in his statement that consumers “continue to support this regulated industry that creates access to tested products, tax revenue for local communities, jobs and a chance for New Mexicans to run their own cannabis business if they choose.”
By the numbers
Taking CCD’s numbers at face value, the state’s industry since March 2023 has consistently reported more than $30 million in adult-use cannabis and since January of this year has sold between $34.4 million and $39.5 million per month.
But that has coincided with a decreasing sales number for medical cannabis, which has plummeted from $17.4 million in April 2022, when adult-use sales started, to $11.2 million as of November, according to CCD data.
Medical cannabis sales this year are on track to reach $143.9 million, Sluben said.
“The medical contribution is declining pretty rapidly, and I believe sales this year will be down an estimated 12% year over year from 2023,” Sluben said. “Now, if medical sales are down roughly $20 million, and the industry aims to have continued exponential growth for the cannabis industry as a whole, you need to have high growth of adult-use sales. However, monthly adult-use sales appear to be at or near its ceiling.”
That may be true, according to Sluben’s data. While many of the state’s largest cities led the charge at the advent of adult-use cannabis sales — Santa Fe, Las Cruces, Albuquerque — they are now seeing a decrease in total sales, led by steep medical cannabis sales drops that act as an anchor on total sales performance.
Albuquerque, for instance, saw only a 21% lift in adult-use sales from April 2022 to its latest sales number in November of $9.7 million, while medical sales have dropped more than 32% in that timeframe. Santa Fe over that same period shows adult-use sales increased by about 3% while medical sales have dropped nearly 50%. Furthermore, Las Cruces has fared even worse, posting decreases in both medical and adult-use sales, with November’s recreational sales number standing at roughly $12,000 less than it was in April 2022 despite more than three dozen stores added over that period.
Meanwhile, 13 border markets have grown rapidly, with Sunland Park seeing a 311.5% increase in adult-use sales from April 2022 and Hobbs a 93.3% spike.
That’s largely due to the increasing foot traffic from Texas customers, who Sluben estimates make up 16% of the state’s overall recreational sales.
But if the rate and frequency of the Texas shopper flatlines, it could have a significant impact on New Mexico’s cannabis industry, specifically in border towns like Sunland Park and Hobbs.
“The Texas shopper may prove us wrong,” Sluben said. “At the end of the day, I’m predicting a declining overall cannabis market in 2025. … I think we’re going to be flat or slightly less than that next year.”
Looking ahead
Despite it being a competitive market, that doesn’t mean businesses won’t — or can’t — succeed in the state, said Matt Kennicott, a cannabis expert who runs the cannabis outfits High Maintenance and The Plug.
He said companies are finding a “quick maturation of the products available to consumers in New Mexico,” pointing to the state’s growing number of concentrates producers who are “some of the top rosin makers in the country.”
“Cannabis is a cutthroat industry and the competition is stiff,” Kennicott said. “But we’re still seeing a lot of innovation, and I think part of having a lot of licensees in the state is it creates a lot of competition.”
For Chadwick, growth is still in the picture. He plans to open two more stores — a Dark Matter in Hobbs and a Top Crop in Las Cruces — in the first quarter of 2025.
“We’re trying to be an outlier in the industry,” Chadwick said. “We don’t ever want to be corporate, but we want to show that a company with a good culture who understands the background of cannabis can do very well.”