In April 2022, New Mexico opened cannabis sales to adults aged 21 and over. As the data indicates, many Texans have visited New Mexico dispensaries near the border to purchase legal cannabis.
The trend is by no means exclusive to the region. Look around the US, and you’ll find news reports or anecdotes noting the same. The trend tends to occur anywhere a legalized weed market is situated next to a state with medical cannabis or continues to practice in some form of plant prohibition. In my home state, New York, shoppers flock to New Jersey and Massachusetts to do the same. While legalization has slowed the practice to a degree, New York’s stalled rollout of shops leaves people with just a few options: They can 1. Not buy cannabis 2. Visit an unlicensed shop in-state or 3. Visit a legalized state for lab-tested, licensed cannabis products.
States facing this predicament tend to encounter a question: Will this force my state to legalize cannabis?
In many states, the threat of nearby sales and lost tax dollars has influenced laws to varying degrees. It’s unclear if Texas will react in such a way, but it is clear that the state is losing ample tax revenue as long as it sticks with the status quo.
New Mexico Sales Over the Months
New Mexico’s legal pot sales have surged in the first year-plus of operation. By April 2023, the state sold more than $300 million in products. Strong sales are supported by more than 660 stores across the state.
Data suggests that Texans were noteworthy in reaching the figure, including first-year sales data from nearby border towns like Sunland Park. With fewer than 20,000 residents, shops in the area were able to generate $19 million in adult use sales. Analysis first reported by the San Antonio Current noted that Texans supported New Mexico’s market from the start of rec sales, with dispensaries along the Texas border generating a significant sum of the state’s $9.9 million in first-week sales. Sunland Park generated over $259,000 during the period.
New Mexico has steadily built on its early sales success. The state hit a sales record in June, totaling more than $33 million in sales. The figure was bested the next month, with July sales topping $34 million. In August, sales jumped to $48 million.
Data zeroing in on Texans’ impact on the market remains unclear. Still, reports provided to Texas Trend suggest that the trend is ongoing. Hans Enriquez is the Chief Executive Officer of Dazed inc., the parent company of the Austin-based franchise Lazydaze Counterculture Cafe and dispensary. He said he recently opened a shop in New Mexico to provide a proof of concept beyond the limited Texas market. Lazydaze opened in Albuquerque in September 2023. Despite operating in central New Mexico, Enriquez reports that customers from their Texas locations have traveled to buy from the recently opened establishment.
The move into New Mexico helped the Lazydaze brand expand, which Enriquez reported has been performing steadily since launching in Texas in 2004. He credits the sales of flower, edibles and beverages containing minor cannabinoids for the steady performance of the brand.
“Still considering that most Texans are unaware of the legality of hemp-related products, [there’s] lots of room to grow,” he said.
Wesley Donahoe, CMO and co-founder of Denver-based PR and marketing firm The 9th Block, is originally from New Mexico. He works with several clients in the state. Working in New Mexico’s adult use market since its inception, Donahoe feels the market has changed significantly since April 2022. He notes that competition, not out-of-state shopping, has altered the most.
“Sales are still looking good for the state overall, but competition is much more apparent, especially on the retail side,” he said. Donahoe added that the spike in competition has created price compressions as brands fight for shoppers.
Donahoe didn’t have figures representing Texans’ impact on the New Mexico market. Still, he feels that it’s safe to assume Texas border shoppers are following the trend set by other states, going where legal cannabis can be obtained.
“Places like Clovis, Roswell, Hobbs are sure to be benefiting off their neighbors in Texas,” he said.
Will Texas Legalize in Response?
It is often hypothesized that states facing the prospect of lost tax revenue from out-of-state cannabis sales will legalize in response. A recent example is the Northeast’s “Green Wave,” where several states took action in short order. Much of the debate centered on whether New York would legalize after New Jersey ramped up efforts and eventually passed adult use regulations. Ultimately, the two states passed measures in near unison, with New Jersey enacting its cannabis laws on February 22, 2021, and New York passing similar measures on March 31, 2021.
Enriquez said he wants to see Texas expand to a whole plant legalization. However, he remains cautious about the road ahead.
“Those in control of Texas laws and regulations have absolutely noticed the tax revenue made from neighboring states that have legalized,” he said, further predicting, “I think federal law will change first–Texas will take two years-plus after to implement that change.”
Donahoe said forecasting Texas’ cannabis future is challenging and boils down to opinion. “It’s hard to ignore the big revenue numbers cannabis has created for other states, but as they say, don’t mess with Texas.”
It remains unclear if tax revenue could propel lawmakers to one day change Texas’ cannabis laws. Other factors, including minor cannabinoids like Delta-8, have been framed as possible catalysts for change in the coming years. While Texas awaits any potential next steps, a change could come via decriminalization, with House Bill 218 passing in the House in April 2023. However, the effort stalled in May 2023, with it last being referred to the Senate and State Affairs.
Until regulations change in Texas, it is safe to assume that citizens will continue to visit New Mexico for legal cannabis despite running afoul of federal interstate trafficking laws prohibiting cannabis from being carried across state lines. If caught bringing cannabis across state lines, a person could face thousands in fines and years in prison.
