Will New Mexico's Marijuana Legalization Hurt Colorado's Cannabis Industry?

Earlier this month, New Mexico Gov. Michelle Lujan Grisham signed legislation to legalize recreational marijuana in the state.

While marijuana and criminal justice reform advocates say it's a huge win, it could mean big losses for dispensaries in Colorado.

Since 2014, when recreational marijuana went on sale in the Centennial State, business has boomed for Colorado dispensary owners with more than $10 billion in marijuana sales and billions more reaped in tax revenue.

It has also been an economic boost for those in the tourism industry. People from around the country come to Colorado every year to consume cannabis products.

However, New Mexico's legal marijuana market could cut off a huge line of revenue for Colorado dispensaries at the border.

Cities like Trinidad, which sits just north of the border with New Mexico, boasts dozens of dispensaries and has come to rely on the "border model" to survive.

"Right now, about 45% [of customers] came from Texas, 20% came from New Mexico," said Michael Evans, the general manager of The Other Place is Greener dispensary.

"When New Mexico does go legal, we will literally be cut off at Raton Pass. They'll have no reason to continue driving through New Mexico to come enjoy the benefits of our recreational marijuana," Evans said.

One thing a lot of tourists and would-be business owners have come to learn over the years is the inability to sell recreational products at clubs or restaurants. This is because Colorado's law allows municipalities and cities to enact ordinances to prohibit social consumption and, in some cases, operate dispensaries within their jurisdictions.

That's not the case with New Mexico's law, which explicitly denies local governments from prohibiting marijuana companies from setting up shop. It does, however, let them decide where and when they can operate.

Furthermore, it also allows for "cannabis consumption areas." Those will be state-approved, licensed venues both indoor and outdoor. People will even be allowed to consume marijuana in designated hotel rooms, casinos, cigar bars and tobacco stores.

That's simply not allowed in Colorado; social consumption has been a controversial issue well before Colorado voters approved Amendment 64 in the 2012 general election.

But Evans said it would be one of the last gimmicks that could attract tourists from nearby states.

"We have to incentivize them to just continue traveling here so we can see this increased revenue," he said. "Trinidad has been a boom bust city. Right now, we're in a boom, and we need to be doing everything thing we can do not to bust and that is getting ahead of these other states."

New Mexico is the 17th state in the country to legalize recreational marijuana. The market is expected to launch in April 2022.