New Mexico residents now boast legal, recreational cannabis in their state for just about a month. With that momentous shift, new cannabis entrepreneurs looking to enter the field are showing a potential gap professionals in the industry may have to grapple with increasingly moving forward: water, or lack thereof.
The Santa Fe New Mexican explored this issue in a recent report, profiling hopefuls Cid and Medina Isbell as an example of two entrepreneurs grappling with the regulations the state already has in place as they look to enter the cannabis industry.
Part of pursuing a career as a cannabis producer in the state is proving that, as a cannabis producer, you have the rights to water and an adequate supply of it before applying for a license with the state.
These regulations alone can be problematic especially for rural growers, as the state has a number of complex laws that look to divide their limited supply of water rights following the state’s 20-year drought that contributes to New Mexico’s water shortage.
If you are a New Mexican cannabis grower in the city, you can typically tap into the municipal water supply as a commercial customer. Grows situated outside city limits, however, need to purchase or lease commercial or agricultural water rights from someone else who has ownership. That can end up being a difficult and time-consuming process for many new to the cannabis industry.
In addition, a domestic well on private property does not meet the state’s requirements. The Isbells ran into this issue, as they prepared to open their company that produces, manufactures and sells cannabis and figured their water needs would be covered by a domestic well. They ended up learning it was not, in fact, sufficient, and they would need to consider other options.
This couple specifically is looking to build a 10,000-gallon water tank for their first greenhouse, a venture that will need an estimated 30,000 gallons a year as they expand. They say that, if they can’t pump the water from a local source, they will haul it in, already talking with local water transport companies and ultimately multiplying their initial monthly water budget by five, from $200 to $1,000 a month for water.
New Mexico is not the only state that has weighed conversations on water and cannabis, as regulations begin to shift. California has been very particular about how they use agricultural water since recreational cannabis was legalized in 2016. The state looks to reduce water impacts, including restrictions on when growers can divert from streams and requirements to use onsite storage if they rely on surface water sources, according to Director Ted Grantham from UC Berkeley’s Cannabis Research Center.
Often, the problem California runs into is that there are any number of illegal grows in which the state is unable to track where the water is being sourced from. And ultimately, regulators and researchers say time will be the best factor to evaluate rules and regulations around water use to suit the needs of both the environment and the budding cannabis industry in the state.
It’s important to note that New Mexico is wholly in the infancy of their legalization, though John Romero, director of the Water Resource Allocation Program of the State Engineer’s Office, says his staff is fielding 25-50 calls per day about water requirements for cannabis. He echoes the same sentiment of patience, saying that it will take time at this stage for cannabis producers to secure water rights.
The state still must finalize rules for producers by September 1; then producers need to submit their paperwork to the State Engineer’s Office to be approved. The office has 500 water permit applications backlogged so far, and Romero says that it will likely take eight to 10 months for each application to be approved.
There is also a conversation surrounding taxation of New Mexico’s limited water supply. A recent study from the Berkeley Cannabis Research Center reports that, by 2025, the total water use of the legal cannabis market is expected to increase by 86 percent. They also cite the illicit market as the primary drier of water use, accounting for 83 percent of water use in 2020 and declining to 69 percent in 2025.
Paula Farcia, executive director of the New Mexico Acequia Association, cited the study, saying there may not be enough water in New Mexico for the emerging industry. “There are already tensions in communities over the distribution of water,” she said. “Water use due to cannabis adds a new demand to an already limited supply.”
Part of narrowing in on what water needs cannabis cultivation will require in the state is playing the waiting game, as many of the studies around cannabis and water use in other states don’t properly paint a picture of how much water the industry would demand from New Mexico specifically.
Ultimately, New Mexico will monitor the water the cannabis industry and businesses use over the first two year of the legal industry’s operation to start. Recreational cannabis sales are planned to launch April 2022, so long as the regulatory structure of the industry rolls out as expected.