After the passing of new cannabis laws in New Mexico, there was much confusion circulating. Hence, people are confused about the type of license that they would require. Water rights are harder to obtain. New business owners have to figure out the type and cost of their operation. Among all the confusion, applicants wonder whether New Mexico’s state laws would open a vertically integrated cannabis business.
Vertically integrated cannabis business – what is it?
Some of our readers might not be familiar with the term vertically integrated cannabis business. In states like Oklahoma, you have to be very thorough about your operation and in an open-market vertically integrated cannabis business, you are going against thousands of businesses. In simple terms, vertical integration is when a business owns every stage of its supply chain. For example, a mobile phone company like apple manufactures every part of their devices themselves. They also own all the manufacturing factories where their products are made.
In the cannabis business, vertical integration means that a producer owns the farm, the cultivation, and the labs to experiment with samples.
Stages of Cannabis Vertical Integration
- Cultivation stage: The cannabis is grown until it is ready for cultivation.
- Extraction stage:The cannabis is passed through an extraction stage. The cannabinoids are removed for concentrate production.
- Manufacturing stage:Cannabis is turned into products and packaged.
- Retail stage: Products are ready to be sold in the market.
Many states have legalized marijuana production. Moreover, the vertically integrated cannabis business model varies from state to state. In New Mexico, the laws have been recently passed, so we have to see how they are implemented here.
New Mexico’s business model
On the medical business model in New Mexico, being vertically integrated is the only option. Also, for licensed non-profit producers, it is a “seed to sale” market. So, these medical business owners have to run the whole operation themselves. Hence, the non-profit label doesn’t get the businessmen any advantages with the IRS. The state requires them to title their business as non-profit.
Currently, there are two licenses available.
- Production licenses
- Cultivation licenses
The license holders can sell wholesale to other cannabis establishments.
The medical license owners have a vertically integrated legacy license. They can continue to operate under the same license. So, the business model looks like a vertically integrated cannabis business.
In January, the state will start issuing the vertically integrated establishment licenses (vice licenses. This program will also be “seed to sale.” The micro-business license is also set to come out next year. It will also be a vertically integrated cannabis business. However, it will be limited to 200 plants per business. The 200 plants are set to be mature plants. This means the flowers have started to show signs of sex.
The applicants have to disclose the number of plants that their business will have.
New Mexico’s license is set to be a vertically integrated business. The medical business is already vertically integrated. Hence, the new licenses are going to be vertically integrated.