Small Cannabis Retailers Try to Carve Out a Footprint in Santa Fe’s Burgeoning Cannabis Industry | Local News

Ian Aarons has long had a strong fascination with cannabis, but as the state’s long-running push to legalize the product became a reality last year, it took his interest in a whole new direction.

It was once just a hobby; he grew a few plants while in college under a private medicinal grower license. Aarons, 26, now plans to make a living with marijuana as the managing director of Endo, a full-fledged Santa Fe cannabis business he helped start with a few family members.

They are looking to put the finishing touches on renovations to a two-story building on the corner of Agua Fría Street and Siler Street, where they plan to grow and sell cannabis products. They are part of a new generation of entrepreneurs trying to gain a foothold in a nascent industry where challenges abound and more experienced operators know the terrain.

“Times were changing,” Aarons said of the decision. “It was just a hobby, but we decided, let’s go all out and see if we can make some money.”

The family initially invested $500,000 in the business, but as work continued, it became increasingly clear to Aarons that plans to open by Friday, the first day cannabis can be legally sold for recreational purposes in New Mexico, would not materialize.

Aarons attributes the late opening to the difficulty of finding a location in Santa Fe’s tight commercial real estate market, as well as the work still to be done to renovate Endo’s facilities and the complex interplay between state and local regulations.

The storefront and production area just received state approvals last Sunday, said Stephen Aarons, Ian Aaron’s father and the company’s general counsel.

Although the arrival of legalized cannabis has been anticipated since its passage last year by the Legislative Assembly, the number of new retailers is low. According to the state’s Cannabis Control Division website, only three have been approved by the state of Santa Fe. Endo is the only one with plans to open a retail facility soon.

The inability to speed up the opening process left Endo in a position where it had to decide whether to “roll the dice and get to work” or wait for its licenses to be approved, Ian Aarons said.

“We would need 100 things to go right and nothing to go wrong to open by April 1,” he said.

When legal recreational cannabis sales officially begin statewide, it’s likely that only a handful of “legacy” vendors in Santa Fe — medical marijuana retailers grandfathered into the program recreational cannabis – will be able to start selling the product on Friday morning.

But Aarons thinks there will be a place in the market for smaller mom and pop retailers like Endo, even if they have to engage in some catch-up play.

“There will always be Walmarts,” he said, referring to the 34 largest cannabis retail companies that have been privileged in selling recreational cannabis. “But it’s up to us to be this Marble Brewing Company, this local craftsmanship.”

Endo is expected to begin developing its product in a 10,000 square foot building at 2903 Agua Fría Street later this month. The structure will have space to process plants, as well as a retail display.

He said the company’s local flair and desire to deliver a consistent high-quality product will help further separate Endo as the market continues to mature.

But he acknowledges the difficulties startups like Endo face just opening doors, especially compared to larger retailers who likely have the legal resources and industry means to complete the process in a timely manner.

He said the entrepreneurs are getting into a business that medical retailers discovered more than 10 years ago.

“That’s the thing, for these moms and dads, it’s hard. … You have to find a niche,” he said. “New Mexico, in my opinion, is really about being close. We like to see guys we grew up with with start-ups; we’re not always thrilled to see a big New York company come to town. ”

Endo – Latin for “inside” – is a decidedly local family outfit.

After earning a master’s degree in business administration from the University of New Mexico last spring, Aarons recruited her mother, longtime Santa Fe resident Doris Valdez, to serve as president of the company, and his cousin, Alex Costello, to work as technical director.

Aarons’ father, Stephen Aarons, is a criminal defense attorney in Santa Fe. He focuses on licensing and regulation.

Stephen Aarons acknowledged the irony of a criminal defense attorney getting into the cannabis business, but said since college he has had a more liberal view of the product.

Stephen Aarons said his son first approached him – or, as Ian Aarons puts it, “bored” him – about getting into the medical cannabis business a few years ago, but has said it seemed too “political” to get into the business.

“There have been jokes about how I have been involved in criminal cases with drugs and now I’ve kind of joined them,” Stephen Aarons said with a laugh. “But my son got an MBA, so he wants to do business, and it’s going to be a hot business and should pay off for him. They’ve really worked hard.”

Marijuana Business Daily, a Colorado-based cannabis business website, estimates cannabis sales in New Mexico will grow from $125 million in 2022 to $400 million per year by 2026.

About 40% is expected to come from out-of-state buyers — namely Texans, said Duke Rodriguez, CEO of Ultra Health, the state’s largest cannabis company. the new mexican Last year.

Stephen Aarons said having a lawyer on the team is an obvious boon to Endo, particularly when it comes to navigating the complicated web of local and state regulations; each municipality was able to put in place its own rules guiding recreational cannabis.

“Your average guy trying to start a business is going to have a really hard time doing it,” he said.

To be approved by the state, a company must obtain a license from its local jurisdiction or prove that it will have one before beginning operations. It must also comply with local zoning ordinances.

The city of Santa Fe has a cannabis business license, but before anyone can apply for one, a state approval letter must be obtained – along with city zoning approvals. A company should also provide a water balance sheet, along with details of how waste will be disposed of and expected energy use.

The state also requires retailers to provide a social and economic equity plan, proof of age for each controlling person, background check authorization form, and premises design.

Ian Aarons said the process sometimes seemed almost circular, and the city’s director of land use, Jason Kluck, acknowledged the tricky interplay between state and local governments — noting a sort of back-and-forth -comes almost “chicken and egg” between the two entities.

“They are not beholden to our process and we are not beholden to theirs,” he said, referring to the state. “We’re trying to work with them to clean up this process, just like every municipality in the state.”

“It’s not a Santa Fe problem,” he added. “It is a state problem.

Kluck said the city has approved about 23 retailers, most of them legacy entities. The city has also issued a “ton” of approvals for growers and manufacturers, he said.

Stephen Aarons wondered if the process had stopped others from getting into the cannabis business.

“I do criminal defense, so I’m not exactly a business lawyer,” he said. “But I have a big advantage over someone who doesn’t have a law degree or something. Just putting together what they want is where it’s so hard to get approved things.”

Heather Brewer, spokeswoman for the Cannabis Control Division, was on vacation Friday and did not respond to an email seeking comment.

Ian Aarons said a lack of available locations in Santa Fe that matched zoning requirements – combined with the stigma that cannabis businesses carry for some landlords – made finding the right building “almost impossible”.

“It’s actually very impressive that we found a building,” he said.

Ian Aarons said he plans to start selling the company’s product at least four months after the facility’s four grow rooms are completed (a cannabis plant can take four to eight months to mature). Endo is expected to have to rely on wholesale cannabis sellers after the storefront opens, but Stephen Aarons has expressed concern about the amount of product available.

Stephen Aarons added that he thinks wholesale cannabis growers are holding onto more of their supply to see how the market takes shape in the first few weeks, which will likely affect how much product retailers can buy.

In an interview last week, Kristen Thomson, director of the state’s Cannabis Enforcement Division, said the state has no concerns about the amount of product available, saying there are more ‘one million mature plants in the statewide tracking system designed to calculate plants. growth.

The figure has been criticized by some of the state’s largest cannabis producers.

But the Aarons are confident that despite a few roadblocks and concerns about available products, their business will welcome customers on May Day.

At present only family and a few contractors are working on the building, but Ian Aarons hopes to hire at least 10 staff to help get Endo up and running once everything is up and running. There will be a few staff members to work at the grow sites, a few people to manage the showcase, and a security guard.

He said he could probably run Endo with fewer people, but he didn’t want to put too much on the shoulders of a smaller staff.

He expects to pay at least $15 an hour and said people have contacted him before about job opportunities.

“I want it to be the kind of job where people are happy with their work,” he said. “I want this place to be a benefit to the community.”

About Donnie R. Losey

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