The state of New Mexico recently revoked the license of an Albuquerque adult-use cannabis retailer, Paradise Exotics Distro. They were accused of unlawfully selling products produced in California.
This marks the first time regulators in New Mexico revoked a cannabis business license since the start of legal recreational marijuana sales on April 1, 2022. Despite laws prohibiting out-of-state cannabis trade or trafficking, many states have adopted so-called trigger bills that would authorize interstate cannabis trade agreements if the U.S. government were to allow it someday.
New Mexico has experienced great success with its legalized cannabis market since adult-use sales began in April 2022; in its first year, it recorded more than $300 million in sales. But as is often the case in cannabis markets, an illicit market has been thriving. In order to prevent further illegal practices and protect the integrity of its retail industry, regulators are ramping up inspections and taking action.
Allegations Against Paradise Exotics
Upon inspection of Paradise Distro, Cannabis Control Division compliance officers found numerous violations, including: possessing, receiving, and selling cannabis products that were not native to New Mexico and were marked with California stampings; displaying products such as edibles and concentrates that were not properly documented on the required shipping manifests; and inaccurately reporting sales data, including more than $56,000 in cash and $8,338 in additional funds that were reported in the licensees third-party point-of-sale system but not in BioTrack, the state’s required track and trace system.
This incident highlights the difficult task of regulating retail cannabis sales, especially in markets close to other legal markets. With California and New Mexico being a state away, it is very easy for products to cross state lines.
While out-of-state trade is prohibited by law, many states have adopted trigger bills that would authorize interstate cannabis trade agreements if the U.S. government were to allow it someday.
Consequences for the Business
As a result of the investigations and the failure of representatives from Paradise Distro who did not attend the evidentiary hearing on April 27th, the New Mexico Regulation and Licensing Department (NMRLD) revoked Paradise Exotics’ license to operate in the state on June 30th.
“In the interest of public safety, the department is holding true to the intent of the Cannabis Regulation Act and taking action upon licensees that have violated the law,” said New Mexico Regulation and Licensing Department Superintendent Linda Trujillo. “This revocation should serve as a warning to those selling or receiving out-of-state cannabis products. Our compliance officers are ramping up inspections and we will work to remove bad actors from within the New Mexico cannabis industry.”
Ultimately, this led to its license being revoked.
At the time of writing, Paradise Exotics appears to have closed down. It is unknown what will happen to their existing inventory or if they will attempt to reopen under a new license.
This incident highlights the difficult task of regulating retail cannabis sales, especially in markets that are so close to other legal markets. With California and New Mexico being only a state away from one another, it is very easy for products to cross state lines.
The excess of cannabis in the saturated western market has led many retailers to make their way eastwards – and instances like this seem inevitable unless interstate trade agreements are adopted. Until the federal government legalizes cannabis nationally, examples like this will seemingly continue to occur.
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