Cannabis industry in New Mexico faces big challenge of water

They are among many hopeful entrepreneurs who see New Mexico’s upcoming legal market for cannabis production and sales — set to launch by April 1 — as a way to break into a new business with a potential windfall. The Isbells already have raised $200,000 toward their initial budget of $800,000, and they’ve hired a lawyer to help sort out legal issues.

They own the land, and they’re ready to install the security fences and cameras required to get a cannabis production license from the state. But they have one big challenge remaining.

Water.

Like all prospective cannabis producers in New Mexico, the Isbells must prove they have rights to water and an adequate supply before they can apply for a license, the Santa Fe New Mexican reported.

That can be a problem, especially for rural growers, in a state with complicated laws divvying up a limited supply of water rights and in the throes of a 20-year megadrought that threatens to contribute to a serious water shortage. While cannabis growers who plan to operate in facilities within a city can tap into the municipal water supply as commercial customers, those growing outside city limits must purchase or lease commercial or agricultural water rights from someone else who owns them — a difficult and time-consuming process.

A domestic well on private property does not satisfy the requirement.

As the Isbells began preparing to open a company that produces, manufactures and sells cannabis, they thought they had their water needs covered by a domestic well. They were surprised to discover it wasn’t sufficient.

“It’s definitely discouraging,” said Medina Isbell, 47, a professional photographer who has worked in the retail and restaurant industries.

“Water becomes a huge factor in our profitability,” her husband said.

The couple plans to build a 10,000-gallon water tank for their first greenhouse. They estimate they will need 30,000 gallons a year as they expand.

If they can’t pump water in from a local source, they’ll haul it in, they said. They’ve been talking to local water transport companies. One has offered a 6-cents-a-gallon deal, delivery included. That will increase their monthly water budget, initially set at $200 a month, to $1,000 a month.

Cid Isbell, a career information technology worker in his mid-50s, is eager to jump into a new industry, hire up to 20 workers and build a nest egg for his eventual retirement.

“It’s going to be difficult, especially with all the rules we need to follow to get licensed,” he said. “But we’re determined.”

John Romero, director of the Water Resource Allocation Program of the State Engineer’s Office, said people often don’t understand how complex water rights can be in New Mexico. His agency is drafting a fact sheet to help people who plan to apply for cannabis producer licenses navigate the system.

In the meantime, his staff is fielding calls — 25 to 50 per day — about water requirements for cannabis.

“We’re doing the best we can,” Romero said.

He cautions it will take time for any cannabis producer to secure water rights. First, the state has to finalize rules for producers by a Sept. 1 deadline. Then producers must submit their paperwork to the State Engineer’s Office for approval.

The office so far has a backlog of 500 water permit applications, including requests for water rights transfers, he said, adding it is likely to take eight to 10 months for each one to get approval. And the number is likely to surge as applications from cannabis producers start to come in.

The development of a new industry that will further tax the state’s limited water supply is what most concerns Paula Garcia, executive director of the New Mexico Acequia Association. She cited a recent study by the Cannabis Research Center at the University of California, Berkeley that predicted nationwide water use by legal cannabis markets will increase by 86% by 2025.

Garcia said there just isn’t enough water in New Mexico for the new 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.”

Studies of states where cannabis producers have been legally operating for some time don’t paint a clear picture of how much water the industry could demand in New Mexico. Much depends on the size of the plants, whether growers are cultivating cannabis indoors or outdoors, and the watering process they use — drip irrigation system versus a garden hose.

A recent report in the journal BioScience says a single cannabis plant requires about 22 liters of water per day — not quite 6 gallons. Cannabis plants require less water than alfalfa, corn, potatoes and some fruit trees, the report says, but more water than grapes and melons.

Tony Martinez, CEO of Lava Leaf Organics in Aztec, which provides medical cannabis to Urban Wellness dispensaries, said his business uses 90 gallons of water per plant for a growing season.

For his 400 plants, that’s a total of about 36,000 gallons, which comes from a local water users association.

Lava Leaf plans to expand into recreational cannabis, which will allow it to increase its footprint to 8,000 plants. Even then, Martinez said, it would be using less than 12% of its allotted water.

An October 2020 report by the National Cannabis Industry Association on environmental impacts says many water-use studies focus on the effects of outdoor illicit markets, particularly in California.

“Considering that a large amount of cannabis farming nationwide is indoors and far from watercourses vulnerable to flow reductions, the initial alarms of cannabis as a threat to water availability are not broadly applicable beyond the original context of illicit cannabis farming in Northern California,” the report says.

Still, the report says indoor growing can put a heightened demand on municipal water systems.

Linda Trujillo, superintendent of the state Regulation and Licensing Department, which oversees the cannabis industry, said she hopes climate conditions do not create a barrier for prospective growers.

The state will gauge water use among cannabis businesses for the first two years of the legal industry’s operation.

Toner Mitchell, New Mexico water and habitat program manager for Trout Unlimited, said he remains concerned, nevertheless. He spoke briefly about the potential adverse effects of the cannabis industry on wildlife during a recent cannabis conference in Albuquerque.

If the state determines too much water is being used to grow cannabis, Mitchell said, “I think it’s going to be very hard to scale back production.”