'Just about killed us': How late and unpaid invoices hurt NM's small cannabis businesses
Justin Garcia , Albuquerque Journal, N.M.
6 min read
Mar. 23—For Taylor Ortiz's cannabis farm near Belen, 2024 wasn't the best harvest. The yield came in smaller than she had hoped, collecting about 770 pounds of cannabis.
Ortiz's company, Genesis Organics, is on the smaller side of cannabis operations. Before growing the flower that now generates millions in New Mexico tax revenue, Ortiz grew alfalfa. She describes her venture as a "mom-and-pop farm." And like all small farms, a bad harvest has lasting implications.
But she wasn't out of options.
Ortiz found a New Mexico-based extractor — a cannabis company that extracts the active ingredients in cannabis to make edibles and other non-smoke products — to buy that year's harvest. In all, she expected to bring in about $38,000.
"This was going to be the income for the season from that crop's harvest," she said.
Instead, the extractor reneged on the deal, citing "financial problems." They never paid Ortiz for the 770-pound harvest and they never returned her product.
"It just about killed us," Ortiz said.
In the aftermath, Ortiz and her husband injected some of their personal savings into the farm, allowing the enterprise to rebound this year.
But nothing has changed in the cannabis industry regarding unpaid invoices, delayed payments and other accounts receivable issues. Operators say the issue is an existential threat to smaller operations in New Mexico's cannabis industry.
The exact impact on New Mexico's market is unclear. But nationally, a 2023 report estimated that delinquent payments topped $3.8 billion and were expected to exceed $4.2 billion in 2024.
Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, said the problem has existed in the New Mexico marketplace since medical cannabis became legal.
The problem intensified with recreational sales, which began in April 2022. Lewinger said that, as the number of customers and companies in the marketplace grew, so did the frequency of delayed and unpaid invoices.
"I think this is one of the biggest threats facing the regulated industry in New Mexico right now," Lewinger said.
A big part of the problem is that cannabis remains federally illegal, Lewinger said. As a result, he said the mechanisms in typical marketplaces that seek to keep things fair — mainly collections agencies — simply don't exist for cannabis.
"There are a few agencies who claim to be cannabis collections," Lewinger said. "But there's no widespread collection mechanism the same way there is in every other industry."
Lewinger also highlighted regulatory issues, most notably the fact that cannabis remains illegal in many states and at the federal level, limiting the ability of firms to transport products through certain states and gaining access to capital and banking.
New Mexico's cannabis market is also extremely competitive, a fact that Lewinger said adds to the problem. According to the New Mexico Cannabis Control Division, the state has handed out 3,071 licenses as of December 2024.
The problem is not felt equally among the state's cannabis operators. Smaller operations — which Lewinger said make up the backbone of the industry — are hit hardest. And in many cases, it's the larger operators that renege on payments.
The most well-known example is that of San Francisco-based Off The Charts, which had operated dispensaries in Las Cruces and Albuquerque before they closed. In February 2024, a leaked video of Norman Yousif, founder and CEO of the dispensary chain, showed Yousif bragging about skipping out on payments to smaller operations.
Yousif said his company was saving money by "not paying the vendors," specifically the operators he labeled as the " (expletive) mom and pops."
"We've saved hundreds and hundreds of thousands. I mean, if you don't have to pay, you don't have to pay," Yousif said in the video.
Yousif later apologized for the statement via an interview with SFGate, a San Francisco news outlet. He added that his remarks were taken out of context and said that Off The Charts always pays its vendors.
"My only flaw is paying them on time. Do they get paid? Absolutely. Do they get paid on time? Lately, this last year, not really," Yousif told SFGate.
Still, Lewinger and operators who spoke to the Journal said the video highlighted the unequal playing field between the big operators and the smaller ones.
It's also a perversion of the goal of New Mexico's market, to allow people who previously grew cannabis illegally to enter the legal marketplace, Lewinger said.
"We know the most talented growers and the most talented extractors have been part of the cannabis industry in New Mexico for decades," Lewinger said. "And those are the ones we want to pull from the illicit market into the regulated market."
And without regulation change, there's no reason for this problem to cease, Lewinger said.
"It's just unfortunate that all these mechanisms and support that exist for other businesses don't exist for the cannabis industry," Lewinger said.
New Mexico cannabis is a microcosm of a national problem.
Beau Whitney, chief economist for the National Industrial Hemp Council and the National Cannabis Industry Association, told the Journal that every state with a legal market experiences what New Mexican operators are feeling.
"There is no evidence that this issue is easing," Whitney said. "Money is still tight, and nothing has changed in terms of banking."
Whitney, who founded and runs the Oregon-based cannabis research firm Whitney Economics, said several states have implemented some regulatory changes that have positively affected the problem. For example, Washington and New York implemented rules requiring cash on delivery or paying for the product upon delivery.
"This is improving it a little bit, but people are finding a way around the system," Whitney said.
Ideally, Whitney said states should develop a system where each company can be assigned a credit rating specific to cannabis, while regulators monitor the health of the market. He also said maintaining a healthy market requires limiting the number of licenses, thus reducing the number of operators.
"There are several ways to fix this, but the main one would be to federally reform the current banking laws related to cannabis," Whitney said.
For Ortiz, who is about to start her 2025 crop, the solution involves accountability.
"It's a very touchy issue because that's going to take a lot for them to monitor it, but there does need to be some kind of accountability that this company is operating in good standing, or this is just going to continue to happen and continue to pull companies down and destroy the overall value in the marketplace," Ortiz said.
