Smaller cannabis businesses struggle

These days, when Tom Schoneman makes the roughly six-hour drive from his Texas home to Earl and Tom's – his spiraling cannabis retail shop in Clovis – he often finds himself "consumed" by stress. 

Low profits have forced him to recently let go of three full-time workers who used the income to support their families. He said he feels like he "failed them." 

"Physically, mentally, emotionally, from a point of anxiety, I've never been this under the gun and felt this kind of pressure to succeed," said Schoneman, 51, who worked in the real estate industry for 17 years before opening Earl and Tom's with his partner Earl Henson. 

All throughout Clovis, local mom and pop cannabis dispensaries like Schoneman's are struggling to keep up with deep-pocketed corporations who're swooping in and undercutting them into oblivion. 

Schoneman said he doesn't want to be "doom and gloom" but something needs to change.  

Now.  

"These big guys are undercutting the prices so low, and they're relying on such low profit margins that I can't do the volume that any of these companies can do," said Schoneman, who owns one of 26 dispensaries in Clovis. He said a handful have closed recently. "We have to find a way," he added.  

According to Seth Thomas, owner of Portales' Horizon Cannabis Company and part-time consultant, corporate-owned companies – some with more than 20 locations – have the financial backing to buy in bulk and sell cheaper products. This, in turn, forces mom and pops like Earl and Tom's to drop prices to remain competitive. The problem? Their new prices are too cheap to net a profit. 

Schoneman and Jason Bouse, owner of Clovis' Enchanted Strains, say the massive problem with less profit is that it exacerbates financial stressors caused by the industry's high tax, compliance and operational fees.  

Big corporations have the resources to stomach federal tax codes that prohibit tax credits and exemptions.  

Bouse and Schoneman, meanwhile, can't.  

"My personal income taxes are more than I paid myself last year. So I paid money to work here last year. Earl was in the same boat," Schoneman said.  

Then came the compliance costs to ensure that every facet of Earl and Tom's is being run legally. Schoneman didn't give a price, but he said he paid his lawyer a "substantial" amount that's "more than I make." 

Thomas said somebody recently told him they were quoted a price of "$15,000" a year for a lawyer.  

"Every single thing in this is regulated by law. Everything we do, touch, see – all regulated – and highly controlled. So it's tough for your average person to do that," he said.  

Lastly, steep operational costs.  

Schoneman said his yearly license is "10 grand." His electricity bills, because he grows plants, can run upward of $30,000 a year. Marketing and sponsorship costs can run between $10-$15,000 a year. He said he pays "between $1,400, $1,500 bucks a month to the bank" to store his earnings. 

Plus, 12 full-time employees on payroll. That number was 17 before times got tough.  

"It's hard to tell them 'Hey, I'm sorry, it didn't work. I'm pulling in the reins a little bit,'" Schoneman said.  

Bouse and Schoneman aren't the only ones speaking out about how New Mexico's open licensing policy has created an oversaturated market that bigger corporations can monopolize.  

Ben Lewinger, executive director of the New Mexico cannabis chamber of commerce, told KRQE in February, "The governor's promise was to have this be an industry open for anybody to participate but I don't think anybody expected quite this many folks." 

New Mexico currently has 1,006 retail dispensaries, according to NMRLD. California, Nevada, Colorado and Oregon don't share New Mexico's open license policy.  

Lewinger later added, "I definitely expect more stores to close including small and medium size shops..." 

What frustrates Schoneman is that the state and cities see a robust bottom line and don't see a need to change anything.  

According to NMRLD, Clovis has netted over $4.5 million in adult-use sales since March, marking its best four-month stretch since recreational sales began April 1, 2022. In June, NMRLD showed big brands were four of the five highest earning dispensaries in Clovis. 

Since recreational marijuana became legal, Clovis has pocketed nearly $34.6 million in total sales, according to NMRLD.  

Marcy Anaya, president of Clovis / Curry County Chamber of Commerce, said what's happening is "just business, unfortunately."  

She added that "mom and pop businesses ... can't make as many cuts as other businesses can make. And so they may not be able to hang in there. I think that's realism." 

As a way to help local dispensaries, Anaya said they can pay a fee to team up with the Chamber. This gives them sponsorship opportunities like a ribbon cutting ceremony on Facebook Live.  

Schoneman's done that. As well as Bouse, owner of Enchanted Strains, when he opened his shop in fall of 2022. Like Schoneman, his dispensary boasted big sales in 2023 that plunged in 2024.  

Last Friday night, as reggae thumped through an empty Enchanted Strains, Bouse reflected back on how Fridays last year typically meant an endless stream of customers. 

"The good old days," he said, as budtender Gilbert Lopez nodded in agreement.  

While sitting on his Clovis porch, Bouse said he wonders if he should've just stayed in the restaurant industry or just opened his shop somewhere besides Clovis.  

Schoneman said he does, too.  

"It'd be much easier to go rent a shack down in Albuquerque ... because Earl still lives there," he said.  

But Schoneman said he decided to pick Clovis because it felt welcoming. Not to mention, his admiration for the town's Wild West and cannabis history, the Texas market he could access and the small town feel of it all.  

He said the challenge excited him. He could enjoy a thrilling ride for the back-half of his life, mentor younger workers and provide customers with mental or physical relief.   

So, he and Henson got a growing license in 2021 and were among the first to open a retail shop in April of 2022.  

Since then both have yet to make a dollar, he said. 

"I love this community, but we can't do it and take everybody on," he said, "I'm 51 years old and I'm tired."  

Schoneman splits his time between Clovis and Texas, commuting from the Dallas/Fort Worth area where his wife took a job.  

Those drives, where it's the endless road, flanked by sawdust grass fields, he said he finds himself riddled with anxiety. 

Country music, Dan Patrick and the occasional Dateline episode provide some respite, but never enough from this "never ending battle." 

But through it all, he has no regrets. 

He said running this shop "was the most amazing challenge or opportunity I've ever seen in my lifetime."  

Unlike shops that're retail only, Schoneman and Henson feel "grateful" they can at least pivot to the production side.  

By focusing more on just growing plants, they can retain all their current employees and earn more money because it'll eliminate many of the tax, compliance and operational fees.  

Still, this isn't what he and Henson envisioned.  

The retail side is no longer their main source of income. Though they're not closing entirely, they said they'll be listing some parts of their retail side this week.  

But Schoneman and Henson said they're relentless in their fight to ensure that Earl and Tom's won't become Clovis' next "Starbucks dispensary." 

"I think everybody (mom and pop's) their days are numbered, in a sense – unless there's some sort of help," Schoneman said.