A new fear for cannabis growers: Water rules drying up their dreams

Yahoo

18-05-2025

May 18—BELEN — Kneeling among rows of dead marijuana plants, Pamela Craddock shared a grim look with her husband. They decided this year to let their plants die and call it quits after years of trying to make a living in the industry.
The issue? Water rights.
The Craddocks entered the cannabis industry as soon as the state legalized it recreationally in 2021, and with zero debt. They are leaving it with $40,000 in loans, opting to abandon the practice rather than scrounging around for thousands of more dollars — at the least — to buy water rights for the farm.
A recent policy shift made by state cannabis regulators, an effort to prevent illegal water practices, is largely barring growers from using water hauling as a primary water source for the farms. Many smaller, rural operators that have hauled water for years are left in tough spots, either unable to afford expensive water rights or unable to secure the rights due to location.
Water rights have a long and complicated history in New Mexico, dating back centuries to traditional water practices and conflicts among Indigenous and Spanish communities. Fast forward to the present, and New Mexico is locked in a yearslong legal battle with neighboring states Colorado and Texas over Rio Grande water.
It's also a time when the Southwest faces pressure to use water more efficiently in agriculture amid water scarcity. Nearly all of New Mexico is abnormally dry, including 40% of the state sitting with extreme drought, according to the National Integrated Drought Information System.
The policy change
Gov. Michelle Lujan Grisham in 2021 convened a special session to legalize recreational cannabis usage. A lengthy set of rules followed, including the creation of the Cannabis Control Division, or CCD, within the state's Regulation and Licensing Department. The CCD was tasked with enforcing rules and regulations on cannabis farms, including their water usage.
So the CCD turned to the Office of the State Engineer, which has authority over surface and groundwater, for advice, said John Romero, OSE water rights division director. Immediately, he said, OSE recommended against allowing water hauling — transporting water from one location to another — because of common illegal operations, like stealing water.
"Water rights are complicated here in New Mexico," he said. "Some people think just because they own land and a river passes by or a ditch or an acequia, that they automatically have water rights."
But CCD allowed the practice, and operations began rolling in 2022. The CCD declined an interview with the Journal. RLD spokesperson Andrea Brown provided a statement affirming the cannabis division's commitment to "striking a balance between responsible, compliant water use and ensuring that participation in the legal cannabis industry remains accessible and equitable."
Eventually, Romero said, the CCD and OSE discovered that companies weren't using appropriate water sources, pushing the two agencies to collaborate on changing water policies.
The joint effort resulted in prohibiting water hauling, save for operators working with long-term partners like municipalities, and requiring water rights instead. But water rights can cost thousands of dollars an acre-foot, depending on factors like location and water type, according to Romero.
The state is also allowing growers to request a temporary exemption to the water-hauling ban while they search for new sources of water.
"We're not just cutting them off because that's not right. We don't want to put people out of business," Romero said.
In March, the CCD notified operators about the new rules, according to the division. So far, about 75 growers dependent on water hauling have approached the OSE, Romero said, though more could come in as renewal deadlines approach — which happens on a rolling basis, depending on when farms started operating.
Growing pains, or flipping the script?
When Craddock found out a couple of months ago she needed to acquire water rights, she faced a tough decision: start planting now and look for water rights, or let her 200 marijuana plants die. But she couldn't afford water rights.
Her half-acre farm is barren now. Only a few brittle stems remain upright, scattered among a growing dominance of invasive species that now blanket the once-thriving cannabis landscape.
"If we were able to have water this season, you would be standing in 200 little plants," said Craddock, who also works as a substitute teacher. The Craddocks have until August, when their license expires, to sell the 30 pounds of cannabis flower they have remaining.
"It's sad. I love them," said Craddock, who hopes one day to return to the industry. "I have pictures of me when I'm first planting them, all barefoot with my feet in the ground and cleaning all the leaves off."
Arin Goold, owner of Albuquerque cannabis shop Mama and the Girls and a farm in Estancia, believes many other smaller, rural farms' operations will also shutter. Goold herself is trying to sort out with the state if she's allowed to haul from Entranosa Water Association, which Romero said is acceptable because it's a long-term planning entity.
The price tag of water rights alone will scare off farms, Goold said.
"It has massive, sweeping implications," she said.
Three dozen miles east of the Arizona border sits another mom-and-pop cannabis grow, Mr. B's Frosty Flower, in Ramah. Like Goold, owner Matthew Brown obtained a yearlong variance to the water hauling rule while he searches for water rights.
"This is my dream," he said. "And that's why all of this was so discouraging. It felt like I was going to lose my dream."
He moved to New Mexico from Texas in 2017 with his wife solely to get into the cannabis industry, eagerly awaiting recreational legalization in the state so they could start in what he believed would be a fresh, non-saturated market. They bought a house, with room for a farm, on land tucked between three tribes — the Navajo Nation, Acoma Pueblo and Zuni Pueblo.
After the legalization, Brown obtained a license and set up a farm with a rainwater catchment system that today holds about 11,000 gallons of water. Brown said he's never had to use any other water source.
But OSE doesn't consider water catchment a primary water source, so the Browns have a contract signed with a water hauler to appease state regulations. Now, with water hauling no longer an option, Brown is working to find water rights, but the surrounding tribes are making it difficult to find any usable land.
"If they (the state) weren't going to allow this, they should have just not given me a license to begin with, and we wouldn't have bothered with it," Brown said. "But to be three years in and flip the script on us a little bit, it was devastating."
He added, "The funny thing is, we have to fight for this water — we'll never use it."