New Mexico’s legal rec cannabis industry is raking in the tax dollars for the state
It’s been a little over four months since the Land of Enchantment became a little more enchanted. Initial tax revenue predictions were slightly under $30 million for the year, but it is looking like the prediction will fall short and will come in closer to $22 million. The state’s current tax rate is 12% of sales until July 1, 2025. Once that date passes the tax will gradually rise to 18% beginning July 1, 2030. Statewide figures factor both medicinal and recreational cannabis in the sales.
Recreational cannabis sales started high when it became legalized, but has since seen fluctuation since. Growers are currently allowed up to 20,000 plants at one time, which is part of the problem. Growers can’t keep up with the current demand. They can’t sell what they don’t have. Currently consumers cannot purchase more than 2 ounces of cannabis, 16 grams of concentrate, and 800 mg of edibles at one time. There is no limit to the number of purchases a consumer can make in a day and there is also no weekly or monthly for adult consumers.
One major cause of lower than expected sales is growers can’t meet the consumers demand with only 20,000 plants. Whatever is produced gets sold. This drives up the price due to the demand being greater, which ultimately hurts sales. Many think the fix is lowering the price, upping the supply, and maintaining the current quality of the product.
Currently the price of a gram on the black market is $5 a gram, while it’s $10 on the legal market. New Mexico’s northern neighbor, Colorado, has legal grams going for $5 as well. For New Mexico to keep up with neighboring states and curb people from buying on the black market, they need to cut prices in half.
Some politicians are looking at the supply shortages in a bright light. Four months of consistent sales shows that the first month’s sale of legal cannabis wasn’t a fluke. Taxes from these sales are bringing in much welcomed revenue for local areas and the state that will continue to create millions more in economic activity. The state Legislative Finance committee is predicting a 10% increase in sales next year. Time will tell if the state’s sales will hit numbers, but the demand for cannabis is showing that the market has plenty of room to expand.
The New Mexico bill that legalized recreational weed also included provisions to help residents with limited funding get a foot in the door of the industry. These low cost loans are also available to micro producers, micro retailers, and micro manufacturers. Micro business For $1,000, micro businesses can get a license that allows them to cultivate up to 200 plants. This is aimed at attracting first time growers and could provide a much needed boost to the state’s supply shortages.
Once the supply catches up to the demand, the cannabis market in New Mexico should hit its next big stride. The customers are there, but when customers are forced to go to other states or on the black market, it’s the people of New Mexico that truly take the hit.