By Ellen Coplen
On June 29, New Mexico’s Cannabis Regulation Act (CRA) went into effect. New Mexico legislators passed the bill in a special session earlier this year. The new law allows for any adult over the age of 21 to possess up to two ounces at any time for recreational use. Medical cannabis patients will also be allowed to purchase more than 12 times what they were allowed to purchase before.
The bill also calls for recreational sales of cannabis to adults to be delayed until no later than April 1, 2022. This will allow time for some of the regulations regarding growing, sales, licenses, taxes, etc. to be ironed out and finalized. Many believe we will start seeing recreational sales by the first of 2022.
Many economists and cannabis producers believe that legalizing cannabis will bring some 11,000-15,000 new jobs and project that annual revenue in sales will bring $600-$800 million in revenue to New Mexico. How will we get there?
Duke Dominguez, Chief Executive Officer of Ultra Health, presented some of the anticipated gains – and some hurdles — New Mexicans can expect over the next few years.
In a June 8 online presentation sponsored by Albuquerque Oasis, Dominguez referenced Colorado’s experience in predicting what lies ahead for New Mexico, and believes that many rural cities – especially along the border of Texas – will benefit the most.
Dominguez said that because Texas won’t legalize cannabis, 42% of anticipated sales in New Mexico will come from Texans traveling here to purchase cannabis. He believes this will create an economic boom for many cities such as Clovis, Portales, Hobbs, and Clayton, which could also lead to challenges such as new traffic patterns needed to handle the flow of traffic. “I anticipate a rebirth in so many communities in our state as a result of legalization,” Dominguez said.
Dominguez added that the state’s revenue will come from a combination of sales tax and gross receipts taxes. He believes that recreational sales will be taxed at 12 percent divided in three ways: four percent will go to the local municipality, four percent to the county, and four percent to the state general fund. Additionally, he predicts there will be a gross receipts tax of about eight percent for the first 3 years, which makes recreational sales taxed at about 20% total. Each year, the gross receipts could increase by one percent and by 2030, it could be up to 18%.
With a high sales and gross receipts tax, Dominguez was asked what would be the incentive for a buyer to pay more to purchase from a dispensary rather than a local dealer. He believes that eventually, street dealers will be mostly weeded out of the mix because it will continue to be illegal to sell cannabis without a license and that Colorado has essentially been able to do this.
He also pointed to the likelihood that prices will drop significantly as part of the competitive marketplace if growers don’t have production limitations – an item in the bill that still needs to be determined. The CRA also allows for an individual to legally grow up to six mature and six immature plants at any given time for their own personal use.
Dominguez predicts that New Mexico – along with California and the Pacific Northwest — will be the three major markets in the nation the cannabis industry. “Cannabis will rival practically every industry outside of oil and gas and the film industry in New Mexico,” Dominguez said. “It will be larger than green chile combined with pecans, wheat and copper.”
Let’s hope Dominguez is right. New Mexico has waited long enough.