Nearly five months since New Mexico launched adult-use cannabis sales on April 1, new projections estimate that the state will collect less in tax revenue than initially expected.
During Wednesday’s Legislative Finance Committee meeting, New Mexico Taxation and Revenue Secretary Stephanie Schardin Clarke told lawmakers that roughly $22.7 million generated from the state’s 12% cannabis excise tax is expected to flow into New Mexico’s general fund by the end of the current fiscal year, according to NM Political Report.
That figure is expected to increase 10.6% each year after that, Schardin Clarke said, as New Mexico’s cannabis excise tax is scheduled to increase over the next several years until it reaches roughly 20%, according to NM Political Report.
The current projection for Fiscal Year 23 is roughly $5 million less than the figure projected last December, the news outlet reported.
Duke Rodriguez, president and CEO of Ultra Health, a vertically integrated cannabis operator in the state, told NM Political Report that New Mexico’s limit of 20,000 plants per cultivator is unable to support consumer demand in the state.
“Prices need to fall, quantity needs to increase and quality has to be maintained at the same time,” Rodriguez said. “But we need a per gram price of around five, pre-tax, and we’re already above 10. So, until we get a more competitive product in the marketplace, we’re not going to see that demand appear.”
Much of the Legislative Finance Committee’s Aug. 17 meeting focused on the increased state revenue from adult-use cannabis sales and how to spend the funds, according to NM Political Report, although cannabis tax revenue falls behind the state’s larger revenue sources, such as oil and gas or income taxes.
House Majority Leader Javier Martinez, D-Albuquerque, said he and other lawmakers are drafting a budget that earmarks cannabis tax revenue for drug treatment programs and loans for cannabis start-ups, the news outlet reported.