New Mexico Cannabis Sales Break $40 Million in July

New Mexico cannabis sales broke $40 million in July for the first time, signaling growth of the recreational cannabis industry. However some are concerned this growth may be coming at the cost of medical cannabis businesses in the state.

Since April 2022, recreational cannabis sales have increased 5.8%. This figure includes an industry dip that occurred in June. In July, medical cannabis sales only accounted for $16.8 million of total sales.

This is barely an increase from the $16.5 million brought in by medical sales in June. Comparatively recreational cannabis sales amounted to $23.5 million in July, an increase from $22.1 million during the state’s first month of adult-use sales (April).

The growth of recreational sales may be slow, but it is noticeable when compared to the decline of medical cannabis sales. When recreational cannabis sales began in New Mexico, 40 municipalities had signed on to allow sales. That number has since increased to 51.

The bulk of revenue was generated in Albuquerque with $14.6 million in sales, squashing the next largest revenue of $3.5 million in the state’s capital, Santa Fe. The state collected over $2.4 million in taxes from recreational cannabis sales since April from 149 retailers.

New Mexico has seen a decrease in registered medical cannabis patients, down over 5,000 from May of this year to 130,128 patients. This has led to a noticeable decrease in sales, with medical operators feeling that the overall industry numbers should be higher.

One major benefit that medical cannabis has over recreational cannabis is that it is tax-free. Comparatively, recreational cannabis sales are subject to sales tax, in addition to cannabis-specific taxes on the state and local level.

Duke Rodriguez, CEO of Ultra Health, one the largest medical cannabis producers in New Mexico, is one of the first to express concern about the state of the industry.

"What we are actually seeing, sadly, is that the average purchase per consumer is on a downward trend. We're mitigating that downward trend by bringing up new markets that we previously weren't serving. So the results are more disturbing than they are encouraging."

"Montana, with only half the adult population of New Mexico and without the benefit of Texas at the doorstep, did $19.2 million," he added, arguing combined New Mexico sales should be far higher by now ― perhaps around $50 million.

Rodriguez also brought up a point that is raised by many when recreational cannabis drives up product prices due to limited production, including plant counts.

"We will never be competitive with the illicit market until we can be more competitive with the amount of product, the quality of the product and the price of the product," he said.

New Mexico places plant count limits on all cultivators in the state, supposedly in an effort to help smaller operators stay competitive. Rodriguez argues that this actually hurt the industry as the illicit market can outpace supply and provide lower prices to consumers.

However plant counts cannot be solely to blame for medical cannabis’ struggle to compete with recreational cannabis sales. In every state that legalized cannabis for adult-use, recreational sales will almost always outpace and surpass medical sales in time.

This is because recreational cannabis is much more accessible to any adult over the age of 21. While medical cannabis may be available to those as young as 18, there is typically an application and review process that must be verified and approved by the state in order to be issues a medical cannabis patient license.

Whether it is the cost of the patient card, the length of the process, or the idea of the government knowing you’re a cannabis consumer, consumers only need one of those reasons to consider recreational cannabis as a better option.

The line between medical and recreational cannabis has become so thinned that the same quality “medical” cannabis is available at a recreational retailer under the same name. It may cost slightly more, but consumers typically choose convenience over cost, especially in a new fledgling industry.