(The Center Square) – As New Mexico gears up to implement the legalization of adult-use cannabis, the state is looking into raising production limits and also making some changes to medical marijuana rules including eliminating some sales tax.
Cannabis businesses across the board are concerned about a sudden shortage once the legal market opens up.
Pricilla Agoncillo, president of the Cannabinoid Industry Association and chairwoman of the National Cannabis Party, said this is a real concern. Right now, cannabis producers are restricted to growing 200 plants, which Agoncillo said is an arbitrary number.
“The adult-use community, once that comes online, you will have a shortage,” she told The Center Square. “So I do believe the requests from the community for an increase in plant numbers is the right approach, it’s the right start.”
She said it’s really a concern for consumers because they are the ones who are going to be left without cannabis to buy.
“If you’re a new market, you’re definitely going to want to start out with a larger number of plants because if you have new operators that are just trying out cultivation for the first time, there’s a lot of kinks to work out,” Agoncillo said.
Another approach that would help alleviate such a shortage would be allowing the import of cannabis from other states such as California or Colorado, but Agoncillo said that would require more law changes.
“That will probably have to require a lot more or we have to wait for federal legalization,” she said.
The state plans to levy a 12% excise tax on adult-use cannabis products initially in addition to the usual gross receipts tax, but then raise the excise tax to 18% over subsequent years.
Previously, over 115,000 New Mexicans enrolled in the state’s medical marijuana program have paid sales tax on all purchases. Under new rules recently outlined in a letter to authorized cannabis businesses, sales tax on medical marijuana will be eliminated for a 90-day, 8-ounce (225 gram) supply limit for individual patients.
Purchases past the 90-day rolling supply limit will not be exempt from sales tax or the 12% excise tax to be levied on adult use.
Concern over pushing customers into the black market by raising taxes too high is legitimate, but Agoncillo said there are always going to be good reasons to buy legal product over unregulated.
“You want to make sure that your cannabis that you’re consuming is clean, that there are no heavy metals, there are no pesticides, that there is nothing harmful in it,” she said. “You can only guarantee that through a regulated market. You do not know what you’re getting in the black market.”