Ultra Health released a cannabis demand report for the New Mexico adult-use and medical cannabis markets seen to date. The analysis recommends more than twice the number of plants the New Mexico Regulation and Licensing Department (RLD) has suggested for commercial cannabis cultivation.
The report, prepared by MPG Consulting out of Denver, Colorado, estimates the total New Mexico cannabis market will reach $782.7 million by 2026 if regulations supporting a robust cannabis market are promulgated.
The extensive analysis outlines several cannabis market demand factors including market sizing, cannabis use trends, cannabis price trends, market dynamics, illicit and regulated market share, plant count allocations, average yields per plant harvested, harvest cycles, production control systems in other states, license distribution in other states, and New Mexico-specific recommendations.
The report recommends a maximum of 10,000 mature cannabis plants at the highest license tier to meet demand and provide contingency space for licensed cannabis producers to mitigate production risks such as pests, disease, and operator error. In most agricultural or horticultural industries, market and capital factors limit the maximum amount of plants grown by each producer rather than regulatory limits.
RLD has recommended just 4,500 mature cannabis plants to support commercial cannabis activity, including medical and adult-use operations. There has been little to no substantial evidence to support RLD’s plant count assessment. The only evidence filed supporting the 4,500 figure is a 2019 report commissioned by the New Mexico Department of Health to estimate demand for the medical program.
MPG Consulting estimates the New Mexico regulated market will absorb nearly all of the illicit market by 2026. The recommendations align with requirements for rules set forth by the Cannabis Regulation Act. Specifically, the law mandates rules created for commercial cannabis activity “ensur[e] a regulated environment for commercial cannabis activity that does not impose unreasonable barriers that would perpetuate, rather than reduce and eliminate, the illicit market for cannabis.”
“The New Mexico Legalization and Cultivation Capacity Analysis prepared by MPG Consulting is the most comprehensive and detailed demand analysis New Mexico has seen to date,” said Duke Rodriguez, CEO & President of Ultra Health. “The report should serve as the blueprint for how to ensure the Legislature’s intent for commercial cannabis activity is carried out: regulations that allow for a robust industry to finally capture the illicit market and create an $800 million industry that provides for 15,000 new jobs and $100 million in recurring tax revenue.”
“There is $750 to $800 million in regional cannabis transactions occurring right now that New Mexico can absorb by developing the right regulated market,” said Adam Orens, founder and managing director of MPG Consulting. “Across the country, regulated cannabis markets that encourage participation by consumers and the industry through open markets and sensible rules have shown to replace illegal activity; provide safe products for consumers; and create lasting state revenue.”
The full report can be accessed here.
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