Economic Report Suggests New Mexico Legal Cannabis Sales Would Exceed $400mm in First Year

An economic analysis commissioned by Ultra Health and supported by Drug Policy Alliance and the Rio Grande Alliance suggests that New Mexico retailers could see annual revenue in excess of $400mm in the first year and almost $700mm by the fifth year if it were to legalize cannabis for social use. The author of the report, Kelly O’Donnell, who holds a PhD in Economics from the University of New Mexico and runs O’Donnell Economics & Strategy, estimates that the state would add over 11,000 jobs and benefit from an increase in tourism.


O’Donnell suggests that the current market consists of 30K medical cannabis patients who buy from dispensaries or grow their own, a smaller group of consumers outside the state’s medical cannabis program who grow their own cannabis and a very large black market. Her analysis is based upon estimates of the black market, its conversion to the legal market and the inclusion of the tourist market, which she estimates could account for 40% of the overall market.

Legalizing cannabis could have a profound effect on New Mexico’s economy and help fill New Mexico’s yawning budget gap. But to achieve the benefits of a robust cannabis market, state policymakers must insist on common sense regulation and sound tax policy.

Dr. Kelly O’Donnell

O’Donnell’s forecast incorporates current New Mexico cannabis consumption statistics that indicate 78,000 residents use cannabis more than 15 days per month.  60,000 residents use cannabis less than 15 days per month, while another 75,000 consume it less frequently than once per month. She believes that lower prices due to legalization and better and more consistent quality with wider variety of products with better accessibility will help push consumers from the black market. Her analysis suggesting strong demand from tourists is based on the Colorado experience:

If out-of state visitors constitute 44 percent of social use cannabis demand as they do in Colorado, they will purchase 13 metric tons of cannabis from New Mexico dispensaries in the first full year of social use sales. Thirteen metric tons is roughly equivalent to 2.1 million out-of-state visitors each purchasing 6.2 grams.

Download Legalization of Cannabis for Social Use: New Mexico Market Analysis

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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