(The Center Square) – As New Mexico prepares to implement adult cannabis legalization, the state seeks to raise production limits and make some changes to medical marijuana rules, including removing some sales tax.
Cannabis companies across the board are concerned about a sudden shortage once the legal market opens.
Pricilla Agoncillo, president of the Cannabinoid Industry Association and chair of the National Cannabis Party, said this was a real problem. Currently, cannabis producers are only allowed to grow 200 plants, which is an arbitrary number, according to Agoncillo.
“The adult community, once it is online, will be short of it,” she told The Center Square. “So I believe that asking the community to increase the number of systems is the right approach, it’s the right start.”
She said it was really a problem for consumers because they are the ones who no longer need to buy cannabis.
“If you are a new market, you will definitely want to start with a larger number of plants because when you have new operators just trying growing them for the first time you have a lot of problems to solve,” Agoncillo said.
Another approach that would help address such a shortage would be to allow cannabis to be imported from other states like California or Colorado, but Agoncillo said that would require further legislative changes.
“It must probably take a lot more or we will have to wait for federal legalization,” she said.
The state plans to initially levy an excise tax of 12% on cannabis products for adults in addition to the usual gross income tax, but then to increase the excise tax to 18% in the following years.
Previously, over 115,000 New Mexicans participating in the state medical marijuana program had paid sales tax on all purchases. Under the new rules, set out in a recent letter to authorized cannabis companies, sales tax on medical marijuana will be abolished for a 90-day supply limit of 225 grams (8 ounces) for individual patients.
Purchases in excess of the 90-day rolling supply limit are not exempt from sales tax or the 12% excise tax levied on adult use.
Concerns about driving customers onto the black market with excessive taxes are legitimate, but Agoncillo said there will always be good reasons to over-regulate legal products.
“You want to make sure that the cannabis you are consuming is clean, that it does not contain heavy metals, pesticides or harmful substances,” she said. “That can only be guaranteed through a regulated market. You don’t know what you can get on the black market. “