Cannabis Knowledge & Insights

New Mexico Cannabis Market: Potential and Trends Analysis

New Mexico is one of the most exciting emerging cannabis markets in the US. The state has a fast-growing medical cannabis market that provides a solid backbone for the adult-use market, which will officially open for business on or before April 1, 2022. In the following we assess the history of the market, its business potential, and provide details on license types and fees and the cannabis tax structure.

Check out our New Mexico market map for more details…

How did the New Mexico cannabis market get here?

The Medical Cannabis Program (MCP) in New Mexico was created under the Lynn and Erin Compassionate Use Act. The purpose of the legislation was to allow the use of medical cannabis “in a regulated system for alleviating symptoms caused by debilitating medical conditions and their medical treatments.” On March 13, 2007, Senate Bill 523 was approved, effectively removing all state-level criminal penalties for the use and possession of cannabis by medical patients.

A bill to legalize adult-use cannabis passed the House of Representatives in March of 2019; however, recreational cannabis did not become legal in New Mexico until June 29, 2021, under the Cannabis Regulation Act. While state regulators still have several details under discussion, some regulations outlined in the bill include personal possession and cultivation limits. 

As of August 2021, cannabis business owners have access to the streamlined online system to submit their applications and become producers in New Mexico. After an application is submitted, regulators have 90 days to issue a decision to the applicant. Rules for retailers, testing facilities, and other cannabis sectors are still being developed and must be finalized by January of 2022 to satisfy the criteria for April sales.

New Mexico cannabis market potential and future growth opportunities

New Mexico has established a robust, steadily growing medical cannabis program that produced $129 million in revenue in 2019, and $203 million in 2020.

We’ve done analysis on the current New Mexico market and concluded that only 25% of the 2,000,000+ population of New Mexico will be captured by the cannabis market in 2022, the first year of adult-use sales. Even at this limited stage, we estimate 2022 revenue in the range of $551 million ($289MM medical and $262MM adult-use). 

As the cannabis industry evolves in the state, and greater percentages of the population are engaged, we anticipate the combined cannabis market to be worth $782 million ($266MM medical and $517MM adult-use) as soon as 2026.

New Mexico has increased competition with adult-use markets to the north in Colorado, and Arizona to the west. 

New Mexico is a largely rural state with population density centered in Albuquerque, where 27% of the state’s population lives. The next three largest municipalities, Las Cruces, Rio Rancho, and Santa Fe, combine for 12% of the state’s population. That means there will be heated competition to establish a foothold in these markets. 

Smaller cities on the east side of New Mexico can expect an increased level of tourist traffic with cross-border customers from Texas accounting for 21% of the total adult population of cannabis customers and patients. 

Officials from larger communities such as Santa Fe and Albuquerque are warning there could be a cannabis shortage at first. Duke Rodriguez, President and CEO of New Mexico’s Top Organics-Ultra Health is worried “the adult recreational program will introduce new demands and push us into a significant deficit of product immediately.” He goes on to further clarify that he believes this deficit will continue to exacerbate and grow. Other cannabis business owners agree with Rodriguez and are worried they will not have enough time to prepare for the future needs of consumers in their state and communities they serve.

New Mexico cannabis licensing procedures and caps

New Mexico has a very inviting licensing structure. There are currently no caps on the number of licenses to be distributed by the state and the application and recurring fees are very reasonable compared to other cannabis markets.

Seventy-seven dispensaries are currently licensed to operate under the medical use laws in New Mexico. There is an increase in applications from businesses requesting to operate under the new adult-use guidelines in 2022. There are presently 35 licenses issued to cultivators and 13 to manufacturers, and there is no current cap on the number of permits issued to dispensaries, cultivators, or manufacturers across the state. Three approved testing labs are operating in New Mexico, and the Secretary of the Department of Health determines the limit.

New Mexico has created 10 adult-use license types with vertical integration encouraged in several key types. Those license types and fees are as follows:

  • Couriers
    • $1,500 courier fee per year and $1,000 for each additional licensed premises
  • Producers (aka cultivators)
    • $2,500 annual license fee
    • $1,000 annual fee for each additional licensed premises
    • Annual per plant fee (up to 8,000 plants)
      • $10.00 per plant for each mature commercial cannabis plant
      • $5.00 per plant for each mature medical cannabis plant
  • Manufacturers
    • $2,500 annual license fee
    • $1,000 annual fee for each additional licensed premises
  • Retailers
    • $2,500 annual license fee
    • $1,000 annual fee for each additional licensed premises
  • Producer Microbusinesses: Cannabis producer at a single licensed premises that possesses no more than two hundred total mature cannabis plants at any one time.
    • $1,000 annual fee if growing 101 to 200 plants
    • $500 annual fee if growing 100 plants or less
  • Cannabis Consumption Areas
    • Up to $2,500.00/year
  • Vertically Integrated Establishments: May operate as any combination of cannabis courier; manufacturer; producer; and or retailer.
    • $7,500.00 annual license fee
    • $1,000.00 annual fee for each additional licensed premises
    • Annual per plant producer fee (up to 8,000 plants)
      • $10.00 per plant for each mature commercial cannabis plant
      • $5.00 per plant for each mature medical cannabis plant
  • Integrated Microbusinesses: Operates up to five cannabis activities: production at a single location, manufacturing at a single location, operation of a single cannabis retail establishment, sale and transport of cannabis products produced or manufactured by the licensee, and couriering of cannabis products.
    • $1,000 annual fee for two activities
    • $1,500 annual fee for three activities
    • $2,000 annual fee for four activities
    • $2,500 annual fee for five activities
  • Cannabis Testing Laboratory
    • $2,500.00 annual license fee
    • $1,000.00 annual fee for each additional licensed premises
  • Cannabis Research Laboratory
    • $2,500.00 annual license fee
    • $1,000.00 annual fee for each additional licensed premises

NOTE: Fees are reduced by half for medical only licensees

For medical cannabis-only operations there is also the New Mexico Licensed Non-Profit Producer (LNPP) license. This is a vertically integrated license, allowing a licensee to grow medical cannabis plants; extract, process and produce medical cannabis products; and dispense to registered patients. There is a limit of thirty-five LNPPs allowed statewide. There are no limits to the number of stand-alone dispensaries each LNPP is allowed to open. The New Mexico has awarded all 35 LNPPs and is no longer accepting applications for additional LNPPs. The LNPP application fee is $10,000; $ 9,000 is returnable if the state denies the applicant.

New Mexico cannabis tax structure

New Mexico’s recently launched cannabis tax structure is relatively fair and straightforward compared to other states. It starts at a reasonable rate (~20%) for the first several years before increasing incrementally until July 1, 2030. All medical cannabis sales are tax-free. 

Excise Tax

  • 12% cannabis excise tax is levied on retail sales starting at 12% until July 1, 2025
  • Increases by one percentage point per year, maxing out at 18% on July 1, 2030
  • Excise tax does not apply to any sales to registered medical cannabis patients, caregivers, or patients from other states
  • 33% of cannabis excise tax revenue goes to municipality
  • 33% of the cannabis excise tax revenue goes to county

Gross Receipts Taxes

  • Range from 5.125% to 8.8125%, depending on the location in the state
  • Only apply to adult-use cannabis

Final thoughts on the New Mexico cannabis market

Our assessment concludes that there is tremendous growth potential in the New Mexico cannabis market. The combination of relatively low licensing fees and cannabis tax rates, plus the lack of caps on licenses, suggests there will be an initial rush to seize market share once the adult-use market opens. It may take several years for production to meet demand, which will keep wholesale prices high and products flying off the shelves. New Mexico has the potential to be one of the most lucrative and fast-growing markets in the US. 

If you reside in New Mexico and are interested in gaining entry into the cannabis market our professionals are here to help. Our experts have fostered excellent partnerships across the U.S. and help cannabis business owners with streamlining efforts to ensure you stay compliant and abide by industry regulations in your state. For recommendations and assistance getting started, visit us at or contact us at 1-800-674-9050.