New Mexico Ups Cannabis Production Limits As Adult-Use Sales Loom

New Mexico sales are about to expand with adult-use legalization, so to prepare, cannabis production is working to keep up.
New Mexico

Less than three months before legal sales of recreational cannabis begin in New Mexico, state regulators have increased production limits placed on adult-use cannabis cultivators. Under emergency regulations that went into effect last week, most licensed cannabis producers will be permitted to grow twice as many plants as previously allowed.

Kristen Thomson, director of New Mexico’s Cannabis Control Division, said that the rule change is designed to help spur the launch of the state’s newly regulated adult-use cannabis industry, which is slated to begin sales of recreational marijuana by April 1.

“We have been listening to producers, consumers and patients who are as committed as the Cannabis Control Division is to supporting a thriving cannabis industry in New Mexico,” Thomson said on Monday in a statement quoted by NM Political Report. “Doubling the plant count for licensed producers makes sense to ensure that everyone can maximize the benefits of a thriving cannabis industry.”

Under the emergency rules, which will remain in effect until July, cannabis cultivators with a Level 4 license will be permitted to grow between 12,001 and 16,000 cannabis plants, while Level 3 license holders will be allowed 6,001 to 12,000 plants. Level 2 growers will be permitted to cultivate 2,001 to 6,000 plants, and Level 1 growers will be able to maintain 401 to 2,000 marijuana plants. Thomson explained the rule change in documents filed with the state’s Commission of Public Records.

“The Division has considered demand estimates provided by applicants and licensees in the cannabis industry,” Thomson wrote. “Projected market demand shows that the demand for regulated cannabis will increase year-to-year as more cannabis consumers move from the illicit market to the regulated market. The supply of medical cannabis will become increasingly threatened without an adequate supply of plants.”

Plant limits for micro-producers, however, will not be increased by the emergency rules. Operations of such small growers will still be limited to 200 plants, a cap set by state law that regulators are not authorized to override. The director said the department would seek a legislative fix that would allow micro-producers a similar increase in production limits.

“Equity and fairness are foundational principles of New Mexico’s vision for the state’s cannabis industry,” Thomson said. “We will work with legislators and the governor to ensure those values are upheld and that micro-producers see increased plant count limits as soon as possible.”

Caps Put in Place to Prevent Overproduction in New Mexico

The plant limits on cultivators were included in New Mexico’s cannabis regulations to prevent overproduction. Regulators feared a glut of cannabis that would cause prices to drop dramatically, a scenario that might challenge small operators trying to gain a foothold in the nascent industry.

But last summer, Linda Trujillo, superintendent of the New Mexico Regulation and Licensing Department, which oversees the Cannabis Control Division, warned that supplies of recreational marijuana would be tight once adult-use sales begin in the state.

“It’s highly likely we will run out of cannabis in the first week, if not the first two weeks,” she said at a meeting of the legislature’s Economic Development and Policy Committee on July 26. Trujillo told lawmakers that her prediction is based on the experience of other states as they launched adult-use cannabis sales.

Limits on cannabis production were first put in place under New Mexico’s medical marijuana program. Ultra Health, one of the state’s largest producers of medicinal cannabis, has sued the state over the caps, arguing that they are too low to serve New Mexico’s patient population. On Monday, the company said that the production limits on adult-use cannabis are also insufficient.

“Unfortunately, this increase may be too little, too late,” a spokeswoman for Ultra Health wrote in a statement to local media. “Sales to adults will commence in 74 days, and it takes twice as long, five months, for cannabis to be fully prepared from seed to sale. We are running on a deficit to support 130,000 patients today, so to think this new rule would somehow alter the biological processes required to grow cannabis is naive, at best.”

Ben Lewinger, the executive director of the New Mexico Cannabis Chamber of Commerce, applauded state regulators for considering potential shortages that would negatively impact those relying on steady supplies of medical cannabis.

“Protecting patients and patient supply is absolutely critical and has been a first-order priority through recent legislative and rulemaking processes, and we’re grateful that the Cannabis Control Division is working to ensure that medical cannabis patients aren’t neglected as the state shifts to legalized cannabis for adults,” he said.

But Lewinger questioned the rule change, saying that doubling the cap on plants only weeks before legal sales begin “undermines the work of legislators and advocates” who advocated for production limits to allow equitable access to participation in the new recreational cannabis economy. 

“Building the infrastructure to double plant count could take months to years for most operators, and plants put in the ground today won’t be ready in April,” Lewinger said. “Increasing the plant count now will only help the very biggest and well-resourced producers—it won’t help medical cannabis patients and it won’t help new businesses trying to break into the industry.”

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