USA: State hits $1bn in cannabis sales, governor’s office says

 

After almost two years of legal cannabis, New Mexico Gov. Michelle Lujan Grisham’s office announced sales in New Mexico eclipsed $1 billion. That’s combining adult-use and medical sales for a period just under two years of legal cannabis in the state.

The state also hauled in $75 million in cannabis excise taxes, according to a news release from the governor’s office.

“This is a huge milestone for New Mexico’s cannabis industry,” Lujan Grisham said. “Nearly two years after beginning sales, New Mexico is on the map as a premier hub for legal and safe cannabis and the thriving business community that comes with it.”

The numbers tell the story: Since April 1, 2022, $678.4 million in adult-use cannabis products sold; $331.6 million in medical products sold. That’s with 2,873 cannabis licenses issued across the state, which include 1,050 retail licenses as well as licenses for manufacturers and micro producers.

Albuquerque, New Mexico’s biggest city, continues to be top dog with more than $202 million in cannabis sales, though smaller communities are also reaping benefits, according to the news release .

But there is a gloomy story behind the figures. Although those aggregate numbers may be impressive, they don’t reflect the reality for smaller, individual operators, said Scott Prisco, CEO and founder of cannabis delivery service Priscotty.

Prisco cited concerns about oversaturation of dispensaries. Many small operators are struggling, he points out.

“We deliver for many dispensaries,” Prisco said Tuesday. “We hear everything. Many individual businesses are not seeing that kind of success. The heart of the matter is that competition is fierce.”

Prisco said though the figures cited by the governor were impressive, challenges remain in the cannabis market.

Bill Sluben, president and CDO of The Data Heard, took issue with the description of the state’s cannabis industry as “thriving,” as the governor described it. He listed a number of ongoing problems the industry faces:

• 67.1 per cent of all cannabis stores statewide recorded less than $50,000 in sales in January, and 21 per cent reported less than $10,000 in sales last month.
• After paying leases, staff wages, purchasing products via the wholesale channel from brands, paying taxes, carving out a small profit for the operator, etc., the minimum top-line revenue is probably in a $40,000 to $50,000 range per month, Sluben said. Every month. That means two-thirds of the 672 operating stores have financial risk to continue as cannabis retail businesses in 2024.
• The median recreational cannabis retailer sales were $28,000 per store last month. That means half of cannabis stores reported a lower monthly sales figure than $28,000. This median sales figure reached a high in August 2023, when it was slightly more than $34,000.

Sluben also cited data disputing the belief that Albuquerque is a good market. There are way too many stores, he contended. And median store sales were $21,300 in February, down from $22,100 in January.

“I would describe the industry as something other than thriving,” Sluben said. “By definition, thriving is growing well.  The industry is growing … but not well.”