NM's medical pot industry up by 70 percent.

New Mexico's medical marijuana industry might be one of the only growing industries in the state. In 2017, the industry grew by 70 percent, according to a report from the state's largest provider, Ultra Health.

The industry's revenues grew to $86.2 million from $50.6 million in 2016, and the number of patients enrolled in the program skyrocketed by 61 percent. In 2017, there were 46,645 patients in the program.

Below is Ultra Health's report on the state's medical cannabis program:

The state’s Medical Cannabis Program grows exponentially despite ongoing challenges

(Albuquerque) – The New Mexico Medical Cannabis Program’s total industry revenues from 2016 to 2017 increased by $35.6 million, resulting in the highest one-year dollar gain in the program’s history. The year ended with $86.2 million in sales and 46,645 enrolled patients, which is a patient increase of 61 percent from December 31, 2016.

The regulated cannabis industry experienced a record 70 percent increase in sales from 2016 to 2017. The rapid growth of the program is reflective of the spirit and resilience of the medical cannabis patients in New Mexico, despite various ongoing challenges to the decade-old program.

Program challenges include delays by state officials in issuing medical cannabis cards, regulatory limitations on the number of plants a licensed provider can cultivate, repeated denials of new qualifying conditions by Health Secretary Lynn Gallagher, arbitrary patient consumption limits and continued delays or refusal to designate new dispensary locations by the New Mexico Department of Health (NMDOH).

“With New Mexico regulators, simple things can be hard, and hard things can be near impossible,” said Duke Rodriguez, CEO and President of Ultra Health®. “But, the cannabis industry continues to advocate an agenda that puts patients’ needs first. New Mexicans have more than proven their full support to the legal and therapeutic use of cannabis.”

FOURTH QUARTER 2017 BREAKDOWN

Ultra Health led all 35 licensed producers in the fourth quarter of 2017 with $3.4 million in sales and a 14 percent statewide market share, the highest market penetration of any licensed cannabis provider in the United States.

Total New Mexico cannabis sales in the regulated industry for the fourth quarter alone were $23.8 million. The top five providers accounted for 44 percent of the market during the same period. The fourth quarter was the single largest quarter in 2017 and was up 58 percent over the same quarter in 2016. For the first time in the program's 10 year history, 35 licensed producers reported sales in the same quarter.

2017 BREAKDOWN

While the regulated medical cannabis industry brought in $86.2 million in legal sales, the unregulated marijuana black market is estimated to be $438.2 million in New Mexico, or over five times larger than the legal market. The regulated sales in 2017 account for only 16 percent of both the regulated and unregulated state cannabis market.

Earlier this month, one ton or $1.6 million worth of illegal marijuana was seized in Lordsburg, New Mexico, confirming the unregulated marijuana market in New Mexico is fully active.

Fourteen producers combined for $10.5 million in sales in 2017 with 5,600 licensed plants. One producer achieved the same revenue in 2017 with only 450 plants.

The top five producers accounted for 41 percent of the total sales in New Mexico during 2017. The median producer revenue was $1.6 million, while the average was $2.5 million. Twenty-two providers, or nearly 63 percent, of all 35 licensed producers in New Mexico fell below the average producer revenue.

The average price per gram in 2017 was $9.46 per gram and the median price was $10.01 per gram. Total grams sold in New Mexico for 2017 was reported at 6,776,103 grams or 14,925 pounds of cannabis sold.

The last demand estimates released by NMDOH in 2013 indicated “supply would need to be approximately 5,110,726.4 grams per year,” to meet the needs of only 9,760 patients. Based on NMDOH’s own data, the most recent patient numbers of 46,645 patients would justify a need of over 24.4 million grams or 53,800 pounds annually, again confirming a statewide shortfall to fully meet patient need.

Ultra Health filed a complaint against NMDOH to ensure an adequate supply of medical cannabis in August 2016. Santa Fe District Court Judge David K. Thomson is expected to rule on the case at 2:30 p.m. on February 28, 2018 in Santa Fe.

Six New Mexico counties experienced triple-digit percent patient enrollment increases from December 31, 2016 to December 31, 2017. Otero County experienced the highest increase at 101 percent among counties with at least 200 cardholders at the beginning of the period. Bernalillo County remains the largest enrollment with 16,303 active cardholders. Sierra County has the highest penetration of enrollees with 49 cardholders per thousand population.

Fifty percent of the state’s 70 dispensaries are currently located in the Albuquerque and Santa Fe area. There remains 14 New Mexico counties without a full time dispensary. Ultra Health is the state’s largest provider serving seven counties with nine locations. Ultra Health recently

plans to expand to 31 locations statewide and a new major cultivation facility planned for Tularosa, New Mexico.

2018 OUTLOOK

Revenue for the regulated industry in 2018 is estimated to surpass $110 million, with more than 60,000 patients projected by year end. The 35 commercial providers are anticipating a consolidation cycle as the New Mexico industry moves into its second decade.

Court decisions and legal maneuvering at both the federal and state level could play a major factor in how the industry shakes out. Ultimately, the medical cannabis footprint in New Mexico will continue to grow, demanding a further expansion of product choices, lowered prices and improved access to medicine for patients. Competition is expected to be ardent in 2018.

The huge unknown for New Mexico remains the timing of legalization for the adult use of cannabis. Just this week, Vermont became the ninth state to legalize the social use of cannabis by adults. Neighboring state Colorado was recently joined by Nevada and California in the past year, and Arizona will likely vote on legalization in November 2018.

As New Mexico’s executive branch and agencies move into a lame duck administration, the call for further expansion of cannabis availability will accelerate.