New Mexico legal cannabis customers would number 250,000, economist says

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Senate Corporations and Transportation Committee hears presentation on economic impacts of cannabis legalization.

Senate Corporations and Transportation Committee hears presentation on economic impacts of cannabis legalization.

New Mexico would have about 250,000 potential customers of cannabis should the state legalize adult recreational use of cannabis, an economist told the Senate Corporations and Transportation Committee yesterday. And those consumers would purchase roughly $412 million worth of the drug in the first year.

The data was produced by Dr. Kelly O’Donnell, an economist who served as Director of State Tax Policy, Deputy Cabinet Secretary for Economic Development, and Superintendent of the New Mexico Regulation and Licensing Department during Gov. Bill Richardson’s administration. She now works as a consultant. Her report was commissioned by Ultra Health, a New Mexico provider of medical marijuana. To derive her estimates, she utilized in part survey data from the National Survey on Drug Use and Health, which was produced by the U.S. Department of Health and Human Services.

Of those potential customers, she estimated in the report that 138,000 live in New Mexico and 119,000 live in Texas within 200 miles of the New Mexico border.

Noting that 44 percent of Colorado’s market is from out-of-state tourists, O’Donnell emphasized the potential boost from Texas consumers should New Mexico legalize cannabis.

“Unlike Colorado, we have a big border with Texas,” she told committee members. “We have almost as many potential users of marijuana within a couple hundred miles of the New Mexico border on the Texas side as in all of New Mexico.”

Her report did not include estimates of tax revenue the state would bring in, but did include job estimates: 11,400 new manufacturing and marketing jobs, and 4,780 jobs in businesses that service the cannabis industry. 

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Emily Kaltenbach, Executive Director of Drug Policy Alliance of New Mexico and Dr. Kelly O’Donnell, economist.

O’Donnell was joined in her presentation by Emily Kaltenbach, Executive Director of the Drug Policy Alliance of New Mexico. The two pointed to a range of benefits of legalization, including tax revenue, job creation, and a reduction of criminal prosecution for marijuana possession.

But not all senators on the panel were convinced of the benefits of legalization.

“You mentioned all the benefits, is there any downside to this?” Sen. William E. Sharer, R-Farmington, asked.

O’Donnell replied that in her analysis she didn’t see a potential downside because a shift from an illicit market to a regulated legal market would generate revenue, creates jobs and also undercut crime and public safety issues.

Sharer said he’d read studies that the state of Colorado has seen an increase in medical costs since legalizations, in part due to medical issues related to things such as car accidents.

“We don’t have any stoned and driving laws, so we don’t know,” he said. “We don’t know what stoned and driving is until you crash into a train a die.”

Kaltenbach replied that traffic fatalities in Colorado had not increased due to marijuana use and that public education is necessary when such a huge policy shift is considered.

“When you actually build a legal and regulated system, you need to build in prevention and education efforts for young people,” she said.

Still not convinced of the economic benefits of legalization, Sharer said that New Mexico can grow its economy in other ways, such as becoming the center for energy in the Southwest by investing in air, solar and nuclear power.

“I don’t think this is positive or negative, economically, it’s certainly not the great answer to all of our economic woes,” he said.

Sen. Clemente Sanchez, D-Grants, raised questions around the enforcement of federal law by the new administration of President Donald Trump, who has appointed Sen. Jeff Sessions, R-Alabama, as his Attorney General. Sessions is on the record opposing marijuana legalization.

Kaltenbach said that it’s a waiting game to see what the new Attorney General will do but she’s optimistic.

“If we were to legalize here, it would be a couple of years, if that, before sales happen,” she said. “And so, I think we will have a lot to learn in those couple of years. I do think that states are a laboratory success, in that we should move forward with something like this and there are other states that are paving the way in front of us.”

O’Donnell and Kaltenbach fielded a wide range of questions from Senators, in a conversation that last more than an hour.

You can watch the archived video of the committee session here. Check out our article about the debate surrounding marijuana legalization in New Mexico.

Robert Salas holds NMID’s 2016 fellowship for a student journalist involved with the New Mexico News Port at the University of New Mexico.

2 thoughts on “New Mexico legal cannabis customers would number 250,000, economist says

  1. I understand that the over dosing by opioids go down significantly when legal access to cannabis is available. If that is, indeed, the case, that is a powerful justification to legalize cannabis.

  2. Strategic Marketing & Research Insight group admitted the findings released last fall were faulty. At the request of the tourism office, the respondents were re-surveyed to delve more deeply into how they were influenced by the ability to purchase and consume marijuana legally.
    source- http://www.denverpost.com/2016/07/20/colorado-tourism-legal-marijuana-2015/

    OUT OF STATE VISITORS
    If New Mexico’s experience of legalization resembles that of Colorado and Washington, out-of-state visitors will constitute a significant fraction of social use cannabis demand. The Colorado Department of Revenue estimates that out-of-state visitors account for 44 percent of metro area social use cannabis sales and 90 percent of sales in resort areas. (Source is Marijuana Policy Project pg 20 O’Donnell Report )
    Why thats’s Not Correct ->
    In a Colorado Department of Tourism and conducted by Strategic Marketing & Research Insight group, 64 percent of tourists over the age of 25 reported legal cannabis played no role in their decision to visit the state of Colorado. Slightly less than 14 percent of travelers called selling of cannabis a negative influence but came to Colorado anyway. The remaining 23 percent of people who visited Colorado in 2015 said the availability of cannabis positively influenced their decision to vacation in the state.
    Now the number of vacationers who said they came to Colorado because of legal cannabis sales was 11 percent, and among that group 39 percent said they visited a dispensary.
    What That Means –>
    That means about 4 percent of Colorado’s 25-and-up vacationers said they came for the cannabis and actually shopped for cannabis.
    That 4 percent motivation for cannabis is that 90% claim the O’Donnell report used. Metro sales were also half of what the report says for out of staters. Those tourist came for camping, biking, wine tours and horseback riding in the spring-summer-fall months, according to the group’s survey results. The top activities that motivated vacationers to book a Colorado vacation in the warm-weather months were scenic drives, visits to state and national parks, dining at restaurants and shopping. In the winter, skiing is obviously the overwhelming motivator for Colorado visitors.
    That’s not the only misrepresentation in the O’Donnell Report of numbers and hard to estimate those tourism dollars when using numbers skewed to make things what they are not. Then again, it was commissioned by Ultra Health to push what they want.At the helm of the Arizona-based business is Duke Rod­riguez, a former chief financial officer for Lovelace Medical Center, who helped transition the hospital from a nonprofit facility to a for-profit organization and who also served as Human Services Department cabinet secretary under then-Gov. Gary Johnson.

    “And as Secretary of Human Services in the cabinet of New Mexico Governor Gary Johnson, Mr. Rodriguez privatized Medicaid into a program called PROGRESS. The Albuquerque Journal summarized his approach then:
    “With extremely limited input from advocates, consumers, the state legislature and state health, mental health and children’s and family departments, Rodriguez designed and pushed through his own plan.”
    The plan was eventually scrapped by the State Supreme Court since Johnson’s administration imposed it without approval of the Legislature. This also resulted in Duke Rodriguez resigning amid allegations that he received money from a firm that collected millions of dollars in Medicaid payments from the state welfare department.” – LA TIMES

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