All Potential Revenue Streams should be on the Table: Increases in Number of Medical Marijuana Plants Generates $3 to $5 Million in GRT

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All Potential Revenue Streams should be on the Table
Increases in Number of Medical Marijuana Plants Generates $3 to $5 Million in GRT

Santa Fe-Senator Gerald Ortiz y Pino (D-12-Bernalillo), sponsor of No Medical Marijuana Plant Limits (SB3), expressed concern today that the measure will not be considered by the House of Representatives. SB3 increases the number of medical marijuana plants any one grower can have under cultivation at a time. The Senate passed SB3 by a wide margin with bi-partisan support on Friday.

The estimated increase in gross receipts tax (GRT) revenue from the sale of the additional plants is $3 to $5 million a year.  During Senate floor debate, Sen. Ortiz y Pino noted that the measure is consistent with the Governor’s Special Session Proclamation in which she asked legislators to find additional revenue for state government without increasing taxes.  Since GRT is already collected on the sale of medical marijuana products, SB3 does not create a new tax.  SB3 simply increases the production of a product that is already being taxed.

“In a year when we are looking for every available source of revenue or savings to balance the budget, I believe this small step could make a significant contribution to the budget picture,” said Sen. Ortiz y Pino. “Not only will it help this year, but it will help in subsequent years as the demand for medical marijuana and its derivatives increase.”

Testimony on the bill revealed that producers have to pay an annual fee of $200 per plant.  That money underwrites the cost of Department of Health (DOH) administration of the program.  Expanding or removing the cap would greatly increase revenue to run the medical cannabis program. However, the primary fiscal benefit to the state would be in the increase in GRT that SB3 would create.

Current state law does not limit the number of plants that can be grown by the state’s 35 licensed producers. DOH has set the limit at 450 total plants including seedlings, immature plants, and those capable of being harvested.  According to producers, it takes more than four months for a plant to reach maturity.

To prevent a small number of the licensed producers from cornering the market of medical cannabis, the bill was amended to limit the number of plants any single producer can have under cultivation at any one time. A license holder’s production capacity cannot exceed 15% of the number of approved card holders at the time the producer applies for the expanded license.

During hearings of the Legislative Health and Human Services interim Committee, many patients enrolled in the program stated that the recent expansion in supply was not adequate to support current demand.  There are over 30,000 New Mexicans authorized to purchase medical cannabis as of July 1. SB3 would eliminate the supply shortage caused by the program’s current structure.

“The artificially low caps that are imposed by DOH have forced many patients who are unable to secure their medicine from licensed providers to attempt to grow their own medicine or even to purchase the plant product from illegal sources,” said Sen. Ortiz y Pino.  “There is no good policy reason to restrict the producers in this fashion.”

Sen. Ortiz y Pino is requesting that the House of Representatives treat the measure fairly as one of the multiple serious solutions for New Mexico’s budget shortfall.  He believes that Governor Martinez would sign this bill if it reaches her desk since it reduces state debt, increases the supply of medical cannabis for legally-authorized purchasers, and creates a fairer situation for all producers.  It would also eliminate the possibility of a lawsuit associated with the State’s inability to provide an adequate supply for authorized users.   He urges medical cannabis patients interested in seeing this expansion of the supply to contact their Representative in the House, House Speaker Don Tripp, and House Majority Leader Nate Gentry.



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