N.M. Medical Cannabis Program Surpasses $92M for the First Six Months of 2020

Patient sales up 55% over prior year; available supply substantially below amount mandated by state law

ALBUQUERQUE, N.M., Aug. 04, 2020 (GLOBE NEWSWIRE) -- Combined patient sales from the 34 licensed producers in New Mexico’s Medical Cannabis Program totaled $92 million during the first six months of 2020, an increase of $32.5 million or 55% over reported patient sales for the first six months of 2019. Ultra Health sustained the top position in the industry with $15 million in patient sales for the first six months.

Currently, New Mexico medical cannabis patients choose Ultra Health as their primary cannabis care provider by over 6 to 1.

The first six months of 2020 experienced a significant jump in patient revenue as compared to last year due to a surge in demand from COVID-19 and its effects. While patient sales increased by 55%, patient enrollment grew by 27% from June 30, 2019 to June 30, 2020, indicating that not only are more patients joining the program, existing patients are purchasing more medicine and hitting purchase limits faster.

The increased demand due to COVID-19 and its effects created an urgent need for more available medicine and therefore more plants than the 1,750 regulatory plant cap. Patient purchase limits also need to be doubled, at a minimum, to allow patients to purchase the amount of medicine they need during times of economic and public health uncertainty. 

There were 2.8 million grams of flower and bud reported in inventory for the six months ended June 30, 2020, equating to a 12-day supply available for the state’s 94,102 patients although the Lynn and Erin Compassionate Use Act mandates an uninterrupted supply of available medicine for 90 days. According to the New Mexico Department of Health (NMDOH), 6.2 million grams of flower and bud were in inventory at the beginning of 2020. Available inventory has deteriorated to less than half of what the program started with in January.

SIX MONTH BREAKDOWN

The industry grew by over $32.5 million from the first six months of 2019 compared to 2020. Of the industry’s dollar sales growth, 59% of the $32.5 million came from the industry’s top 5 providers, indicating a reliance on bigger producers to provide a majority of the industry’s cannabis care. The top five producers represented over half of the state’s entire patient sales.

Ultra Health’s patient sales were well ahead of all other producers for the 16th consecutive quarter, finishing the first six months of 2020 with over $15 million in retail sales. This represents an increase of 62% over last year.  Even among the top five operators, there is a wide range of performance. The next four competitors lag Ultra Health by 45% to 193%.   

The industry’s top five providers’ patient sales for the six months of 2019 over 2020 include:

Altogether, New Mexico’s top 10 cannabis providers accounted for nearly three-fourths of total patient sales. Thirteen licensed providers outperformed the industry’s 55% growth rate while 21 fell below the industry pace.

At the end of the six month period, there remained 34 licensed cannabis producers. Today, there are 109 dispensaries operating throughout the state. The average sales in the first six months of 2020 for all 34 licensees was $2.7 million, with 23 licensed operators falling below the industry patient revenue average.  Currently, four out of the 34 licensed providers do not serve patients directly with retail locations. 

REGIONAL COMPARISON OF MEDICAL PROGRAMS

New Mexico has the lowest allowed plants for cultivation and the lowest allowed purchase limits for medical patients in the United States.                                                                 

*May 31, 2020 data used as June, 30, 2020 is unavailable.

All surrounding states have no plant cultivation limits or in the case of Colorado, nearly twenty times the plants allowed in New Mexico, even though New Mexico’s medical program enrollment is larger than Colorado’s. Colorado has never placed into production the fully allowed number of plants so the program effectively operates with no plant limits.

The NMDOH has defined an “adequate supply” for individual patients to be 230 units (one unit equals one gram) or approximately 8 ounces in a 90 day period. It is unclear how NMDOH determined the adequate supply figure, as many other states allow at least twice as much.

The Lynn and Erin Compassionate Use Act mandates the NMDOH must “ensure the uninterrupted availability of cannabis for a period of three months [90 days].” As of June 30, 2020 the statewide available supply was 12 days, less than 15% of the 90-day statutory requirement, creating a violation of the amount mandated by New Mexico state law. 

OUTLOOK FOR THE REMAINDER OF 2020

The Governor of New Mexico has extended the outstanding emergency public health order regarding COVID-19 until August 28, 2020. The effect is a continued shutdown of certain commercial business activities, allowing only essential services, and the enhanced enforcement of masks and physical separation. Reopening of schools, mass gatherings and most state agencies or political subdivision’s day-to-day activities have been substantially placed on hold.

At the Federal level, there remains uncertainty about the continuation and level of coronavirus relief to be provided for unemployment benefits, stimulus checks, or other safeguards regarding evictions, foreclosures, utilities or student loans forbearance. All of these financial relief efforts will ultimately impact the amount of disposable household income available for saving or spending.

The level of available spending could ultimately impact the amount of medical cannabis purchased in the second half of 2020. Compounded by the remote possibility of a widely distributed vaccine this year, the remainder of 2020 will likely reflect a continued pandemic-like period with an increasing medical cannabis demand being driven by the further exacerbation of diseases of despair.

Evidence from neighboring states indicates even higher medical cannabis purchasing demands and yet much lower pricing. While New Mexico experienced a 55% increase in medical cannabis patient sales over 2019, the volume and pricing is not sustainable for the second half of the year because of New Mexico’s self-imposed regulatory program barriers.

The New Mexico Medical Cannabis Program as compared to other states falls substantially behind in regard to patient-centric protections. The needed regulatory fixes are all within the control of the state actors to ensure the safeguards for the state’s most medically vulnerable population. The NMDOH would need to immediately eliminate the cap on the allowed number of plants to be cultivated, remove the artificial patient purchase limits and automatically extend the expiration dates of enrollment cards.

These three programmatic changes would increase the availability of medicine to ensure a 90-day adequate supply, lower the cost of medicine, and ultimately improve uninterrupted access for those enrolled in the program due to curtailed activity at the state level. Additionally, these changes would reduce patient dependence on the illicit market or neighboring states’ cannabis programs, limiting the potential for exposure to COVID-19.

While the third quarter of 2020 industry-wide data is not yet available, preliminary information from Ultra Health for July 2020 indicates the upward trend in patient demand seen in the first two quarters of 2020 has accelerated. The month of July 2020 is already higher than the previous all-time record month of June and up 60% over the average of the first six months of the year. Alone, July 2020 is up a whopping 185% or nearly a tripling over the same month in the previous year.

“COVID-19 is the single biggest health event in the last 100 years. We are likely to be addressing COVID-19 for a long extended future. The human and economic loss being experienced today is unimaginable. Every barrier to the accessibility of affordable and safe cannabis should be removed,” said Duke Rodriguez, CEO and President of Ultra Health®. “Now, more than ever, any responsible use of cannabis is a healthy use of cannabis.”

Ultra Health is New Mexico’s #1 Cannabis Company and the largest vertically integrated medical cannabis provider in the United States. The provider currently operates 20 dispensary locations statewide, with another 10 stores slated to open by the fourth quarter of 2020. Ultra Health provides unparalleled medical cannabis care by producing accurately dosed, smokeless cannabis products such as sublingual tablets, oils, pastilles, suppositories and more through its partnership with Israeli pharmaceutical group Panaxia. Ultra Health has been at the forefront of patient-rights issues and continues to fight for adequate supply and rural access in the New Mexico medical cannabis market.

Contact: Marissa Novel  480-404-6699
marissa@ultrahealth.com 

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/626daecd-827e-443c-a5c8-08e1061e6aaf