New Mexico’s Cannabis Industry Poised for Growth Following Trump’s Reclassification Order
Significant Changes in Cannabis Regulation
New Mexico’s cannabis industry is on the brink of transformation following President Trump’s recent executive order aimed at reclassifying marijuana from a Schedule I to a Schedule III substance. This landmark decision acknowledges the drug’s medicinal potential and could pave the way for significant economic benefits for local dispensaries and cultivators.
Understanding the Executive Order
Signed on December 18, 2025, the executive order titled ‘Increasing Medical Marijuana and Cannabidiol Research’ directs the Attorney General to expedite the rescheduling process. This change comes amid growing recognition of marijuana’s therapeutic uses, particularly for chronic pain and other health conditions. According to the White House, this order is a response to public demand for access to medical cannabis treatments.
Economic Implications for New Mexico
New Mexico’s cannabis sector, which has seen nearly $1.5 billion in sales since the legalization of adult-use sales in April 2022, stands to gain immensely from this reclassification. Currently, cannabis businesses face hefty tax burdens due to Section 280E of the Internal Revenue Code, which restricts deductions for expenses. As noted by Jon Updegraff, CFO of Verdes Cannabis, many companies are effectively paying tax rates exceeding 100% due to these regulations. The reclassification could allow for standard deductions, making operations more financially viable.
Benefits for Local Dispensaries
Operators believe that the executive order could enhance profitability. Updegraff estimates that Verdes Cannabis could see an income increase of approximately $1 million as a result of reduced tax liabilities. Matt Kennicott, executive director of the Cannabis Association of New Mexico, expressed optimism about the potential financial relief that comes from being able to deduct business expenses. “If we can actually deduct business expenses like regular businesses, we would see more profit and more money in our pocket at the end of the year,” he stated.
Research Opportunities and Future Prospects
The reclassification not only aims to ease the financial strain on cannabis businesses but may also facilitate more extensive research into marijuana’s medical benefits. Currently, federal approval is required for cannabis research, which can be a lengthy and costly process. The potential for increased research could lead to the development of FDA-approved cannabis products, boosting the state’s standing as a leader in medical cannabis research.
Investment and Growth Potential
New Mexico’s established framework for cannabis regulation positions it favorably for attracting significant investments, potentially reaching up to $100 million for new cultivation programs. This is particularly appealing as other states begin to navigate their own regulatory environments. As Duke Rodriguez, CEO of Ultra Health, pointed out, “This is the single biggest game changer in a decade.”
Conclusion: A New Era for Cannabis in New Mexico
While the reclassification represents a significant step forward, experts caution that more work is needed to navigate the complexities of state and federal regulations. As New Mexico continues to adapt to these changes, the local cannabis industry is poised for substantial growth, benefiting both businesses and consumers alike.
