Though the arrival of legalized marijuana has been met with excitement and anticipation, economics and commercial real estate experts are tamping down expectations.

For one thing, they caution, it’s unrealistic to think marijuana shops will pop up on every street corner. The market, while potentially significant, just isn’t that big — and it won’t be a snap of the fingers to open a pot shop.

Though New Mexico has more than 117,000 residents registered in the state’s medical cannabis program with 12,628 living in Santa Fe County, recreational marijuana may be only a modest player in the state’s overall economic portfolio.

“It will make a big contribution to the state, but it will not replace oil or gas,” said Sarah Stith, an assistant professor of economics at the University of New Mexico.

The Legislative Finance Committee in a March fiscal impact report predicted the first full fiscal year of recreational marijuana sales starting in July 2022 would produce an estimated $19.1 million in net tax revenue for the state and $9.4 million for local governments. Fiscal year 2023-24 could see $30.1 million in net state tax revenue and $15.1 million for local governments.

By comparison, New Mexico typically receives more than $2 billion in direct revenue from oil and gas production through severance and property taxes and royalty and rental income, the committee reported.

“A lot of [recreational marijuana] revenue is dependent on tourism and consumers’ willingness to pay given the added cost of the tax,” said Ismael Torres, senior economist for the Legislative Finance Committee.

Legal, homegrown marijuana and continuing black market sales could take further bites from taxable sales, Stith added.

New Mexico will charge a 12 percent excise tax on recreational marijuana sales in addition to the gross receipts tax, which is 8.4375 percent in Santa Fe, or a total 20.4375 percent. The legislation that legalized recreational marijuana also dropped the tax on medical marijuana.

Recreational users could try to get medical-use licenses, where nearly 100,000 users diagnosed with either post-traumatic stress disorder or severe chronic pain have gained state approval to use soon-to-be untaxed medical marijuana.

“There could be a substantial impact to revenues if more medical-use licenses are sought to avoid the cost of taxes or if medical users begin to purchase cannabis recreationally as accessibility grows,” Torres said. “Shifts between recreational and medical cannabis is a big, unanswered question for us.”

The Legislature intentionally set the excise tax lower than the 15 percent in Colorado and 16 percent in Arizona to make New Mexico marijuana more competitive for tourists.

Tourists likely will be the larger share of recreational marijuana purchases. As of July 1, 18 states and the District of Columbia will have legalized recreational marijuana. But not all these states have started recreational pot sales yet.

Texas, a large source of New Mexico tourists, is not one of them.

“Texans, instead of buying in Colorado, can now buy it here,” Stith said. “It may be a golden opportunity to put more promotion into tourism now. … I think they need to think of Texas. I don’t think it’s the New Mexicans buying it all up. Along the Texas border, towns with not much going on will be like Trinidad.”

Trinidad, Colo., just a few miles north of Raton, has about 30 marijuana dispensaries.

But some warn marijuana sales may only be a brief boon to New Mexico. The prospect of federal and/or Texas legalization would change the landscape, said Kayhan Koleyni, assistant professor of economics at Eastern New Mexico University.

“The time we have for the border cities is short,” Koleyni said. “I think it’s going to be two, three years at least [before marijuana gets federal approval]. I think as soon as there is federal legalization, up to 50 percent of the revenue is going to disappear.”

Cities in Eastern and Southern New Mexico with proximity to interstate highways and Texas will see the most impact from pot tourism, Koleyni said.

“Probably Las Cruces will be the best,” he said. “I think Las Cruces will see a lot of impact.”

The economic benefit in the short term, especially in Eastern New Mexico, will be “huge,” Koleyni said.

“I hope it creates economic development that can bring other businesses and attractions to the area,” Koleyni said, though he added: “Tax revenue should be used for community awareness against drugs and social campaigns.”

Recreational marijuana retail shops might not be able to open until April, but jockeying is already going on for space.

“From a street guy, they are buying up properties,” said Micah Ortega, a Coldwell Banker commercial broker.

“I’m working on a couple right now,” added James Wheeler, owner of Commercial Properties Inc. in Santa Fe. “One is for a grower; the other is a retail site.”

“In the past couple weeks, I’ve got three calls for that kind of location,” said John Shepler, owner of Shepler Commercial Real Estate Services.

Shepler said he doesn’t believe there will be a huge number of new pot shops in Santa Fe. Myriad challenges face any novice marijuana retailer, starting with the current landscape: Santa Fe already has 14 medicinal marijuana shops.

“The people who are already in medicinal can also do recreational,” Shepler said. “I don’t see why they wouldn’t” be the dominant players in the recreational market.

Marijuana is still considered a Schedule 1 controlled substance under federal law. Banks in general are not allowed to lend to marijuana businesses, and commercial properties that have a bank loan can’t lease to marijuana business, said Jim Chynoweth, managing partner of the Albuquerque office of the global CBRE commercial real estate services firm.

“I have a feeling you won’t see these shops on every street corner,” Chynoweth said. “I don’t know if they will all succeed. Landlords will look for track record and stout financial activity.”

Shepler added properties owned by trusts or families may not be eager to lease to marijuana businesses.

“It’s going to be case by case,” Shepler said. “What kind of risk are [building] owners willing to take? It depends on independent property owners’ risk tolerance. I think there are a lot of question marks with that industry still. I guess a big question is how viable is it going to be with some of the legalities that are involved? I have counseled people to maybe not go there, depending on how conservative they are.”

Beyond legalities and landlord comfort levels, Chynoweth said he wonders how marijuana can find a needed midpoint between the fields and the stores.

“The challenge will be in the warehouse sector for growers,” Chynoweth said. “That’s going to be a major challenge because warehouse space is going to be very tight. The cannabis industry is not known for wanting to pay top dollar or medium to top dollar.”

And then there is the question of how much demand there actually will be for recreational marijuana.

“There will be a lot of supply, but will there be the demand?” Wheeler said. “One of my clients said 90 percent of novices going into this are going to fail.”