The New Mexico Supreme Court effectively ended a years-long legal battle over medical cannabis and taxes.
In an order filed on Wednesday morning, the court wrote that a previous decision from the New Mexico Court of Appeals that medical cannabis was exempt from gross receipts taxes prior to June 2021 should be upheld.
“Having considered the petition, response, and briefs of the parties, the judgment of the Court is that the writ shall be quashed as improvidently granted,” the court wrote.
In other words, the high court should have never accepted the case.
The lawyer for Sacred Garden, the medical cannabis company that sparked the legal battle, did not respond to a request for comment.
Duke Rodriguez, whose cannabis company Ultra Health joined the case last year, told NM Political Report on Wednesday that he was “thrilled” with the high court’s decision.
“I think it’s a recognition that the state never had the legal authority to collect gross receipts tax on the sale of [medical] cannabis,” Rodriguez said. “This finally rights that wrong.”
The issue of gross receipts tax, which is often incorrectly referred to as a sales tax, and cannabis goes back several years, and spans two gubernatorial administrations, when medical cannabis producer Sacred Garden requested a refund for the gross receipts taxes it paid to the state. Sacred Garden’s reasoning was that medical cannabis was essentially the equivalent to other prescription drugs, which are exempt from gross receipts tax. Through an administrative hearing, the state’s Taxation and Revenue Department, under then-Gov. Susana Martinez, denied the request. Sacred Garden took the issue to the New Mexico Court of Appeals, which ultimately ruled that a recommendation for medical cannabis by a qualified medical professional was the same as a prescription for other types of medication.
In early 2020, the department, which was by then under current Gov. Michelle Lujan Grisham, challenged the court of appeals decision and filed a petition with the state supreme court.