gross receipts tax

It could be awhile before the NM Supreme Court decides to rule on cannabis tax case, if at all

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Medical cannabis producers in New Mexico will be on the hook for gross receipts taxes for the foreseeable future, or at least until the state Supreme Court decides whether it will weigh-in on the issue. 

Last week, a response filed by New Mexico cannabis producer Sacred Garden was the latest in a pending case between the producer and the state’s Taxation and Revenue Department (TRD). Earlier this month, the TRD filed a petition asking the high court to consider the case, with the hopes that it might overturn a previous state Court of Appeals decision. 

Santa Fe attorney Joe Lennihan, on behalf of Sacred Garden, argued that a review by the Supreme Court was unnecessary since the Court of Appeals already determined that medical cannabis should be viewed in a similar light as prescription drugs, which are exempt from gross receipts taxes. 

“Sales of medical marijuana are restricted to patients approved to use it and must do so under the care and supervision of a physician,” Lennihan wrote. 

Both TRD and Sacred Garden have repeatedly made their respective arguments in previous court filings and now both must wait to see if the state Supreme Court decides to weigh-in. 

For the most part, TRD has argued that since medical cannabis use is recommended, not prescribed, by a doctor, medical cannabis sales are subject to gross receipts taxes. Sacred Garden’s view on the matter is that because a 2019 update to the state medical cannabis law states that medical cannabis should be viewed in a similar light as any other prescription drug, medical cannabis producers should be exempt from the tax. The Court of Appeals ruled in favor of Sacred Garden, citing a lack of expected tax revenue in legislative financial impact reports. 

But in its request for the Supreme Court to consider the case, the TRD turned the legislative intent argument around and said that if the Legislature wanted to exempt medical cannabis from gross receipts taxes, it could have specified this by amending state tax laws. 

Gross receipts taxes, sometimes incorrectly referred to as sales taxes, are charged by the state and local municipalities for goods and services. Businesses often pass the tax along to the consumer, although they are not required to.

Quick Reads

Medical cannabis producers still on the hook for GRT, pending a state Supreme Court ruling

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Despite a decision by the New Mexico Court of Appeals, medical cannabis producers are still required to pay gross receipts taxes—at least for now. 

Last month the New Mexico Supreme Court filed notice that it received a petition from the state Taxation and Revenue Department asking for the high court to overturn a court of appeals ruling. That opinion, filed in January, stated that medical cannabis is exempt from gross receipt taxes. The notice from the high court that it received the petition from the state also included instructions to hold off on enforcing its decision. 

Days after the January decision, medical cannabis producers began notifying patients that they would not charge gross receipts taxes, which are often erroneously referred to as sales tax. State law requires many businesses to pay gross receipt taxes for goods produced or services provided. Those businesses often pass the tax on to consumers. 

The issue goes back to an attempt by medical cannabis producer Sacred Garden to get a refund from the gross receipt taxes it paid from 2011 through 2016.

News

Full court pressed: New Mexico Court of Appeals is swamped with backlogged cases, leaving hundreds in limbo

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Ruben Romero thinks he got an unfair trial. The 20-year-old is imprisoned at the Lea County Correctional Facility in Hobbs for his role in a 2015 murder, which happened when he was 16. He is appealing his 10-year sentence because, he claims, he wasn’t properly informed of his Miranda rights – his right to remain silent – before he was questioned by a police detective. 

The New Mexico Court of Appeals received all of the documents in April of last year — 10 months ago — and nothing has happened since. 

“Wow, wow!” said Gina Maestas, who ran the court’s staff attorney division from 1991 to 2002 and served as chief clerk from 2006 to 2011. “That’s a really long time for a criminal case.”

This story originally appeared at Searchlight New Mexico and is republished with permission. But these days, long delays are routine at the state’s second highest court.

Featured

Ruling means state may owe millions in tax refunds to cannabis producers

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The state of New Mexico’s Taxation and Revenue Department could be on the hook for millions of dollars in tax refunds to medical cannabis producers after a state Court of Appeals ruling made earlier this week. 

In her opinion filed on Tuesday, Court of Appeals Judge Monica Zamora wrote that medical cannabis producers should be able deduct gross receipts taxes just as pharmacies do for sales of prescription drugs. Under the Lynn and Erin Compassionate Use Act, the state’s medical cannabis law, medical cannabis is not prescribed to patients. Instead, qualified medical professionals issue a recommendation to the state Department of Health for each patient. 

Zamora cited the federal Food, Drug and Cosmetics Act, which says that restricted drugs “shall be dispensed only . . .

Michelle Lujan Grisham

Lujan Grisham has some appointing to do

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All eyes are on Governor-elect Michelle Lujan Grisham. With about two months until the legislative session starts and just weeks until she takes office, speculation and rumors about how she’ll run the state are growing. Lujan Grisham will appoint new department heads for the state agencies, but she has another list of important appointments to make shortly after taking office. Lujan Grisham will also have to fill state judicial vacancies and a New Mexico Senate seat in southern New Mexico as she takes office in January. During her campaign, Lujan Grisham also said she would like to see all new members of the University of New Mexico Board of Regents.

Criminal Justice & Public Safety

A win by two or more challengers would give women first-ever majority on New Mexico Court of Appeals

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The notion struck Megan Duffy at an event she attended with several other women—and it struck her hard. It was Aug. 18. The gathering marked the anniversary of a seismic change to the US Constitution: Passage of the 19th Amendment, more commonly known as women’s suffrage. “Women have only been able to vote in this country for 98 years,” Duffy says in a recent interview with New Mexico In Depth and SFR.

Dianna Duran

After appeal, SoS’ office has to pay big in open records case

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An open records case related to unproven allegations of widespread voter fraud will cost the Secretary of State’s office $90,000. The Santa Fe New Mexican first reported on the decision by the state Court of Appeals. Then-Secretary of State made national headlines when she alleged that 117 foreign nationals were registered to vote—and that 37 had actually illegally voted. Duran checked voter registration records against motor vehicle and Social Security databases; she sent 64,000 records with alleged irregularities to state police to investigate. Some questioned why Duran sent the files to the state police instead of to individual county clerks to check the voter rolls; experts said at the time that these were likely clerical errors or voters just using variations on their name (Tom instead of Thomas, for example).

Odds and Ends

Odds and Ends: Judge says no to new food benefit rules

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We’re back after taking Tuesday night off to finish up a recap on filing day. Here are some stories you may have missed, plus what we wrote today. —Federal judge shoots down state food benefit rules. U.S. District Court Judge Kenneth Gonzales ruled against the latest attempt by the state to impose new work rules on those who receive food benefits, or SNAP. The rules the state imposed required 80 hours per month of approved work activity for able-bodied adults from 18-49 if they wanted to continue to receive SNAP benefits for more than three months

“We are pleased that unemployed adults will not face the illegal loss of food assistance in addition to the economic hardship that many are already facing in New Mexico,” Sovereign Hager, Staff Attorney at the Center on Law and Poverty, said in a statement.

Edward Chavez

Supreme court: Helicopter search that led to pot conviction was illegal

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The New Mexico Supreme Court ruled that surveillance from a helicopter that led to the conviction of a Northern New Mexico man for growing marijuana was illegal under the United States Constitution. The New Mexico Court of Appeals previously ruled in January of 2014 that the aerial search was illegal, but cited the state constitution. Norman Davis was convicted after a joint operation, called Operation Yerba Buena, between the New Mexico State Police and the New Mexico National Guard involved flying two Army National Guard OH 58 Jet Ranger helicopters over Taos County to find alleged marijuana growth sites. The journey between that search and this Supreme Court decision was long; the search was conducted back in 2006. The Supreme Court heard the arguments on the case in January of this year.

Latino vote

In deep-red Roswell, Latino surge prompts political action

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ROSWELL – In a packed gymnasium, Vanessa Tarango canvasses a crowd gathered to take advantage of public hours being held today by Consulate General of Mexico in El Paso. Tarango is a member of Somos Un Pueblo Unido, a statewide immigrant rights advocacy group that’s here to recruit new members. She and half a dozen other canvassers are scattered throughout St. Peter’s Parish gym in downtown Roswell. Here, flocks of people are waiting in line for help with their immigration documents, which include green cards and consular identification cards.