Should medical cannabis producers continue to get a tax break? That’s the question the New Mexico Taxation and Revenue Department has asked the state’s high court.
On behalf of TRD, the state’s Attorney General’s office filed a petition Monday with the New Mexico Supreme Court asking for clarification about whether medical cannabis is exempt from gross receipts tax, like prescription drugs.
In 2014, New Mexico cannabis producer Sacred Garden asked the TRD for a refund on the gross receipts tax the company paid that year. That request was denied by TRD. But the state Court of Appeals agreed with the cannabis company and ruled that medical cannabis indeed qualifies for the same tax exemption as prescription drugs. In the state’s petition to the state Supreme Court, Special Assistant Attorney General Cordelia Friedman argued that because federal law prevents doctors from writing prescriptions for cannabis, it does not fall under the same tax exempt category as prescription drugs in New Mexico.
“The term ‘prescription’ does not appear in the [Lynn and Erin Compassionate Use] Act or the regulation promulgated to provide guidance for individuals wanting to obtain ‘registry identification cards’ to receive medical marijuana,” Friedman wrote.
The state Court of Appeals ruled in January that a recommendation from a doctor to use cannabis to alleviate symptoms of certain medical conditions is essentially the same as a prescription.
When it comes to legalizing cannabis for recreational use, those responsible for running state government have a warning for lawmakers: Not so fast. The proposed legislation calls for the state to begin licensing retailers as soon as January 2020. But the state Taxation and Revenue Department has told lawmakers the deadline is unfeasible and asked that they push it back to 2021. The change would shove further into the future the day when New Mexicans who are 21 and older could freely buy cannabis from retailers. And that’s if House Bill 356 even passes this year, which may be a long shot, as the 60-day legislative session is in its final month and some Democratic senators remain opposed.
Gov. Michelle Lujan Grisham on Tuesday named Santa Fe County’s finance director as secretary-designate of the New Mexico Taxation and Revenue Department and appointed a member of Sandia Pueblo with a background in tribal law as head of the state Department of Indian Affairs. The Cabinet-level appointments of Stephanie Schardin Clarke to lead the tax agency and Lynn Trujillo to lead Indian Affairs leave the Democratic governor with two remaining Cabinet positions to fill — secretaries of the Department of Corrections and the Public Education Department.
Lujan Grisham, who has made public education one of her top priorities, indicated Tuesday that an appointment for public education secretary could be coming soon. In the interim, Lt. Gov. Howie Morales, a former educator, is overseeing the department. Santa Fe County Finance Director Stephanie Schardin Clarke was appointed Tuesday as the new Cabinet secretary-designate of the state Taxation and Revenue Department. Among Schardin Clarke’s goals, the governor said, will be to make the tax agency’s Motor Vehicle Division more “responsible, accountable and customer friendly.”
After a year of high-profile changes in Gov. Susana Martinez’s Cabinet, top officials from several of the most important departments in state government now await Senate confirmation hearings. But the secretaries of environment, finance and health are just of a few of the governor’s nearly 100 appointees on the agenda. With the long list, it is unclear how many appointees will even get a vote before the Senate adjourns March 18. New Mexico’s financial crisis will make confirmation hearings more difficult than usual. Staff members say the Senate Rules Committee only has enough money to conduct background checks on about half the appointees.
The House Regulatory and Public Affairs passed, along party lines, a Republican driver’s license bill Thursday evening. Sponsors of HB 99, Reps. Andy Nuñez, R-Hatch and Paul Pacheco, R-Albuquerque, presented the bill and told the panel that this was their attempt at compromising on the multiple-yearlong issue of whether or not to issue driver’s licenses to undocumented immigrants. Nuñez said since 2010 he’s tried to repeal the state law that allows a person to get a driver’s license without legal documentation of citizenship. “Since then we made a lot of compromises,” Nuñez said.
The top attorney for the state’s Taxation and Revenue Department recently resigned from the cabinet-level agency. Brad Odell, TRD’s chief legal counsel, “informed the department that he will be leaving to pursue a good opportunity with a large law firm,” according to Lorissa Abeyta, a legal assistant with the agency. NM Political Report confirmed Odell’s resignation through a public records request with TRD after Odell and department spokesman Ben Cloutier didn’t return phone calls and emails for two days earlier this week. Odell’s actions came under scrutiny in a preliminary investigation that concluded TRD Secretary Demesia Padilla may have abused her power by helping a business during a tax audit by her agency. Padilla’s actions, according to the report, may have led to retaliation against TRD employees and lost the state money.
On Oct. 15, 2014, Kevin Sourisseau sent a message to his boss with the subject line “Harold’s Trucking Audit.”
As second and first in command of the state Taxation and Revenue Department’s audits, Sourisseau and his then-director Lizzy Vedamanikam were in charge of making sure individuals and businesses paid their share of taxes in New Mexico. Their boss, TRD Secretary Demesia Padilla, wanted to help Harold’s Grading & Trucking save money after the Bernalillo-based company faced an audit from their department. Before Gov. Susana Martinez named her head of the state agency in 2011, Padilla had done accounting work for the trucking company. In his email to Vedamanikam, Sourisseau wrote that the situation was a “difficult and uncomfortable issue.” Still, it didn’t seem like he had a reason for concern.
Shortly after state Taxation and Revenue Department Secretary Demesia Padilla was publicly implicated in an investigation of wrongdoing, the governor’s chief of staff received a letter. Those who sent the letter, which Susana Martinez Chief of Staff Keith Gardner received on July 14, claimed to be employees “who have witnessed the decline of this department because of the unprofessional, unethical, and overall inept leadership of Demesia Padilla.”
“Since the governor is on the record that her staff are expected to hold to the highest ethical and professional standards, we hope that you’ll look into what we share in this letter, and that you’ll do something about it before more TRD staff, out of frustration, seek out the [Attorney General], the state auditor and the press as a means to address these serious concerns,” the letter reads. NM Political Report obtained the letter through a public records request with the governor’s office. In July, State Auditor Tim Keller announced a preliminary investigation contracted by his office concluded that Padilla may have interfered with the tax audit of a former client for whom she did accounting work before becoming the TRD cabinet secretary. The client, later revealed to be Bernalillo-based Harold’s Grading & Trucking, has denied knowing about or asking for any special treatment.
In July, State Auditor General Counsel Sarita Nair filed an ethics complaint against Tax Department lead attorney Brad Odell with the Disciplinary Board of the Supreme Court of New Mexico, NM Political Report has learned. The Disciplinary Board opted not to take action against Odell, citing that it lacked sufficient evidence.
When New Mexico Political Report discovered and reported on a botched redaction from the state Taxation and Revenue Department this summer, the state responded with a threat. “You purposely manipulated the document in order to reveal taxpayer return information and thwart the purpose of the redaction,” tax department spokesman Ben Cloutier wrote to us in July. “You have published taxpayer return information despite the clear intent that it remain confidential. It is unlawful for any person other than the taxpayer to intentionally reveal to any other person the taxpayer’s return information.”
Yet internal emails show at least one current tax department attorney faulted his employer, and not New Mexico Political Report, for the mishap. “I have been telling the Department for years that we are not redacting documents properly,” tax department attorney Lewis Terr wrote in an email the same day we published the story.