NM collects $2.4 million in cannabis taxes for first month of sales

The New Mexico Taxation and Revenue Department announced on Friday that it has collected more than $2.4 million in cannabis excise taxes for April, which was the first month of adult-use sales in the state. 

The Cannabis Regulation Act, which was approved by the New Mexico Legislature and Gov. Michelle Lujan Grisham last year, mandates that a 12 percent cannabis excise tax be applied to all adult-use cannabis sales. That 12 percent rate is slated to increase over the next several years. 

Adult-use cannabis sales are also subject to a state gross receipts tax which is seven to eight percent, depending on the county.  The Taxation and Revenue Department reported collecting more than $1.6 million in gross receipts taxes from adult-use cannabis sales.  

Taxation and Revenue Secretary Stephanie Schardin Clarke said in a statement on Friday that the tax revenue so far signals a boost in state revenue. 

“The adult use cannabis industry in New Mexico clearly has gotten off to a strong start,” Schardin Clarke said. “These receipts show the industry is already diversifying our economy and our tax base.”

Adult-use cannabis retail stores paid $2,422,678 in Cannabis Excise Tax from the first month of recreational cannabis sales in New Mexico this April. 

According to the department, 114 businesses filed tax returns and 158 businesses have registered for cannabis tax accounts, but not all of them started sales by April. 

Earlier this month, Schardin Clarke told NM Political Report that the department expects to collect about $31.5 million in cannabis taxes this year. 

Both cannabis excise and gross receipts taxes were due earlier this week, but some businesses said they were caught off guard by the department’s take on how both the cannabis excise and gross receipts taxes are applied to their total sales.     

The Cannabis Regualtion Act also exempts medical cannabis sales from any taxes. 

Adult-use cannabis businesses are required to file their cannabis excise and gross receipts taxes monthly. Taxes on May sales will be due at the end of June.    

NM Supreme Court to hear oral arguments in medical cannabis tax case

The New Mexico Supreme Court this week scheduled oral arguments for a case regarding medical cannabis sales and gross receipts taxes. 

Lawyers for the New Mexico Attorney General’s Office and two medical cannabis businesses will have an opportunity to make their respective arguments on Feb. 28 as to whether or not medical cannabis sales should have been exempt from gross receipts taxes prior to the state’s Cannabis Regulation Act that went into effect last June. 

The issue goes back several years to when medical cannabis producer Sacred Garden asked the state’s Taxation and Revenue Department for a refund of multiple years worth of gross receipts taxes the company paid. Initially, a hearing officer ruled in favor of the state, but that ruling was eventually reversed by the New Mexico Court of Appeals. In February 2020, the state took the issue to the state supreme court, where it has been pending since. In June 2021, medical cannabis company Ultra Health joined the case as an amicus curiae, or friend of the court. 

In previous court filings, Sacred Garden and Ultra Health argued that like prescription drugs, medical cannabis should have always been exempt from the state’s gross receipts tax, which is sometimes incorrectly referred to as a sales tax.

Former Tax and Revenue Secretary charged with embezzlement

The New Mexico Attorney General filed embezzlement and other charges against a former Tax and Revenue Department (TRD) secretary Thursday. She had previously resigned amid questions about possible preferential treatment of a former client. A spokesman for Attorney General Hector Balderas confirmed that special agents with the AG’s office filed nine criminal charges against former Tax and Revenue Department Secretary Demesia Padilla. This is a developing story and may be updated with more information. Update: Added information from the criminal complaint

At the time of publication, the criminal complaint against Padilla was not yet available through online court records.