Tax rebates of $500 per person are set to go out in mid-June, Gov. Michelle Lujan Grisham announced Friday. “Prices for basic necessities continue to be high across the nation,” Lujan Grisham said in a news release. “Our state today is in a fantastic financial position, and it’s important to me that New Mexico’s families are sharing in that success.”
The total amount of the rebates is $673 million. The New Mexico Taxation and Revenue Department will begin sending $500 to single tax filers and $1,000 to joint filers, married taxpayers, heads of household and surviving spouses in June. “Any New Mexico resident who filed a 2021 New Mexico Personal Income Tax return and who was not declared as a dependent on another taxpayer’s return will receive the rebates automatically,” a news release states.
Taxpayers who had their 2021 tax refunds be direct deposited will also receive the rebate via direct deposit.
New Mexico has collected, or is due to collect, nearly $10 million dollars from cannabis taxes, according to the state’s Regulation and Licensing and Taxation and Revenue departments.
According to the latest announcement from the Regulation and Licensing Department, July marked the highest sales so far with more than $40 million in combined medical-use and adult-use sales.
According to numbers provided by Regulation and Licensing, since recreational-use sales started in April, New Mexico has seen a total of about $196 million worth of cannabis sales. About $112 million was for adult-use sales which are taxed by both gross receipts and cannabis excise taxes. The total amount of sales since April, multiplied by the 12 percent cannabis excise tax signals more than $10.5 million in tax revenue, not counting gross receipts taxes on cannabis and related accessories retails might sell. But according to numbers reported by the Taxation and Revenue Department, the state is due about $9.9 million in cannabis excise tax revenue.
Charlie Moore, a spokesperson for the tax department, told NM Political Report that the difference in numbers is likely due to not all businesses filing taxes on time.
“The excise tax numbers we provide are a snapshot in time – it’s how much has been reported to us as of the date we run the query,” Moore said. “Though the deadline to report is the 25th of the month, some businesses may be reporting late.”
The difference between what the tax department has reported and the calculation based on what the Regulation and Licensing has reported is nearly $700,000. Still, accounting for just the cannabis excise tax, the state is a little less than halfway to the $22 million Taxation and Revenue Secretary Stephanie Schardin Clarke projected the state will see by the end of the fiscal year.
New Mexico recreational-use cannabis companies, for the first time, are required to file their gross receipts and cannabis excise taxes in one week. It’s unclear exactly how much the state is set to collect, but cannabis regulators reported more than $20 million in recreational-use sales for the month of April.
Since an announcement from the New Mexico Taxation and Revenue Department earlier this month, though, it seems that most if not all recreational-use cannabis companies may have under-collected taxes from customers compared to what those companies will owe. For some companies that could mean cutting costs on things like packaging and raising prices. For at least one company, it will mean a formal appeal with the state.
On May 5, the state’s Taxation and Revenue Department issued a press release with specifications on how the newly established cannabis excise tax will be calculated with state gross receipts taxes. The guidance from the department was to apply the 12 percent cannabis excise tax to total sales before figuring in the roughly 7 to 8 percent gross receipts tax.
New Mexico cannabis businesses are expected to pay cannabis excise and gross receipts taxes by the end of this month. But the state’s Taxation and Revenue Department is also expected to issue about $15 million dollars worth of gross receipts refunds to medical cannabis companies that paid those taxes prior to the enactment of the Cannabis Regulation Act, which legalized recreational-use cannabis. State Taxation and Revenue Secretary Stephanie Schardin Clarke told NM Political Report that while the estimated refund amount may sound like a lot of money, it is a fraction of the estimated $31.5 million the state is expected to collect from non-medical cannabis sales. Further, she said, the estimated $15 million in gross receipts refunds is an even smaller fraction of what the state sets aside for reserves.
In the grand scheme of things, we have something like an $8 billion general fund budget, give or take,” Schardin Clarke said. “So there are other things that happen all the time that are just ups and downs in that revenue base.”
The tax refunds are the culmination of a years-long legal dispute between the Taxation and Revenue Department and Sacred Garden, a long-time medical cannabis producer.
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.
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 . . .
New Mexicans shopping on Amazon.com will soon find a state tax added to their bill. State officials said Monday the giant online retailer will begin collecting gross receipts taxes on purchases shipped to the Land of Enchantment beginning in April, a move that may not thrill shoppers but will likely hearten legislators looking to boost revenue amid a budget crisis and please small businesses frustrated with competing against internet companies that do not charge New Mexico taxes. “It will give much needed revenue to the state and it will allow local retailers to compete fairly,” said Simon Brackley, president of the Santa Fe Chamber of Commerce. The announcement that Amazon would start collecting New Mexico taxes comes as the state Legislature is considering legislation that would require major internet companies to charge gross receipts taxes on purchases shipped into the state. Amazon is expected to pay the base state gross receipts tax of about 5 percent.
Two Democrats joined with Republicans to kill a bill that would have automatically registered all eligible adults as voters when they obtain a New Mexico driver’s license. Rep. Debbie Rodella, D-Española, questioned whether the bill was necessary when the Motor Vehicle Division can already offer eligible adults the chance to register to vote. Republicans on Thursday evening moved to table the bill in the House Local Government, Elections, Land Grants and Cultural Affairs Committee. Rodella and a newly elected Democrat, Rep. Daymon Ely of Corrales, sided with Republicans to stop the proposal on a 5-2 vote. Update: Later in the week the the committee heard the bill again and, after amending it, passed it.
Republicans and Democrats joined together Friday to advance a bill that would allow cities and counties in cash-strapped New Mexico to find out if voters are willing to pay more at the gas pump in order to support better roads and bridges. Lawmakers have had difficulty finding agreement on any tax issue the past two years, but HB 63 seems headed toward approval. The House Taxation and Revenue Committee gave it a unanimous thumbs up. Under the proposal, voters could impose a local-option tax on gasoline and diesel fuel sales to residents and visitors alike to fund road work. Sponsored by Reps.
Media coverage of planned tax legislation has so far focused on one hot-button topic of the proposal—reinstating a state tax on food. Santa Fe Archbishop John C. Wester and advocacy groups like New Mexico Voices for Children have vocally opposed the idea. But the two state representatives behind the proposal have not actually filed any legislation on the matter for the session that begins in January. Legislators could begin introducing bills on Dec. 15.
