Tax on Medical Cannabis in NM

New Mexico collects gross receipt tax. (aka GRT). The GRT rate varies throughout the state from 5.125% to 8.6875% depending on the location of the business. The GRT rates vary from county to county and also depend on what area of a given county the business is located, for example; Bernalillo County rate is 6.4375% but Albuquerque’s rate is 7.875%.

Certain items are exempt from GRT, and prescription drugs are among them. This has been interpreted as “all medicine” by many people, but that isn’t correct. New Mexicans pay tax on all over the counter drugs, including medical cannabis. Most people involved in the NM Medical Cannabis program feel they should not have to pay tax on their cannabis medicine, especially since they have been recommended to the program by a licensed healthcare professional that has DEA certification to prescribe medicine. However, any health care professional that prescribes cannabis will lose their license to write any prescriptions, due to the federal illegality of cannabis. This is a Catch 22 that has been taken advantage of by the New Mexico Taxation and Revenue Dept., even though NM Workman’s Comp reimburses their recipients for prescription drugs AND medical cannabis (minus the tax paid on it).

Lawsuits by members of the medical cannabis community have been fought and lost with regard to this taxation on cannabis medicine. It’s now evident that the only way to permanently overcome this taxation is by legislation. In the ongoing movement to legalize cannabis for adult use cannabis in NM (recreational cannabis), it has been written into the bills that have been proposed that medical cannabis will no longer be subject to tax, and recreational cannabis products will. But unless adult use is legalized NM, medical cannabis patients will continue to bear the burden of GRT.

The purpose of this post is to ask medical cannabis patient to write and or call their representatives and implore them to right this wrong. Here is a sample letter you may copy, paste, change to suit you, and send to your NM Representatives and Senators. Click this link to find your senators and representatives.

Dear Senator ______________,

I am writing today to ask that you please legislate to drop the Gross Receipt Tax on my medical cannabis. My doctor has recommended that I use medical cannabis to help my condition, but is unable to give me a prescription for cannabis due to federal law. Because it is a recommendation and not a prescription, my medicine is subject to NM Gross receipts tax. This is unfair to all medical cannabis patients. Medical Cannabis does not carry the side effects and other dangerous long-term effects of most pharmaceutical drugs. This is why I prefer to utilize it over prescriptions. Please understand that this tax is an additional burden to medical cannabis patients, especially low income patients. Our neighbor to the north, Colorado, does not charge tax on medical cannabis products. Why does our state think it is okay to do this? Please work to repeal tax on Medical Cannabis.

Sincerely,

your name here

Last year, in late January the NM Court of appeals ruled that cannabis IS medicine recommended by a doctor so it should not be taxed. Many dispensaries stopped collecting tax or lowered their prices. Organtica lowered prices on nearly every item. About a month or two later the NM Taxation and Revenue Department appealed that ruling to the NM Supreme Court, causing this repeal of taxation on medical cannabis to be on hold until it is ruled on by the higher court. So, all Licensed Producers were once again required to pay tax on all cannabis medicine sales. (Read story by the NM Political Report here.)

When the tax was reinstated, Organtica decided to not collect tax again on medical cannabis products. As a result we have been paying the tax without collecting it for a year now. This cost to us has really put a hold on our company growth and ability to expand our employee benefits as well as our grows. Many patients didn’t realize why we had a decrease in prices last spring, especially since many dispensaries didn’t lower their prices when the tax was temporarily repealed. However, starting on February 1 we will return to collecting tax. We won’t be raising prices, just adding the tax.

We hope our patients will understand this change. In the meantime, please address this issue with your state representatives. This taxation needs to stop.