US (NM): Some cannabis producers may face higher tax bill than expected

For the first time, New Mexico adult-use cannabis companies 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 adult-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 adult-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. It will mean a formal appeal with the state for at least one company. 

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. For example, on a $100 sale, cannabis companies owe the state $12 in excise taxes and an additional 7 to 8 percent, depending on the county, of $112. But the handful of cannabis producers NM Political Report spoke with said they were under the impression the two taxes were applied independently. Those two taxes applied separately under the same hypothetical $100 sale would come out to about $.84 less than the total from the department’s calculation. But cannabis producers said those small amounts add up.  

Mathew Muñoz, the chief innovation and financial officer for cannabis microbusiness Carver Family Farm, didn’t know exactly how much the different calculations would cost the company but said it would be more of a “headache” than it would be “detrimental” financially. 

To read the complete article, go to www.nmpoliticalreport.com


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