Cannabis Excise Tax
What is cannabis excise tax?
Cannabis excise tax is paid by a cannabis retailer that sells products in New Mexico. A cannabis retailer is a person whose license from the Cannabis Control Division of the Regulations and Licensing Department (RLD) allows the license holder to sell cannabis products to a person who purchases, acquires, possesses or uses the cannabis product for a purpose other than resale.
The Taxation and Revenue Department (Tax & Rev) is committed to offering cannabis retailers the support needed to comply with their cannabis excise tax account (CAN) and gross receipts tax (GRT) obligations. Formal guidance on the cannabis excise tax is available in FYI 260: Information for the Cannabis Industry, which is located in the “Publications” folder of the Forms & Publications page.
Wholesalers, manufacturers, and producers are not required to register for the CAN if they do not fit the definition of a cannabis retailer. Medical cannabis sales are not subject to the CAN. These businesses do need to register for any other business taxes program that applies to them.
Gross receipts tax
GRT, all sales in New Mexico are subject to the GRT, unless a deduction or exemption exists. For more information see the GRT page. A few deductions that may apply for the cannabis industry for the GRT include:
- Section 7-9-47 NMSA 1978, a deduction for sales of cannabis products for resale.
- Section 7-9-73.2 NMSA 1978, a deduction for medical cannabis. This deduction is required to be separately reported starting July 1, 2025.
Registration
First apply for a license with the RLD.
Next register with Tax & Rev for a cannabis excise tax account (CAN). Online registration is offered through the Taxpayer Access Point (TAP) https://tap.state.nm.us/Tap/. Tutorials on registering using TAP are available on the Department’s YouTube channel @newmexicotaxationrevenue8012.
Businesses already registered for GRT may use their existing accounts to pay GRT on adult-use cannabis sales, but they must register for a CAN account.
For more information on registering a business see Who must register a business? page.
Determining Location Code and Rate
Use the Gross Receipts Location Code and Tax Rate Map to determine the correct location to use based on where the product is given to the customer. If at your retail location, use your retail location. If delivered, use the location of the delivery.
The rate of the cannabis excise tax shall be at the following rates and shall be applied to the price paid for a cannabis product:
- prior to July 1, 2025, 12%;
- beginning July 1, 2025 and prior to July 1, 2026, 13%;
- beginning July 1, 2026 and prior to July 1, 2027, 14%;
- beginning July 1, 2027 and prior to July 1, 2028, 15%;
- beginning July 1, 2028 and prior to July 1, 2029, 16%;
- beginning July 1, 2029 and prior to July 1, 2030, 17%; and
- beginning July 1, 2030, 18%.
FREQUENTLY ASKED QUESTIONS ABOUT
CANNABIS EXCISE TAX
Are the rates different in each location like they are with GRT?
No, the rate is the same throughout the state, but businesses must report by location so that localities can receive their share of the tax. For example, if the retail cannabis business is located in the City of Albuquerque, it will report the cannabis excise tax using the City of Albuquerque location code so that Tax & Rev is directed to distribute the local share of the cannabis excise tax revenue as required to that city.
How often do I have to file and pay?
The cannabis excise tax must be filed and paid monthly by the 25th of the month following the sale of the product. So, for example, the tax on sales made in the month of April must be filed and paid by May 25. Late returns and payments are subject to penalty and interest. See the form and instructions for this tax for more information.
How do I file and pay?
Returns must be filed electronically through Tax and Rev’s Taxpayer Access Point (TAP) self-service portal.
Taxpayers are required to pay electronically and can use ACH debit (e-checks) or a credit card to make payments. Credit card payments are subject to a 2.4% convenience fee.
We cannot accept Fedwire and ACH Credit payments for cannabis excise tax or the gross receipts tax on cannabis retail sales.
Anyone needing to pay with a paper check or cash must have an approved waiver or exception from the electronic payment mandate. Waiver forms are available in the “E-File and E-Pay Exceptions” folder at the bottom of this page.
FORMS AND PUBLICATIONS
Directions
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- Double-click a form to download it.
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