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Cannabis Excise Tax
The Taxation and Revenue Department is committed to offering cannabis retailers the support needed to comply with their Cannabis Excise Tax and Gross Receipts Tax (GRT) obligations.
Taxpayers must be licensed with the Cannabis Control Division of the Regulation and Licensing Department (RLD) before they can establish a Cannabis Excise Tax account with Tax & Rev. Once they are licensed by RLD, businesses subject to the Cannabis Excise Tax can register on the Taxpayer Access Point self-service portal.
Businesses subject to the Cannabis Excise Tax are those that have retail sales of adult-use cannabis. Those businesses also must register to pay GRT on their sales. Businesses already registered for GRT may use their existing accounts to pay GRT on adult-use cannabis sales, but they must also have a Cannabis Excise Tax account.
Tutorials on registering for the Cannabis Excise Tax and GRT are available on the Department’s YouTube channel, New Mexico Taxation and Revenue.
Medical cannabis sales are not subject to the Cannabis Excise Tax. Medical cannabis sales are eligible for the GRT deduction for prescription drugs. Medical cannabis providers still must file GRT returns with the receipts from medical cannabis sales reported in gross receipts, but they can deduct their medical cannabis sales to reduce their GRT liability.
Similarly, wholesalers are not required to register for the Cannabis Excise Tax but must register for Gross Receipts Tax and other business taxes that apply to them. However, there is also a GRT deduction for sales of cannabis products for resale under Section 7-9-47 NMSA 1978.
Formal guidance on cannabis tax issues is available in FYI 260, which is located in the “Publications” folder of the Forms & Publications page.
More information on licensing is available from the Cannabis Control Division on their website: https://ccd.rld.state.nm.us/.
Below are answers to some other frequently asked questions about the new Cannabis Excise Tax.
How much is the excise tax? The excise tax is 12 percent of sales until July 1, 2025 and then gradually rises to 18 percent beginning July 1, 2030.
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 to that city.
How often do I have to file and pay? 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 April must be filed and paid by May 25. Late returns and payments are subject to penalty and interest.
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 (echecks) or a credit card to make payments. Credit card payments are subject to a 2.4% convenience fee.
Fedwire and ACH Credit payments cannot be accepted for the Cannabis Excise Tax or the Gross Receipts Tax on cannabis retail sales.
Anyone needing to pay with a paper check or cash must have a waiver from the e-pay mandate. Waiver forms are available in the “E-File and E-Pay Exceptions” folder on the Forms & Publications page.