New Mexico lawmakers are looking to keep cannabis prices down with a bill that would stop an incoming tax hike in its tracks.
SB 89, sponsored by Sen. Katy Duhigg (D), would remove language from the state’s marijuana law that imposes a one percent increase to the cannabis excise tax every year through 2030. The tax currently sits at 12 percent, which, when combined with the variable Gross Receipts Tax, comes out to nearly 19 percent—a figure that Ben Lewinger, Executive Director at the New Mexico Cannabis Chamber of Commerce, says is just about right.
“In 2019, when the state began in earnest to work on legalizing cannabis for adults, the Governor’s Working Group on Cannabis Legalization researched what the right tax rate was that the average consumer would pay to purchase safe, tested cannabis in the regulated market,” Lewinger tells New Mexico News. “That magic number is 18 to 19 percent, which is what we have now.”
But if the law remains unchanged, and the yearly increase remains in place, the excise tax will ultimately cap out at a staggering 18 percent in 2030. That will leave consumers paying in excess of 25 percent with Gross Receipts Taxes included. This tax hike could have a negative impact on consumers’ wallets at a time when prices in grocery stores and at gas pumps are inflated.
“The last minute amendment to the Cannabis Regulation Act that escalates the Cannabis Excise Tax one percent annually was certainly well-intentioned,” Lewinger says, “but will drive people to the illicit market and potentially reduce this revenue to the state and local governments.”
The tax increases will also harm small businesses that won’t be able to lower retail prices to accommodate them. With many cannabis industry stakeholders already concerned over market saturation and oversupply, the future is beginning to look grim.
But if Duhigg’s bill passes, then the tax increase will be permanently removed. “The Cannabis Chamber supports SB 89, which will keep the tax rate for cannabis right in the sweet spot of what the average consumer is willing to pay to purchase legal, safe, regulated cannabis and cannabis products,” says Lewinger.
But tax increases aren’t the only area where lawmakers are looking to change drug laws.
Bad Actors
HB 10 is still moving through the legislature. It passed in the House on Feb. 20 by a 68 to 1 vote and is on its way to the Senate. The bill would address concerns about bad operators in the cannabis industry by creating a special law enforcement agency that will focus only on cannabis law violations.
The bill comes hot on the heels of numerous major violations in the industry over the last year that have shaken faith in the state’s ability to keep businesses from breaking the rules. Under current law, the state’s Cannabis Control Division (CCD), the agency in charge of the recreational cannabis industry, has only administrative authority to enforce laws. That means it can revoke licenses and issue fines, but its hands are tied when it comes to actually seizing suspected products or arresting serious offenders.
Under HB 10, the CCD would be able to hire seven peace officers who have the authority to take samples of suspected illegal or dangerous weed products for testing. They would also be empowered to seize and issue administrative holds on illicit or adulterated products and obtain court orders to permanently destroy those products.
In a press release from the Regulations and Licensing Department (RLD), which oversees the CCD, the bill’s lead sponsor Rep. Doreen Gallegos (D) said it would strengthen regulations and “drive out the bad actors.” Co-sponsor House Speaker Javier Martínez said the bill would ensure that the rules and regulations set by the state are actually being followed.
“HB 10 will not only help combat and deter illegal cannabis activity, it will also support the upstanding businesses whose livelihoods are jeopardized by illicit operators,” said RLD Superintendent Clay Bailey
Anson Stevens-Bollen
Medical Cannabis Covered
Meanwhile, HB 527, sponsored by Rep. Cristina Parajon (D), would create new sections of the Healthcare Purchasing Act, the Public Assistance Act and the New Mexico Insurance Code to require medical insurance companies to cover marijuana supplies for medical cannabis patients.
If passed, the bill would make it so that patients enrolled in the state’s Medical Cannabis Program could seek reimbursement for their medical cannabis purchases. It specifies that insurance companies are required to cover an “adequate supply” of medical marijuana, which is defined as a three-month allotment. The bill would also create a direct reimbursement system for retailers.
New Mexico already allows for workers’ comp insurance to cover medical marijuana reimbursements. If passed, HB 527 would make New Mexico one of the earliest adopters of insurance coverage for all medical cannabis patients.
Synthetics and Psilocybin
Meanwhile, HB 346, a bill to ban the sale of synthetic or semi-synthetic cannabinoids and create regulations for hemp retailers, is currently waiting review by the House Commerce & Economic Development Committee. The bill would add to the definition of “hemp finished products” by including any products intended for ingestion, absorption or inhalation. It would also require the Environmental Improvement Board to adopt rules regulating hemp extracts.
The bill is meant to address concerns over unregulated intoxicating hemp products. It would ban the use of synthetic cannabinoids in hemp products and require regulatory oversight of retail hemp sales.
And in related news, SB 219, which would legalize psilocybin therapy in New Mexico, received a Do Pass recommendation from the Senate Tax, Business and Transportation Committee. The bill would set up a program for qualified patients to gain access to psilocybin therapy under the guidance of a licensed health professional.
Unlike the medical cannabis program, patients enrolled in the psilocybin program will not be allowed to purchase the drug and take it home for personal use. Instead, the drug will be administered by a therapist who will walk them through the entire process during a session at the clinic.
