If you’re a medical cannabis patient in New Mexico, you may be wondering, “Do dispensaries tax you when you have a med card?” Understanding New Mexico’s cannabis taxes can feel confusing, but we’ll break it down in simple terms. Let’s go over what taxes apply to medical cannabis, how you can benefit from tax exemptions, and what you can expect at dispensaries. If you have a med card, this guide is for you!
Cannabis Taxes in New Mexico: A Simple Overview
In New Mexico, two main taxes affect cannabis purchases. These taxes depend on whether you’re buying cannabis for medical or recreational use:
- Cannabis Excise Tax: This is a tax specifically for recreational cannabis. Medical cannabis purchases are usually exempt from this tax.
- Gross Receipts Tax (GRT): This tax is like a sales tax and applies to most goods and services in New Mexico, including cannabis.
Each tax works differently, so let’s look at how they affect medical cannabis patients.
Do Medical Patients Have to Pay the Cannabis Excise Tax?
If you’re a medical cannabis patient, there’s good news: your medical purchases don’t include the 12% cannabis excise tax. This tax exemption helps lower the cost of cannabis for those who need it for medical reasons.
Here’s how it works:
- When you show your medical cannabis card at the dispensary, you won’t be charged the cannabis excise tax.
- New Mexico law protects this tax exemption for qualified medical cannabis patients with a valid card under the Lynn and Erin Compassionate Use Act.
Dispensaries honor this exemption by deducting the excise tax at checkout. This means more savings for you!
Are Out-of-State Medical Patients Exempt from the Excise Tax?
Yes! New Mexico offers a reciprocity program for out-of-state medical cannabis patients. If you have a medical cannabis card from another state, you can still avoid the cannabis excise tax when buying in New Mexico. Simply show your valid out-of-state medical card at any New Mexico dispensary, and they’ll apply the tax exemption. This option is great for medical patients visiting New Mexico.
What About the Gross Receipts Tax (GRT)?
While medical cannabis is exempt from the excise tax, gross receipts tax (GRT) still applies. Gross receipts tax is New Mexico’s version of a sales tax and affects most purchases across the state, including medical cannabis. This tax varies by location, with rates typically between 5% and 9%.
Here’s what to expect at checkout:
- Medical cannabis is generally exempt from the excise tax, but GRT will likely still apply.
- The exact amount of GRT depends on the dispensary’s location, so your total tax might change from one city to another.
Dispensaries automatically apply GRT to each transaction, making it something to keep in mind when budgeting for your purchase.
How to Make Sure You Get Your Medical Tax Exemption
To make sure you aren’t charged the excise tax, present your medical cannabis card every time you visit the dispensary. Dispensaries need to see your card to apply the exemption, so always have it with you when you shop.
If you’re visiting New Mexico and have a medical card from your home state, show it at the dispensary. As long as it’s valid, the dispensary should waive the excise tax, just like they would for New Mexico patients.
If you forget your card, the dispensary may charge you the full recreational price, including both the excise and GRT taxes. Always carry your card to avoid extra fees.
Medical vs. Recreational Cannabis Taxes: What’s the Difference?
Understanding the difference between medical and recreational cannabis taxes can help you make informed choices. Here’s a quick breakdown:
- Recreational Cannabis: Recreational purchases include both the 12% excise tax and the GRT (5-9% depending on location).
- Medical Cannabis: Medical purchases are exempt from the 12% excise tax but still include GRT.
For example, let’s say a recreational user buys $100 worth of cannabis in a location with a 7% GRT. They’d pay an additional $12 for the excise tax and $7 for GRT, totaling $19 in taxes. Meanwhile, a medical user would only pay the $7 GRT, saving $12 on the excise tax.
Why Does New Mexico Offer Tax Exemptions for Medical Cannabis?
New Mexico aims to make cannabis affordable for those who need it for health reasons. Since medical cannabis can be essential for managing chronic pain, anxiety, or other health conditions, the state offers this tax break to lower costs. By removing the excise tax on medical cannabis, New Mexico helps make cannabis more accessible for patients.
What Dispensaries Must Do for Compliance
Dispensaries in New Mexico have specific requirements to meet for cannabis taxes. Here’s what businesses do to stay compliant:
- Register for Excise Tax: Any dispensary selling recreational cannabis must register for the cannabis excise tax and file monthly reports.
- Register for Gross Receipts Tax (GRT): All dispensaries, including those selling only medical cannabis, must register for GRT. While some sales are tax-exempt, dispensaries must report all transactions accurately.
- Monthly Filing: Dispensaries must file their tax reports every month. Those with both medical and recreational sales must clearly separate each type of sale for accurate tax reporting.
These rules help New Mexico maintain a fair and organized cannabis industry for both recreational and medical users.
FAQs About Cannabis Taxes in New Mexico
Q: Do dispensaries tax you when you have a med card in New Mexico?
A: Medical patients with a valid card don’t pay the 12% excise tax but still pay gross receipts tax (GRT).
Q: Can out-of-state medical patients avoid the excise tax?
A: Yes! New Mexico’s reciprocity program allows out-of-state medical patients to avoid the excise tax by showing a valid medical card.
Q: How much is the excise tax for recreational cannabis?
A: The excise tax for recreational cannabis is currently 12%. This rate will gradually increase, eventually reaching 18% by 2030.
Q: Do I need to show my medical card every time I buy cannabis?
A: Yes, to get the excise tax exemption, you must show your medical card each time you shop.
Staying Informed on New Mexico’s Cannabis Tax Laws
Cannabis tax laws in New Mexico change from time to time, so it’s good to stay updated. The New Mexico Taxation and Revenue Department (TRD) provides valuable resources and updates on cannabis taxes, registration requirements, and filing guidelines. For the latest information, you can visit their website or check out publications like FYI-260, which offers insights into cannabis industry taxes.
Bottom Line: The Perks of Having a Medical Card in New Mexico
Having a medical card in New Mexico provides significant benefits, including tax savings. Medical patients avoid the excise tax on their purchases, reducing overall costs. However, they may still pay gross receipts tax depending on their dispensary’s location. By knowing which taxes apply, medical patients can make the most of their savings and keep cannabis purchases more affordable.
So, the next time you head to a dispensary, remember to carry your medical card to benefit from these tax breaks. This small step can add up to big savings over time, especially for patients relying on cannabis for their health.
Ready to buy your medical cannabis? Visit Mindscape Dispensary in Hobbs, NM for quality products and enjoy the savings with your medical card.
