SANTA FE — New Mexico’s tax company might be on the hook for greater than $24 million in reimbursement funds to medical hashish producers, after the Supreme Courtroom dominated Tuesday it will not hear an enchantment of a decrease court docket ruling.
At subject within the long-running case is whether or not medical hashish producers can declare a state gross receipts tax deduction for prescription remedy.
Whereas a 2021 legislation legalizing leisure hashish for grownup customers in New Mexico made medical marijuana gross sales exempt from taxation going ahead, the court docket case offers with tax deduction claims denied by the state Taxation and Income Division that date again to 2014.
An company spokesman mentioned Tuesday the tax division was nonetheless engaged on pinning down an up to date price estimate, however would course of refund claims as they’re submitted.
“Whereas the division is disillusioned with the Supreme Courtroom’s resolution to quash its evaluate of the case, we respect the choice and can transfer ahead to subject refunds to the affected taxpayers as soon as the court docket’s resolution is remitted to change into closing,” Taxation and Income Division spokesman Charlie Moore mentioned.
The most recent twist comes after the Courtroom of Appeals dominated in January 2020 that medical hashish meets the definition of a prescription drug beneath New Mexico’s tax code since physicians are required to certify that sufferers have a qualifying situation earlier than they’ll enroll in this system.
However the Taxation and Income Division appealed that ruling to the Supreme Courtroom, arguing the Legislature by no means meant for medical hashish to qualify for the deduction and questioning whether or not it needs to be thought-about a prescription drug.
The Supreme Courtroom had scheduled oral arguments within the case for Feb. 28, however its unanimous ruling on Tuesday canceled the listening to and successfully dismissed the enchantment.
Along with the monetary implications, no less than one distinguished medical hashish producer mentioned Tuesday the Supreme Courtroom’s resolution might renew questions on medical hashish prices being coated both by non-public insurance coverage firms or Medicaid.
Duke Rodriguez, CEO and president of Extremely Well being Inc., the state’s largest medical hashish producer, mentioned it might particularly impression a pending request that insurers cowl the price of medical hashish purchases for psychological well being and associated remedy.
“It is a enormous resolution,” Rodriguez informed the Journal. “I feel it’s particularly essential as a result of it units the precedent that medical hashish is remedy.”
He additionally mentioned the overall greenback quantity the tax division might need to pay to medical hashish producers for previous gross receipts taxes might find yourself hitting — and even exceeding — $30 million.
The primary declare for a tax deduction for medical hashish gross sales was filed in 2014 by Sacred Backyard, a Santa Fe-based hashish producer, which sought a refund of roughly $275,000 for gross receipts taxes paid over a three-year interval.
The refund declare was denied by the tax division, and a listening to officer subsequently rejected a protest.
However the firm then appealed the ruling in 2108 and was subsequently joined it’s authorized effort by Extremely Well being. An Extremely Well being spokeswoman mentioned Tuesday the corporate stands to get a refund of $7.4 million plus curiosity beneath the Supreme Courtroom’s ruling.
New Mexico launched its medical hashish program in 2007 — the legislation is formally known as the Lynn and Erin Compassionate Use Act — and the variety of individuals enrolled in this system has surged lately.
There have been 130,345 energetic sufferers in this system as of January — up from 81,771 sufferers in January 2020, in response to the state Division of Well being.