Court Approves Prescription Tax Cuts for Cannabis Businesses

A court ruling in New Mexico signals that state-licensed medical cannabis companies can claim a tax deduction reserved for prescription medication.

Full story after the jump.

A New Mexico appellate court has ruled that state-licensed medical cannabis producers can claim a tax deduction for prescription medication, the Albuquerque Journal reports. New Mexico has never allowed the industry to take the deduction and medical cannabis companies paid about $24 million in gross receipts taxes over the last three years, the report says.

Sen. Jacob Candelaria (D) told the Journal that the ruling has “a direct potential fiscal implication to the state” and that lawmakers will need to set aside funding for the tax claims if the ruling survives appeal.

The Court of Appeals verdict overturns a hearing officer’s decision and says medical cannabis meets the definition of a prescription drug under New Mexico tax code because physicians are required to certify patients for the program and that both medical cannabis and the allowable tax deduction for prescription drugs both intend to make medicine more accessible to patients, according to the report. The state’s cannabis laws don’t define cannabis as a prescription drug.

Candelaria suggested to the Journal that the ruling could have implications beyond the tax code, including on workplace medical cannabis policies, and the rights of inmates and others under state supervision to use medical cannabis.

Last year, the New Mexico Corrections Department updated its guidelines allowing registered patients on parole or probation to use their physician-recommended medical cannabis products. If the ruling in upheld and serves to define cannabis as a prescription drug, it could allow inmates and those awaiting trial – who are not covered by the Department of Corrections guidance – access to their medicine.

The ruling could ultimately lower cannabis prices for patients in the state if companies no longer have to pay the state taxes. The Taxation and Revenue Department has until Feb. 27 to appeal the ruling.

Get daily cannabis business news updates. Subscribe

Have an additional perspective to share? Send us a message to let us know, and if your comment is chosen by our editors it could be featured here.


Latest Cannabis News

View all news Get email updates

Create a profile View all categories

From Our Partners