N.M. Medical Marijuana Tax Could Push Patients To Black Market


Photo: Flickr / Westword
New Mexico: Land of Enchantment. And, well, taxing the sick.

​New Mexico’s Legislature has been looking mighty hungrily at the state’s medical marijuana program as a source of tax revenue. But according the state’s Tax and Revenue Department, such a tax could cause patients to turn to the black market.

A 25 percent excise tax on medical marijuana could potentially raise about $1.2 million for the state, according to the Legislative Finance Committee’s fiscal impact report on Sen. John Sapien’s bill, SB 56, reports Marjorie Childress at The New Mexico Independent.
The analysis estimated a typical patient spends $6,256 annually on medical marijuana, and would pay about $1,564 in excise tax per year.

Graphic: hempnews.tv
The New Mexico Department of Health is designated to administer the medical marijuana program and register patients, caregivers, and providers.

There are 1,048 licensed patients in New Mexico. Of those, 321 are also licensed to grow their own marijuana at home. The rest depend on the state’s licensed dispensary system, which last year ran out of pot and left patients not-high and dry.
While the tax is on the production rather than on the purchase of medical cannabis, the Tax and Revenue Department rightly pointed out in the report that the analysis assumes patients won’t purchase alternatives to licensed dispensary medical marijuana if the price is raised.
If the tax is passed on to the patients, it could instead push more patients to grow at home, or to purchase from the black market, the report says:

… while there might not be a substitute for medical marijuana, there are substitute sources for medical marijuana where this new tax would not be applied. Most patients with the physical ability or resources available to grow their own medical marijuana may already do so; however, a price increase of 25 percent could push more of the non-growing patients to grow their own or to turn to the black market.

Sen. Sapien told The Independent last week that it’s not a given that non-profit producers would pass the tax on to consumers, but many patient advocates, including Paul Culkin, who recently organized the New Mexico Medical Cannabis Patients Group, assume that it would be.

Sapien said he had not heard of any other proposals to tax medicine or drugs recommended as treatments by physicians.
“Most patients don’t have the money to purchase equipment for a grow room, many aren’t physically able to grow their own, and many are on Social Security and fixed incomes,” Culkin said.
“At about $400 an ounce already, this would hurt them a lot,” Culkin said.