Medical Cannabis Company Sues New Mexico Over Cannabis Sales Tax

Ultra Health, New Mexico’s largest medical cannabis producer, is suing the state of New Mexico’s Taxation and Revenue Department in an attempt to recover $1.5 million in sales taxes, which the company claims were collected illegally, according to the Santa Fe New Mexican.

New Mexico state law exempts prescription drugs from “gross receipts” or sales taxes. Ultra Health is taking the position that medical cannabis, which requires a doctor’s recommendation in New Mexico, is a prescribed drug and thus exempt. However, the company has paid $1,541,088 in taxes between January 1, 2015 and May 31st, 2018.

The company filed a request to have the taxes refunded through the Taxation and Revenue Department, but the request was denied. Ultra Health is now filing suit in order to have the taxes refunded, as well as their lawyer fees and interest on the money.

“Patients already pay 100 percent out of pocket for medical cannabis. If the average cost of medicine for patients is $2300 a quarter, the average [gross receipts tax] burden on medical cannabis is nearly $1,000 per year. This is a huge undue burden on patients with debilitating medical conditions. … It is time that we recognize the tax fairness due medical cannabis patients who are making a healthier and fiscally responsible choice for their well being.” — Duke Rodriguez, CEO of Ultra Health, to the Sante Fe New Mexican

The dispute comes down to the difference between a doctor’s “recommendation” and “prescription.” Ultra Health believes that there is no effective difference — it remains to be seen how the District Court of Sante Fe will rule.