Medical cannabis business sues New Mexico over $1.5M in tax payments

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Ultra Health, a vertically integrated medical marijuana operator in New Mexico, is suing the state Taxation and Revenue Department to obtain a refund of more than $1.5 million in gross-receipts taxes the company says it shouldn’t be forced to pay because it provides medicine.

According to Ultra Health’s suit, medical marijuana should be treated like prescription drugs, which are exempt from gross-receipts taxes, the Santa Fe New Mexican reported.

Ultra Health is arguing a physician’s recommendation for medical marijuana – which patients must have to access MMJ – is the same as a prescription.

The company filed the suit in state District Court in Santa Fe.

A lawyer for Ultra Health’s CEO, Duke Rodriguez, told the New Mexican that most other states with medical cannabis programs do not levy a gross-receipts tax.

Gross-receipts taxes are similar to sales taxes in that they’re charged at the point of purchase.

The tax burden almost always falls on consumers, but ultimately businesses are responsible for paying, Ultra Health attorney Kate Ferlic told Marijuana Business Daily.

The New Mexican reported that the company had asked the state tax department to refund more than $1.5 million that it paid in gross-receipts taxes between Jan. 1, 2015, and May 31, 2018, but the department refused the request in November.

Santa Fe-based medical marijuana producer Sacred Garden has filed a similar suit fighting gross-receipts taxes that’s pending in the state Court of Appeals, and state Sen. Jerry Ortiz, an Albuquerque Democrat, plans to introduce a bill that would make MMJ exempt from gross-receipts taxes.