New Mexico officials claim the cannabis tax program is compliant, despite a $6.4 million shortfall in collected taxes.
Santa Fe: So, the New Mexico Taxation and Revenue Department has revealed a $6.4 million shortfall in cannabis taxes. But they still say the program is “highly compliant.” Sounds a bit contradictory, right?
Despite the shortfall, the cannabis industry in New Mexico has hit a big milestone, racking up over $1 billion in recreational sales. That’s a lot of green! But some folks in the industry are raising eyebrows about the tax collection process.
TRD Deputy Secretary Aysha Mora mentioned that the gap in tax collection is only about 1 to 3%, which she claims is pretty low compared to other tax programs. They’re saying the system is tight and mostly electronic, which should help keep things in check.
However, they didn’t share how many cannabis businesses are actually out of compliance. With the 12% cannabis excise tax, the state should have collected over $122 million, but they’ve only managed about $115.8 million so far.
There’s a bit of a lag in the reports, too. Mora pointed out that the distribution reports are about 60 days behind and don’t account for all the factors that could affect those numbers. If businesses don’t pay their taxes for over a year, they can’t renew their licenses, which adds pressure.
Bobbie Marquez from TRD emphasized that to renew a cannabis license, businesses must be compliant with their tax filings. They’ve got a system in place to keep track of everything, which is supposed to make it easier for everyone.
But Duke Rodriguez, who runs Ultra Health, thinks the state isn’t being transparent about the sales data. He believes the numbers from different agencies don’t match up and that the sales figures are being used for marketing rather than accurate reporting.
He made a good point: if businesses aren’t paying their taxes, they’re just like any illegal operator. The state loses out on revenue, and that’s not good for anyone.
On the other hand, the Cannabis Control Division says they’re not required to report sales data, but they do it to keep things transparent. They can’t really explain why the tax revenues don’t match the sales data, though.
Interestingly, Colorado has a similar system, but they don’t rely on tax data to determine sales. They have their own way of tracking everything, which seems to work for them.
As for how New Mexico tracks compliance, Mora mentioned they have a big data warehouse with over 30 sources to check who’s paying their taxes. They’ve got some complex algorithms to help with that, so they’re keeping an eye on things.
