Summary:

 Senate Bill 89 (SB 89) eliminates the planned incremental increases to the Cannabis Excise Tax, maintaining a fixed rate of twelve percent for all cannabis product sales in the state. The bill excludes sales of medical cannabis products to qualified patients, caregivers, and reciprocal participants from the excise tax. SB 89 takes effect on July 1, 2025. 

Legislation Overview:

 Senate Bill 89 (SB 89) amends Section 7-42-3 NMSA 1978 to remove the schedule of annual Cannabis Excise Tax rate increases, which would have raised the rate incrementally from twelve percent in 2025 to eighteen percent by 2030. Under SB 89, the excise tax rate would remain fixed at twelve percent for sales of cannabis products. The bill retains the existing exemption from the tax for medical cannabis products sold to qualified patients, primary caregivers, and reciprocal participants who present valid identification or proof of eligibility at the time of purchase.

Fiscal Implications
By freezing the Cannabis Excise Tax at 12 percent, SB 89 is expected to reduce potential future revenue growth from cannabis sales compared to projections under the current schedule of rate increases. The fiscal impact may depend on future market trends in cannabis sales, as a fixed rate could incentivize consistent consumer spending. The exemption for medical cannabis sales remains unchanged and does not generate additional fiscal effects.
 

Current Law:

 Under current law, the Cannabis Excise Tax is set at 12 percent until July 1, 2025, after which it is scheduled to increase annually by one percentage point, reaching eighteen percent by 2030. The tax does not apply to medical cannabis products sold to qualified patients, primary caregivers, or reciprocal participants who present valid documentation.