New Mexico medical marijuana providers can claim a tax deduction for prescription medical marijuana, the state’s Court of Appeals ruled, providing dispensary owners with a potential tax break that is unavailable in other states.
Depending on the medical marijuana producer, tax claims could “carry a multimillion-dollar price tag for the state Taxation and Revenue Department,” the Albuquerque Journal reported.
The agency has until Feb. 27 to appeal the ruling.
In its ruling, the New Mexico Court of Appeals said medical marijuana meets the definition of a prescription drug under the state’s tax code.
That’s because doctors are required to certify that patients have a qualifying condition before they can enroll in the program.
Although it was a state-specific decision, the ruling could serve as a precedent in other U.S. markets.
U.S. courts have consistently ruled that because marijuana is illegal at the federal level, so cannabis business owners are prohibited from deducting operating expenses on their taxes.
In New Mexico, medical marijuana providers pay state business taxes but typically pass the costs on to consumers.
The ruling could eventually lead to New Mexico’s dispensaries lowering prices for consumers and, potentially, spur an increase in medical marijuana sales.
– Associated Press and Marijuana Business Daily