New Mexico Cannabis Taxes & Revenue

Last verified: March 2026

The Escalating Excise Tax

New Mexico's Cannabis Regulation Act established a cannabis excise tax that increases by 1 percentage point per year:

The gradual escalation was designed to keep initial prices competitive with the illicit market while building toward a higher long-term revenue rate. SB 89, which would have frozen the rate and prevented further increases, died in the legislature — the scheduled increases remain in effect.

Gross Receipts Tax (GRT)

On top of the cannabis excise tax, all cannabis sales are subject to New Mexico's Gross Receipts Tax (GRT), which functions like a sales tax but varies by location:

• State base rate: 5.125%
• Combined with local rates: 5.125%–8.9% depending on municipality and county

This means the total tax burden on recreational cannabis currently ranges from approximately 19% to 22% depending on where you buy.

Medical Tax Exemption

Medical cannabis purchases are exempt from both the excise tax and receive a GRT deduction. This double exemption is one of the strongest financial incentives for maintaining a medical card in any state. For a patient spending $300 per month on cannabis, the combined savings approach $400 or more per year.

This exemption is a key reason why medical enrollment, despite declining 42% from its peak, remains substantial at ~78,938 patients. The financial math is clear for regular consumers.

Revenue Performance

New Mexico's cannabis market has generated substantial revenue despite the state's relatively small population of 2.1 million:

Of the cumulative $2.07 billion, adult-use accounts for approximately $1.49 billion (77%) and medical for $583 million (23%). Monthly sales average approximately $47 million.

Cannabis excise tax revenue exceeded $50 million in FY2024.

Revenue Allocation

New Mexico's cannabis excise tax revenue is split roughly in thirds:

• One-third to municipalities where cannabis businesses operate
• One-third to counties
• One-third to the state general fund and designated programs

This three-way split ensures that local communities hosting cannabis businesses share directly in the revenue, creating alignment between local government and the legal cannabis market.

SB 89: The Failed Freeze

SB 89 was introduced to freeze the cannabis excise tax rate and prevent the scheduled annual increases. The bill's sponsors argued that rising taxes, combined with intense market competition and price compression, would push more consumers to the illicit market and accelerate business closures.

The bill died without passage. As a result, the scheduled 1% annual increases continue, and the excise rate will reach 18% by 2030. Combined with GRT, the total tax burden will approach 24–27% — a level that industry advocates warn will be unsustainable for legal operators competing with untaxed illicit product.

Related on this site: NM Cannabis Enforcement Bureau, New Mexico's Fastest Cannabis Launch, New Mexico Cannabis Industry Resources.