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SENATE BILL 20
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Martin Hickey
FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE
AN ACT
RELATING TO TAXATION; INCREASING THE RATE OF THE CIGARETTE TAX
AND PROPORTIONALLY ADJUSTING THE DISCOUNTS ON CIGARETTE TAX
STAMPS; INCREASING THE RATE OF THE TOBACCO PRODUCTS TAX;
INCLUDING NICOTINE, REGARDLESS OF SOURCE, IN THE DEFINITION OF
"TOBACCO PRODUCT" IN THE TOBACCO PRODUCTS TAX ACT; DISTRIBUTING
THE REVENUE FROM THE INCREASES IN THE TAXES TO A NEW NICOTINE
USE PREVENTION AND CONTROL FUND; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] NICOTINE USE PREVENTION AND
CONTROL FUND.--The "nicotine use prevention and control fund"
is created in the state treasury. The fund consists of
appropriations, donations, interest from investment of the fund
and other money distributed to the fund. The fund shall be
administered by the department of health, and money in the fund
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is subject to appropriation by the legislature to provide funds
to that department to, in collaboration with the public
education department and the higher education department,
develop programs, educational materials and social and
traditional media advertising on nicotine use prevention and
control for persons five to twenty-five years of age.
Disbursements from the fund shall be made by warrant of the
secretary of finance and administration pursuant to vouchers
signed by the secretary of health or the secretary's designee.
Any unexpended balance remaining at the end of a fiscal year
shall revert to the general fund.
SECTION 2. Section 7-1-6.11 NMSA 1978 (being Laws 1983,
Chapter 211, Section 16, as amended) is amended to read:
"7-1-6.11. DISTRIBUTIONS OF CIGARETTE TAXES.--
A. A distribution pursuant to Section 7-1-6.1 NMSA
1978 shall be made to the board of regents of the university of
New Mexico for the benefit of the comprehensive cancer center
at the university of New Mexico health sciences center in an
amount equal to seventy-one hundredths percent of the net
receipts, exclusive of penalties and interest, attributable to
the cigarette tax.
B. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to [seven and fifty-two hundredths ]
five and one-half percent of the net receipts, exclusive of
penalties and interest, attributable to the cigarette tax,
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shall be made on behalf of and for the benefit of the
university of New Mexico health sciences center for its
comprehensive cancer center, until payment of all principal,
interest and other expenses or obligations related to the bonds
authorized pursuant to Section [3 of this 2021 act ] 6-21-6.15
NMSA 1978 and the New Mexico finance authority certifies to the
secretary of taxation and revenue that all obligations for the
bonds have been fully discharged, to the credit enhancement
account.
C. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to [three and seventeen hundredths ] two
and seven-tenths percent of the net receipts, exclusive of
penalties and interest, attributable to the cigarette tax shall
be made to the New Mexico finance authority for land
acquisition and the planning, designing, construction and
equipping of department of health facilities or improvements to
such facilities.
D. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to [eight and twenty-six hundredths ]
six and three-tenths percent of the net receipts, exclusive of
penalties and interest, attributable to the cigarette tax shall
be made to the New Mexico finance authority for deposit in the
credit enhancement account created in the authority.
E. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to fifty-three hundredths percent of
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the net receipts, exclusive of penalties and interest,
attributable to the cigarette tax shall be made, on behalf of
and for the benefit of the rural county cancer treatment fund,
to the New Mexico finance authority.
F. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to twenty-eight and one-half percent of
the net receipts attributable to the cigarette tax shall be
distributed to the nicotine use prevention and control fund. "
SECTION 3. A new section of the Tax Administration Act is
enacted to read:
"[NEW MATERIAL] DISTRIBUTION--TOBACCO PRODUCTS
TAX--NICOTINE USE PREVENTION AND CONTROL FUND.--A distribution
pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the
nicotine use prevention and control fund in an amount equal to
sixty-five percent of the net receipts attributable to the
tobacco products tax."
SECTION 4. Section 7-12-3 NMSA 1978 (being Laws 1971,
Chapter 77, Section 3, as amended) is amended to read:
"7-12-3. EXCISE TAX ON CIGARETTES--REDUCTION OF RATE FOR
CERTAIN CIGARETTES.--
A. For the privilege of selling, giving or
consuming cigarettes in New Mexico, there is levied an excise
tax at a rate of [ten cents ($.10) ] fifteen cents ($.15) for
each cigarette sold, given or consumed in this state.
B. The tax imposed by this section shall be
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referred to as the "cigarette tax".
C. The tax imposed by this section shall be reduced
by fifty percent for a cigarette for which a modified risk
tobacco product order has been issued by the United States
secretary of health and human services pursuant to Section 21
U.S.C. 387k(g)(1).
D. The tax imposed by this section shall be reduced
by twenty-five percent for a cigarette for which a modified
risk tobacco product order has been issued by the United States
secretary of health and human services pursuant to Section 21
U.S.C. 387k(g)(2)."
SECTION 5. Section 7-12-7 NMSA 1978 (being Laws 1971,
Chapter 77, Section 7, as amended) is amended to read:
"7-12-7. SALE OF STAMPS--PRICES.--
A. Only the department shall sell stamps. Stamps
may be sold by the department only to a distributor.
B. Stamps shall display a serial number. Stamps
bearing the same serial number shall not be sold to more than
one distributor. The department shall keep records of the
serial numbers of the stamps provided to each distributor.
C. A stamp shall be affixed to a package of
cigarettes in such a manner as to clearly display the serial
number at the point of sale.
D. Tax stamps shall be sold at their face value
with the following discounts:
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(1) [forty-six] thirty-one hundredths percent
less than the face value of the first thirty thousand dollars
($30,000) of stamps purchased in one calendar month;
(2) [thirty-six] twenty-four hundredths
percent less than the face value of the second thirty thousand
dollars ($30,000) of stamps purchased in one calendar month;
and
(3) [twenty-two] fifteen hundredths percent
less than the face value of stamps purchased in excess of sixty
thousand dollars ($60,000) in one calendar month.
E. Tax-credit stamps shall be provided only to
distributors and shall be provided free of charge; provided
that the distributor is in full compliance with the reporting
requirements of the Cigarette Tax Act and rules adopted
pursuant to that act.
F. If the face value of tax stamps sold in a single
sale is less than one thousand dollars ($1,000), the discount
provided for in this section shall not be allowed.
G. Payment for tax stamps shall be made on or
before the twenty-fifth day of the month following the month in
which the sale of stamps by the department is made.
H. Tax-exempt stamps shall be provided only to
distributors and shall be free of charge; provided that the
distributor is in full compliance with the reporting
requirements of the Cigarette Tax Act and rules adopted
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pursuant to that act."
SECTION 6. Section 7-12A-2 NMSA 1978 (being Laws 1986,
Chapter 112, Section 3, as amended) is amended to read:
"7-12A-2. DEFINITIONS.--As used in the Tobacco Products
Tax Act:
A. "department" means the taxation and revenue
department, the secretary or any employee of the department
exercising authority lawfully delegated to that employee by the
secretary;
B. "cigar" means a roll for smoking made wholly or
in part of tobacco and weighing greater than four and one-half
pounds per thousand;
C. "distribute" means to sell or to give;
D. "closed system cartridge" means a single-use,
pre-filled disposable cartridge containing five milliliters or
less of e-liquid for use in an e-cigarette;
E. "e-cigarette" means [any electronic oral device,
whether composed of a heating element and battery or an
electronic circuit, that provides a vapor of nicotine or any
other substance the use or inhalation of which simulates
smoking and includes any such device, or any part thereof,
whether manufactured, distributed, marketed or sold as an
e-cigarette, e-cigar, e-pipe or any other product, name or
descriptor. "E-cigarette" does not include any product
regulated as a drug or device by the United States food and
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drug administration under the Federal Food, Drug, and Cosmetic
Act] a device that can be used to deliver aerosolized or
vaporized nicotine to the person inhaling from the device and
includes any component, part or accessory of such a device that
is used during the operation of the device but does not include
a battery or battery charger ;
F. "e-liquid" means liquid or other substance
intended for use in an e-cigarette [not including any substance
containing cannabis or oil derived from cannabis ];
G. "engaging in business" means carrying on or
causing to be carried on any activity with the purpose of
direct or indirect benefit;
H. "first purchaser" means a person engaging in
business in New Mexico that manufactures tobacco products or
that purchases or receives on consignment tobacco products from
any person outside of New Mexico, which tobacco products are to
be distributed in New Mexico in the ordinary course of
business;
I. "little cigar" means a roll for smoking made
wholly or in part of tobacco, using an integrated cellulose
acetate or other similar filter, and weighing not more than
four and one-half pounds per thousand;
J. "person" means any individual, estate, trust,
receiver, cooperative association, club, corporation, company,
firm, partnership, joint venture, syndicate, limited liability
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company, limited liability partnership, other association or
gas, water or electric utility owned or operated by a county or
municipality or other entity of the state; "person" also means,
to the extent permitted by law, a federal, state or other
governmental unit or subdivision or an agency, department or
instrumentality;
[K. "product value" means the amount paid, net of
any discounts taken and allowed, for tobacco products or, in
the case of tobacco products received on consignment, the value
of the tobacco products received or, in the case of tobacco
products manufactured and sold in New Mexico, the proceeds from
the sale by the manufacturer of the tobacco products; and
L.] K. "tobacco product":
(1) means:
[(1) any] (a) a product, other than
cigarettes, [cigars and little cigars ] made from or containing
tobacco or nicotine, whether natural or synthetic, that is
intended for human consumption or is likely to be consumed,
whether smoked, heated, chewed, absorbed, dissolved or inhaled ;
[(2)] (b) e-liquid;
[(3)] (c) e-cigarettes; and
[(4)] (d) closed system cartridges; and
(2) does not mean a product regulated as a
drug or device by the United States food and drug
administration pursuant to the Federal Food, Drug, and Cosmetic
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Act; and
L. "wholesale price" means the amount paid, net of
any discounts taken and allowed, for tobacco products or, in
the case of tobacco products received on consignment, the value
of the tobacco products received or, in the case of tobacco
products manufactured and sold in New Mexico, the proceeds from
the sale by the manufacturer of the tobacco products ."
SECTION 7. Section 7-12A-3 NMSA 1978 (being Laws 1986,
Chapter 112, Section 4, as amended) is amended to read:
"7-12A-3. IMPOSITION AND RATES OF TAX--REDUCTION OF RATE
FOR CERTAIN TOBACCO PRODUCTS--DENOMINATION AS "TOBACCO PRODUCTS
TAX"--DATE PAYMENT OF TAX DUE.--
A. For the manufacture or acquisition of tobacco
products in New Mexico [not including cigars, little cigars, e-
liquid, e-cigarettes or closed system cartridges ] to be
distributed in the ordinary course of business and for the
consumption of tobacco products in New Mexico, there is imposed
an excise tax at the rate of [twenty five ] sixty-seven and
one-half percent of the [product value ] wholesale price of the
tobacco products; provided that for the following tobacco
products, the rate shall be:
(1) for cigars, thirty-seven and one-half
percent, not to exceed one dollar fifty cents ($1.50) per
cigar; and
(2) for little cigars, the rate equal to the
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rate imposed on cigarettes pursuant to Section 7-12-3 NMSA
1978.
[B. For the manufacture or acquisition of cigars in
New Mexico to be distributed in the ordinary course of business
and for the consumption of cigars in New Mexico, there is
imposed an excise tax at a rate equal to twenty-five percent of
the product value of the cigar, not to exceed fifty cents
($.50) per cigar.
C. For the manufacture or acquisition of little
cigars in New Mexico to be distributed in the ordinary course
of business and for the consumption of little cigars in New
Mexico, there is imposed an excise tax at a rate equal to the
rate imposed on cigarettes pursuant to Section 7-12-3 NMSA 1978
per package of little cigars.
D. For the manufacture or acquisition of e-liquid
in New Mexico to be distributed in the ordinary course of
business and for the consumption of e-liquid in New Mexico,
there is imposed an excise tax at a rate equal to twelve and
one-half percent of the product value of the e-liquid.
E. For the manufacture or acquisition of closed
system cartridges in New Mexico to be distributed in the
ordinary course of business, there is imposed an excise tax at
a rate of fifty cents ($.50) per closed system cartridge.
H.] B. The taxes imposed by this section may be
referred to as the "tobacco products tax".
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[I.] C. The tobacco products tax shall be paid by
the first purchaser on or before the twenty-fifth day of the
month following the month in which the taxable event occurs."
SECTION 8. Section 7-12A-4 NMSA 1978 (being Laws 1986,
Chapter 112, Section 5, as amended) is amended to read:
"7-12A-4. EXEMPTION--TOBACCO PRODUCTS TAX.--
A. Exempted from the tobacco products tax is the
[product value] wholesale price of tobacco products sold:
(1) to or by the United States or any agency
or instrumentality thereof;
(2) to the governing body or any enrolled
tribal member licensed by the governing body of an Indian
nation, tribe or pueblo to be distributed on the reservation or
pueblo grant of that Indian nation, tribe or pueblo; or
(3) to the state of New Mexico or any
political subdivision thereof.
B. As used in this section, the term "agency or
instrumentality" does not include persons who are agents or
instrumentalities of the United States for a particular purpose
or only when acting in a particular capacity or corporate
agencies or instrumentalities."
SECTION 9. Section 7-12A-5 NMSA 1978 (being Laws 1986,
Chapter 112, Section 6) is amended to read:
"7-12A-5. DEDUCTION--INTERSTATE SALES.--The [product
value] wholesale price of tobacco products sold and shipped or
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given and shipped to a person in another state may be deducted
from the [product value ] wholesale price subject to the tax
imposed by the Tobacco Products Tax Act; provided that the
department may require the person to submit proof satisfactory
to the department that the tobacco products have been sold and
shipped or given and shipped to a person in another state."
SECTION 10. APPROPRIATION.--Five hundred thousand dollars
($500,000) is appropriated from the general fund to the
regulation and licensing department for expenditure in fiscal
year 2026 to expand the department's licensure and enforcement
duties in regard to nicotine sales and use. Any unexpended or
unencumbered balance remaining at the end of fiscal year 2026
shall revert to the general fund.
SECTION 11. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
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