SENATE TAX, BUSINESS AND TRANSPORTATION COMMITTEE SUBSTITUTEFOR SENATE BILL 72
56th legislature - STATE OF NEW MEXICO - second session, 2024
AN ACT
RELATING TO TAXATION; INCREASING THE RATE OF THE TOBACCO PRODUCTS TAX ON E-LIQUID AND E-CIGARETTES; INCLUDING NICOTINE, REGARDLESS OF SOURCE, IN THE DEFINITION OF "TOBACCO PRODUCT" IN THE TOBACCO PRODUCTS TAX ACT; PROVIDING EXCEPTIONS FOR CERTAIN PRODUCTS; TEMPORARILY DISTRIBUTING REVENUE FROM THE TAX TO A NEW NICOTINE USE PREVENTION AND CONTROL FUND; PROVIDING A DELAYED REPEAL.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--TOBACCO PRODUCTS TAX--NICOTINE USE PREVENTION AND CONTROL.--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
the following percentages of the net receipts attributable to the tobacco products tax:
A. prior to July 1, 2026, fifty percent;
B. beginning July 1, 2026 and prior to July 1, 2027, eighty percent; and
C. beginning July 1, 2027 and prior to July 1, 2028, one hundred percent."
SECTION 2. [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 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 3. 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 drug administration under the Federal Food, Drug, and Cosmetic Act] device that can be used to deliver aerosolized or vaporized nicotine by heating a liquid solution;
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 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. "tobacco product":
(1) means:
[(1)] (a) any product, other than cigarettes [cigars and little cigars] and the products described in Subparagraph (a) of Paragraph (2) of this subsection, made [from] of 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, dissolved or inhaled;
[(2)] (b) e-liquid;
[(3)] (c) e-cigarettes; and
[(4)] (d) closed system cartridges; and
(2) does not mean:
(a) a noncombustible product that contains nicotine, is not made of and does not contain tobacco and is not e-liquid; and
(b) any product regulated as a drug or device by the United States food and drug administration pursuant to the Federal Food, Drug, and Cosmetic Act."
SECTION 4. 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 percent of the product value of the tobacco products; provided that for the following tobacco products, the rate shall be:
(1) for cigars, twenty-five percent, not to exceed fifty cents ($.50) per cigar;
(2) for little cigars, the rate equal to the rate imposed on cigarettes pursuant to Section 7-12-3 NMSA 1978;
(3) for e-liquid, forty-four percent;
(4) for e-cigarettes, forty-four percent; and
(5) for closed system cartridges, fifty cents ($.50) per closed system cartridge.
[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".
[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 5. DELAYED REPEAL.--Section 1 of this act is repealed effective July 1, 2028.
SECTION 6. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2024.
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