NM lawmakers plan to reintroduce nicotine tax hike in 2027

Ahead of New Mexico’s next 60-day legislative session in 2027, the interim Tobacco Settlement Revenue Oversight Committee on Monday strategized about how to best approach raising taxes on electronic nicotine products.

While New Mexico law imposes a 25% tax on traditional tobacco products, the tax on e-cigarettes is half that: 12.5%.

For the last two years, New Mexico lawmakers have tried to amend the state Tobacco Control Act to say anything that is nicotine derived should be taxed like other nicotine products, American Heart Association lobbyist Mahesh Sita told the committee.

In the most recent legislative session, state Rep. Elizabeth “Liz” Thomson and Sen. Martin Hickey, both Albuquerque Democrats, carried a bill that would have raised taxes on all nicotine products to 40%.

The state Senate and the House Health and Human Services Committee passed the bill, but it did not receive a final vote in the House Taxation and Revenue Committee.

The 2026 legislative session, the last regular session under Gov. Michelle Lujan Grisham, is a short session, meaning lawmakers can only consider pieces of legislation approved by the governor on her “call,” or deemed “germane” to the state government budget.

“There is a new session coming up — it is a call session, so things may be more difficult — but we’re planning out for the following session,” Hickey said on Monday.

Thomson asked Sita and Linda Siegle, a lobbyist for the Cancer Action Network, about other states that have passed legislation for regulating not just existing nicotine products but also those that the industry may come up with in the future.

Thomson said the tobacco industry stays “miles, not just steps” ahead of lawmakers.

“By the time we get a bill done, with the language, they’ve left us in the dust,” she said.

Sita said the latest tobacco products are synthetic, so the tobacco industry argues they can’t be taxed as tobacco. However, Sita argued they should be, since they are derived from nicotine.

“Other states have done it, and the new products — the chews and the like — with a high content of nicotine, have very addictive properties,” Sita said.

Sita pointed to California and Massachusetts as examples, and said his organization has proposed a uniform taxing system on all nicotine products based on their wholesale value, comparable to the existing cigarette tax.

Officials from the New Mexico Department of Health Nicotine Use Prevention and Control program presented data to the committee showing that in 2023, more than a third of New Mexicans aged 18 to 29 years used some kind of nicotine product, while 22% of high school students and nearly 13% of middle school students used them.

Hickey said the greatest inhibitor to young people starting to use nicotine is cost, and Siegle said making e-cigarettes’ cost comparable to traditional tobacco is probably the best approach to curbing young people’s use.

“The e-cigarette market is rapidly evolving,” Siegle said. “Now there are all these other products out there, I don’t even know what we’re taxing on them — if we’re taxing them, because they’re not listed in our statute.”