HB0212

HOUSE BILL 212

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

Micaela Lara Cadena and Derrick J. Lente and Cristina Parajón

AN ACT

RELATING TO TAXATION; AMENDING THE LIQUOR EXCISE TAX ACT; CHANGING THE RATES OF THE TAX TO A PERCENTAGE BASIS; CHANGING THE DISTRIBUTIONS OF THE TAX; CREATING THE ALCOHOL AND SUBSTANCE USE HARMS ALLEVIATION FUND; DEFINING "BARRELS" IN THE ACT; ELIMINATING FORTIFIED WINE AS A SPECIFIC TYPE OF ALCOHOLIC BEVERAGE; REPEALING THE LOCAL DWI GRANT PROGRAM ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 7-1-6.40 NMSA 1978 (being Laws 1997, Chapter 182, Section 1, as amended) is amended to read:

"7-1-6.40. DISTRIBUTION OF LIQUOR EXCISE TAX--[LOCAL DWI GRANT FUND--CERTAIN MUNICIPALITIES] DRUG COURT FUND--ALCOHOL AND SUBSTANCE USE HARMS ALLEVIATION FUND.--

[A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 in an amount equal to forty-five percent of the net receipts attributable to the liquor excise tax shall be made to the local DWI grant fund.

B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 of twenty thousand seven hundred fifty dollars ($20,750) monthly from the net receipts attributable to the liquor excise tax shall be made to a municipality that is located in a class A county and that has a population according to the most recent federal decennial census of more than thirty thousand but less than sixty thousand and shall be used by the municipality only for the provision of alcohol treatment and rehabilitation services for street inebriates.]

A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the alcohol and substance use harms alleviation fund in an amount equal to the net receipts attributable to the liquor excise tax, less two million eighty-four thousand dollars ($2,084,000) monthly and the amount distributed pursuant to Subsection B of this section.

[C. Beginning July 1, 2019] B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 in an amount equal to [five percent of] two hundred fifty thousand dollars ($250,000) monthly from the net receipts attributable to the liquor excise tax shall be made to the drug court fund."

SECTION 2. Section 7-17-2 NMSA 1978 (being Laws 1966, Chapter 49, Section 2, as amended) is amended to read:

"7-17-2. DEFINITIONS.--As used in the Liquor Excise Tax Act:

A. "alcoholic beverages" means distilled or rectified spirits, potable alcohol, brandy, whiskey, rum, gin, aromatic bitters or any similar beverage, including blended or fermented beverages, dilutions or mixtures of one or more of the foregoing containing more than one-half of one percent alcohol by volume, but "alcoholic beverages" does not include medicinal bitters;

B. "barrel" means the equivalent of thirty-one gallons;

[B.] C. "beer" means an alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt and hops or other cereals in water and includes porter, beer, ale and stout;

[C.] D. "cider" means an alcoholic beverage made from the normal alcoholic fermentation of the juice of sound, ripe apples or pears that contains not less than one-half of one percent of alcohol by volume and not more than eight and one-half percent of alcohol by volume;

[D.] E. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

[E. "fortified wine" means wine containing more than fourteen percent alcohol by volume when bottled or packaged by the manufacturer, but "fortified wine" does not include:

(1) wine that is sealed or capped by cork closure and aged two years or more;

(2) wine that contains more than fourteen percent alcohol by volume solely as a result of the natural fermentation process and that has not been produced with the addition of wine spirits, brandy or alcohol; or

(3) vermouth and sherry;]

F. "microbrewer" means a person who produces less than two hundred thousand barrels of beer per year;

G. "person" includes, to the extent permitted by law, a federal, state or other governmental unit or subdivision or an agency, department, institution or instrumentality thereof;

H. "small winegrower" means a winegrower who produces less than one million five hundred thousand liters of wine in a year;

I. "spirituous liquors" means alcoholic beverages, except fermented beverages such as wine, beer, cider and ale;

J. "wholesaler" means a person holding a license issued under Section 60-6A-1 NMSA 1978 or a person selling alcoholic beverages that were not purchased from a person holding a license issued under Section 60-6A-1 NMSA 1978;

K. "wine" means an alcoholic beverage other than cider that is obtained by the fermentation of the natural sugar contained in fruit or other agricultural products, with or without the addition of sugar or other products, and that does not contain more than twenty-one percent alcohol by volume; and

L. "winegrower" means a person licensed pursuant to Section 60-6A-11 NMSA 1978."

SECTION 3. Section 7-17-5 NMSA 1978 (being Laws 1993, Chapter 65, Section 8, as amended) is amended to read:

"7-17-5. IMPOSITION AND RATE OF LIQUOR EXCISE TAX.--

A. There is imposed on a wholesaler who sells alcoholic beverages on which the tax imposed by this section has not been paid an excise tax, to be referred to as the "liquor excise tax", at the [following] rates provided in Subsections B through D of this section on the price paid for alcoholic beverages sold by the wholesaler.

[(1) on spirituous liquors, except as provided in Paragraph (9) of this subsection, one dollar sixty cents ($1.60) per liter;

(2) on beer, except as provided in

Paragraph (5) of this subsection, forty-one cents ($.41) per gallon;

(3) on wine, except as provided in Paragraphs (4) and (6) of this subsection, forty-five cents ($.45) per liter;

(4) on fortified wine, one dollar fifty cents ($1.50) per liter;

(5) on beer manufactured or produced by a microbrewer and sold in this state, provided that proof is furnished to the department that the beer was manufactured or produced by a microbrewer, eight cents ($.08) per gallon on the first thirty thousand barrels sold, twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels and forty-one cents ($.41) per gallon for sixty thousand or more barrels sold;

(6) on wine manufactured or produced by a small winegrower and sold in this state, provided that proof is furnished to the department that the wine was manufactured or produced by a small winegrower:

(a) ten cents ($.10) per liter on the first eighty thousand liters sold;

(b) twenty cents ($.20) per liter on each liter sold over eighty thousand liters but not over nine hundred fifty thousand liters; and

(c) thirty cents ($.30) per liter on each liter sold over nine hundred fifty thousand liters but not over one million five hundred thousand liters;

(7) on cider, except as provided in Paragraph (8) of this subsection, forty-one cents ($.41) per gallon;

(8) on cider manufactured or produced by a small winegrower and sold in this state, provided that proof is furnished to the department that the cider was manufactured or produced by a small winegrower, eight cents ($.08) per gallon on the first thirty thousand barrels sold, twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels and forty-one cents ($.41) per gallon for sixty thousand or more barrels sold; and

(9) on spirituous liquors manufactured or produced by a craft distiller licensed pursuant to Section 60-6A-6.1 NMSA 1978, provided that proof is provided to the department that the spirituous liquors were manufactured or produced by a craft distiller, for products up to ten percent alcohol by volume, eight cents ($.08) per liter for the first two hundred fifty thousand liters sold and twenty-eight cents ($.28) per liter for the next two hundred fifty thousand liters sold and for products over ten percent alcohol by volume, thirty-two cents ($.32) per liter on the first one hundred seventy-five thousand liters sold and sixty-five cents ($.65) per liter on the next two hundred thousand liters sold.]

B. The liquor excise tax imposed on spirituous liquors is as follows:

(1) if manufactured or produced by a craft distiller licensed pursuant to Section 60-6A-6.1 NMSA 1978; provided that proof is provided to the department that the spirituous liquors were manufactured or produced by a craft distiller:

(a) for products up to ten percent alcohol by volume: 1) six-tenths percent for the first two hundred fifty thousand liters sold; 2) two and one-tenth percent for the next two hundred fifty thousand liters sold; and 3) twelve percent for each liter sold thereafter; and

(b) for products over ten percent alcohol by volume: 1) two and four-tenths percent for the first two hundred fifty thousand liters sold; 2) four and eight-tenths percent for the next two hundred fifty thousand liters sold; and 3) twelve percent for each liter sold thereafter; and

(2) for all other spirituous liquors, twelve percent.

C. The liquor excise tax imposed on wine is as follows:

(1) if manufactured or produced by a small winegrower and sold in this state; provided that proof is furnished to the department that the wine was manufactured or produced by a small winegrower:

(a) two percent for the first eighty thousand liters sold;

(b) four percent for each liter sold over eighty thousand liters but not over nine hundred fifty thousand liters; and

(c) six percent for each liter sold over nine hundred fifty thousand liters but not over one million five hundred thousand liters; and

(2) for all other wine, nine percent.

D. The liquor excise tax imposed on beer and cider is as follows:

(1) if manufactured or produced by a microbrewer or small winegrower and sold in this state; provided that proof is furnished to the department that the beer or cider was manufactured or produced by a microbrewer or small winegrower:

(a) one and two-tenths percent for the first thirty thousand barrels sold;

(b) five percent for all barrels sold over thirty thousand barrels but less than sixty thousand barrels; and

(2) for all other beer and cider, six percent.

[B.] E. The volume of wine transferred from one winegrower to another winegrower for processing, bottling or storage and subsequent return to the transferor shall be excluded pursuant to Section 7-17-6 NMSA 1978 from the taxable volume of wine of the transferee. Wine transferred from an initial winegrower to a second winegrower remains a tax liability of the transferor, provided that if the wine is transferred to the transferee for the transferee's use or for resale, the transferee then assumes the liability for the tax due pursuant to this section.

[C.] F. A transfer of wine from a winegrower to a wholesaler for distribution of the wine transfers the liability for payment of the liquor excise tax to the wholesaler upon the sale of the wine by the wholesaler."

SECTION 4. [NEW MATERIAL] ALCOHOL AND SUBSTANCE USE HARMS ALLEVIATION FUND.--

A. The "alcohol and substance use harms alleviation fund" is created as a nonreverting fund in the state treasury. The fund consists of appropriations, distributions, gifts, grants, donations and bequests made to the fund and income from investment of the fund. The department of finance and administration shall administer the fund, and money in the fund is subject to appropriation by the legislature for alcohol and substance use harms prevention, treatment and recovery services to individuals throughout New Mexico, including on lands of Indian nations, tribes and pueblos.

B. Money in the fund shall be expended by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary or the secretary's authorized representative.

SECTION 5. TEMPORARY PROVISION--TRANSFER OF FUNDS.--Any unexpended and unencumbered balance in the local DWI grant fund shall be transferred to the alcohol and substance use harms alleviation fund.

SECTION 6. REPEAL.--Sections 11-6A-1 through 11-6A-6 NMSA 1978 (being Laws 1993, Chapter 65, Sections 1 through 5 and Laws 1997, Chapter 182, Section 2, as amended) are repealed.

SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.

- 11 -