How should Las Cruces use $900K in cannabis tax revenue? Council discusses potential use
The Las Cruces City Council is in the process of determining how to allocate nearly $900,000 of excise tax revenue generated by recreational cannabis.
There was no clear consensus reached during a Monday work session, but according to a presentation by City staff members, Las Cruces has received excise tax revenue from 67 dispensaries in city limits since recreational sales started in April of 2022.
Cannabis tax revenue is distributed to the general fund and is unrestricted, meaning the city can spend the money however officials want.
Council members discussed potentially attaching cannabis excise tax revenue to another fund, such as the Telshor Fund, or the creation of a special revenue fund, which the council would need to approve via resolution or ordinance and from which monies from which would be specified for a purpose.
More: New Mexico's first 24-hour cannabis store opens in Las Cruces
“We are looking for direction,” said Assistant city manager Ikani Taumoepeau, who presented Council with information regarding revenue. “This is the type of deliberation we appreciate as staff. We are really at the behest of council. We just want to make sure we are here to present for your actions.”
Las Cruces received approximately $87,000 in Fiscal Year 2022, approximately $847,000 in FY23 and $137,000 so far in FY24.
The City's presentation included an analysis of how cannabis tax revenue has been allocated in other cities where recreational cannabis is legal, such as Portland, Oregon, where recreational cannabis sales started in 2015.
According to data presented by City staff, Portland generated approximately $9.2 million in tax revenue from cannabis sales in 2022. The revenue was allocated to drug and alcohol treatment, public safety and support for neighborhood small business with 62 percent allocated toward small business and community support.
“What I would rather do instead of diluting it to where it makes very little impact, ensure that we are using it to make the most impact,” Councilor Johana Bencomo said.
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Revenue could be used to address public safety needs
Taumoepeau cited two ways cannabis excise tax funds could address public safety needs.
The first included increased training for Las Cruces Police Department officers to better observe, identify and articulate signs of impaired drivers related to drugs or alcohol.
As a second option, Las Cruces Fire Department Chief Jason Smith said that an additional inspector is needed as all cannabis dispensaries in Las Cruces are located in older buildings.
“A lot of these (businesses) are taking older buildings. Buildings that maybe aren’t for the purpose of retail or production and changing them,” Smith said. “They take a little more detail as far as review.”
Create a separate fund or combine revenue with Telshor Fund?
The Telshor Fund is meant to support the city’s sick and indigent populations, often through disbursements to local community nonprofits. It had a July market value of about $40 million.
“As funds are expended, this might be a prudent funding mechanism to help supplement expended funds by putting cannabis revenues funds in the Telshor,” Taumoepeau said. “If we wanted to use these funds that has been on sideline. It would be an easy recommendation to make.”
Councilor Becky Corran, who represents District 5, suggested temporary assistance for the expungement of outstanding cannabis related crimes in a hybrid funding model that could also support public safety projects.
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“I do think the Telshor Fund we fund a lot of excellent community projects,” Corran said. “But I believe part of this legislation was really to address expungement of people who have outstanding records, which I think would be a very short term need or opportunity.”
When the New Mexico State Legislature legalized cannabis, lawmakers added a provision allowing for past convictions of marijuana possession to be expunged.
“It could make a big impact on the Telshor Fund, certainly, or it could make a big impact on operational costs or racial justice," Bencomo said.
Allocating revenue for economic development
City economic development staff cited a survey of Las Cruces cannabis businesses in an effort to determine ways the City can support the business community and identify potential growth.
Cannabis businesses listed the need to hire additional staff and increased staff training for new occupations that arise in the industry.
"We really hope to serve as the bridge between the educational institutions and the businesses to really try to tailor those programs to best suit our businesses in the City of Las Cruces," said Irene Parra from economic development during the question and answer period with Councilors.
Economic development staff also briefly discussed applying additional resources to the two recently established Metropolitan Redevelopment Areas near El Paseo Boulevard and West Picacho Avenue to jumpstart those programs.
Jason Groves can be reached at 575-541-5459 or jgroves@lcsun-news.com. Follow him on X, formerly Twitter, @jpgroves.
This article originally appeared on Las Cruces Sun-News: $900K in cannabis tax revenue available to Las Cruces
