City councilors discuss where to spend cannabis tax revenue

LAS CRUCES - City councilors seemed content to wait for the state to act before determining where most of the municipality's share of cannabis excise tax revenue will be allocated, though some possible ideas were suggested during a work session June 13.

"I dont see a harm in waiting," District 4 Councilor Johana Bencomo said, adding that she expects legislation on the revenue allocation at the state level during the 2023 legislative session. "I would like to see more information coming from the state."

New Mexico imposes a 12 percent tax on adult-use cannabis sales, which became legal April 1. About one-third of the cannabis excise tax revenue generated is kept by the city. Las Cruces generated $3.3 million in medical and recreational cannabis sales in May, about $1.8 million of which was taxable. Medical cannabis is not taxed in New Mexico.

During the Monday work session, city economic development department staff presented the Las Cruces City Council with a forecast for the amount of local tax revenue newly legal cannabis sales could generate.

In April and May, Las Cruces cannabis sales generated roughly $82,500 and $70,900 in tax revenue, respectively. The city forecasts cannabis sales could generate more than $441,000 in local tax revenue in the upcoming fiscal year.

Fire Chief Jason Smith suggested $155,000 of the revenue go toward hiring and equipping a new fire code inspector to accomodate the growing demand from increased business applications, some of which are cannabis businesses. Business applications were up 8.7 percent in the first quarter of 2022 when compared with the same time last year, and businesses currently must wait between five and nine days to be inspected.

"We can't meet the demand right now," Smith said.

If just one more inspector is hired, Smith said, wait times for new businesses could be decreased.

District 2 Councilor Tessa Abeyta and Bencomo agreed that funding a new fire code inspector is an immediate need.

Las Cruces Deputy Police Chief Kiri Daines suggested using a portion of the revenue to train five officers in drug recognition to combat an anticipated increase in impaired driving incidents, at about $18,400 per officer. She envisions those five training other officers on the force. She also proposed $10,000 in funding to assist the Las Cruces police in engaging with cannabis businesses and schools to provide education about responsible cannabis use.

More:Las Cruces police warn about weed-laced Cheetos imposters, other THC snack foods

"What we're looking at is getting impaired drivers off the roadways," Daines said.

City staff presented cannabis tax revenue information to the city’s Finance Select Committee on April 22 and to the Economic Development Policy Review Committee on May 18. In those meetings and on Monday, councilors said they were open to using cannabis tax revenue to replenish the city's Telshor Facility Fund on a recurring basis. The fund is dedicated to helping the city's low-income residents and to provide health-related services.

"I will advocate on this dais that we stay away from funding enforcement mechanisms," Bencomo said, "given that it has taken such a long time for the industry to get out of prohibition, and then saying we're going to use this revenue to then enforce this community again, to me feels counterintuitive. And I would like to see us use these revenues in a way that's going to improve people's quality of life. And I think that the Telshor Fund has the huge potential of doing just that."

Some councilors also said they preferred to wait to see how the state would use its share of tax revenue first so the city's plans aren't redundant.

District 5 Councilor Becky Corran said she wants the city to focus the use of the revenue on communities historically impacted most by the war on drugs.

"I think that I support Councilor Bencomo's model for thinking about replenishing the Telshor Fund and perhaps adding an additional lens for the specific communities that may have been affected by prohibition in the past," Corran said.

Councilors also discussed using the revenue to address housing insecurity, economic development, substance abuse and mental health.

Michael McDevitt is a city and county government reporter for the Sun-News. He can be reached at 575-202-3205, mmcdevitt@lcsun-news.com or @MikeMcDTweets on Twitter.

This article originally appeared on Las Cruces Sun-News: Las Cruces city councilors discuss where to spend cannabis tax revenue