When legislative advocates for legalizing cannabis were pushing their cause, they said the industry would bring in tens of thousands of dollars a year in new revenue.
The state Revenue and Licensing Department last week provided a first glimpse of how much tax revenue the state might expect from marijuana sales, which became legal April 1. The state reported retail shops paid more than $2.4 million in excise taxes in April and more than $1.6 million in gross receipts tax.
Taxation and Revenue Department spokesman Charlie Moore said Wednesday the excise tax figure is closer to $2.5 million — meaning overall, the state took in more than $4.1 million in tax revenue in the first month.
That money will go into the state’s general fund and to local municipalities to use as needed, he said.
Medical cannabis sales are exempt from the state’s excise tax.
Moore said the first monthly look at potential revenue bodes well for the fledgling industry, in which many producers, manufacturers and retailers are still trying to gain solid footing.
Though 158 taxpaying retailers had registered for cannabis tax excise accounts, not all of them had begun selling in April, Moore said.
Tax figures were taken from just 126 of those businesses, he added.
Endo, a locally owned cannabis shop in Santa Fe, did not open until late May. One of its owners, Ian Aarons, kept a smile on his face as he dealt with a steady stream of customers at his Agua Fría Street store Wednesday.
Business started out slowly but is picking up, Aarons said, as his staff showed off an array of cannabis flowers, pre-rolls and ice cream to customers.
Though he hasn’t been in the sales game long enough to rack up a month’s worth of receipts, he believes the state’s Taxation and Revenue Department’s estimate it made at least $4 million on cannabis sales in April is “legitimate.”
“We’re seeing pretty good sales, and with the corporate guys with 40 locations operating, I could see $4 million,” he said.
Moore said the Taxation and Revenue Department is posting some initial revenue distribution figures to local municipalities, and he said he hopes there will be a fuller, more user-friendly report by mid-June. An initial distribution list to individual communities shows more than $12,000 to Albuquerque, about $8,800 to Santa Fe and about $4,120 to Española.
Aarons, who runs the store with his father, cousin and two other employees, said he’s already seen a number of clients who identified themselves as teachers. Those customers made it clear they hope much of the tax money derived from cannabis goes toward improving public education, he said.
“We want to see where that money is going,” Aarons said.
To date, the state Regulation and Licensing Department, which has a Cannabis Control Division which oversees the industry, has provided regular reports on cannabis sales.
First weekend sales topped $5 million and more than $20 million in April. An update on sales in May is expected Thursday.
A Legislative Finance Committee report in March 2021 predicted recreational marijuana sales in the industry’s full fiscal year, starting in July 2022, would produce $19.1 million in tax revenue for the state’s general fund and $9.4 million for local governments.
The following year could be more lucrative, with up to $30 million in tax revenue for the state, the report said.
Moore said it would be easy to multiply the $4.1 million in tax revenue generated in April by 12 months and estimate future yearly earnings on that amount.
But he said it’s too early to draw that conclusion. “We’ll see how it goes; it’s a new industry,” Moore said.