LAS CRUCES – An agreement to invest funds for economic development in an upcoming hemp and cannabis business was terminated by the city of Las Cruces after the company failed to meet employment criteria.
420 Valley, LLC, to open as a hemp and cannabidiol manufacturing center and retail store with indoor growing space and a coffee shop and taproom for infused beverages, when the Local Economic Development Act pledged an investment of $ 150,000 in December 2019 Funding, with the New Mexico Economic Development Department pledging to invest $ 400,000.
The company on 420 South Valley Drive in Las Cruces pledged to bring 55 full-time jobs to the city by the end of 2023, after a scheduled opening in 2020. However, the COVID-19 pandemic disrupted those plans, leaving 420 Valley in possession of large amounts of biomass used to extract CBD.
Owner and partner Rick Morales previously told Sun News it would be a hassle to have the biomass processed and then sit on unsold produce. Retailers that could have been supplied with hemp and CBD products from 420 Valley have closed due to the pandemic, he said.
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The store has yet to open.
Other plans for the business were turned upside down by COVID-19. Morales said higher timber prices affected plans to remodel the 420 South Valley building, and he said potential employees were no longer taking phone calls back, for which he blamed increased federal unemployment benefits.
Still, Morales said the recent legalization of cannabis for adult use has led 420 Valley to rethink its original business model. On Tuesday, Morales said that once the store opened, it could sell recreational cannabis or include a testing lab. Hemp and CBD could still be part of the final deal, Morales said, or the deal could have all of these components.
LEDA project agreements usually contain specific employment benchmarks that a company must meet in order for the funding agreement to continue.
The city, which was the financial agent for the funds, said the company missed a December 31, 2020 deadline to employ at least 18 people and a 180-day cure period had passed.
The city said none of the funds had been transferred to 420 Valley by Monday when Las Cruces City Council voted 5-0 to return the state and municipal funds to the NMEDD, or the city’s balance, and a project-sharing agreement between 420 Valley to end and the city. Councilors Gabe Vasquez and Gill Sorg were absent.
Since the money has not been sent to the company, 420 Valley will face no recovery penalties for canceling funds, the city said.
Morales said Tuesday the business was not materially impacted by the loss of the LEDA investment, adding that he would rather start the business with no external requirements than accept public funds only to be later accused of mishandling.
Michael McDevitt is the city and county government reporter for Sun News. He can be reached at 575-202-3205, [email protected] or @MikeMcDTweets on Twitter.
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