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Colorado’s tax on pot still a worry for backers
Meeting revenue goals will be in voters’ hands
DENVER - Recreational marijuana was sold to Colorado voters as a revenue source for schools, but some lawmakers now worry that they may wind up with all of the pot and none of the money.
State Senate President John Morse vowed to revive a repeal effort on recreational marijuana next year if proposed sales and excise taxes on the drug fail to win voter approval in November. The Senate killed a proposal late Monday that would have given voters the repeal option on this year’s ballot.
Colorado’s Amendment 64, the 2012 legalization measure, calls on the legislature to place a 15 percent excise tax on the ballot, but it doesn’t say what will happen if the voters reject it. Under the state’s Taxpayer Bill of Rights, only voters may approve a tax increase.
Mr. Morse, a Democrat, raised the possibility Monday that the marijuana industry may actually campaign against the proposed pot taxes “with their millions from out of state.”
“Here is the inherent problem, the marijuana industry has no incentive to support a tax increase it promised voters [benefiting schools],” Mr. Morse said in a statement. “The industry intentionally worded the initiative to force a second ballot question to the voters.”
Coloradans may now wish they had done what Washington state voters did in November. Both states approved recreational marijuana use for adults 21 and older, but included in Washington’s ballot measure were three 25 percent excise taxes on producers, processors and retailers.
Both states are entering uncharted territory on recreational marijuana supply and demand, with little to guide them but the medical marijuana markets now operating in 18 states. On Monday, the California Supreme Court ruled that cities and counties may ban medical marijuana dispensaries within their borders.
Amendment 64 dedicates the first $40 million raised by the excise tax for school construction, but legislators say a special sales tax is needed to cover the costs of regulation and enforcement. A bill expected to win final approval Tuesday asks voters to approve a 15 percent excise tax and 10 percent sales tax on marijuana that may be increased by legislators to 15 percent.
“The voters wanted legalized marijuana and a tax that funded schools. But it is a strong reality that the tax will not pass,” Mr. Morse said. “I have yet to meet an industry that supports increasing taxes on themselves.”
Supporters of recreational marijuana insist that voters will approve the taxation proposal. A poll conducted three weeks ago by Public Policy Polling found that 77 percent of Coloradans surveyed would support a 10 percent sales tax on pot.
Mason Tvert, who led the Amendment 64 campaign, emphasized that the state’s legalization drive was run by advocates, not the marijuana industry, and that they continue to support the concept of excise and sales taxes.
“The Amendment 64 campaign has no interest in working against these taxes,” Mr. Tvert said. “We’ve been saying the whole time, we want marijuana taxed.”
At the same time, Mr. Tvert, who now works for the Marijuana Policy Project, said the campaign has no plans to ring doorbells in favor of the proposed tax structure but said state legislators should.
“We expect everyone who’s saying these taxes are necessary to support and campaign in favor of the ballot measure in the fall,” he said. “If they don’t, then we have to question what their motives are.”
Oddly enough, the tax proposal could wind up uniting the marijuana industry and its chief critics. If the tax fails, the pressure on the state legislature from anti-drug groups such as Smart Colorado to repeal Amendment 64 will be intense.
Denver pollster Floyd Ciruli predicted that the measure will pass, given the electorate’s tendency to support “sin taxes” such as those on tobacco.
“The people dealing directly with the price problem are a relatively small group, and they’re less likely to vote in a nonpresidential year,” Mr. Ciruli said. “This measure is going to be decided by nonusers.”
Republicans have argued in favor of keeping the sales tax at 10 percent in order to increase the measure’s chances of passage and avoid the specter of a black market driven by higher taxes. Meanwhile, Democrats insist that the higher sales tax will pass and, if not, the legislature can always enact fees on the industry.
“If it doesn’t pass, instead of tax the heck out of you, we’ll fee the heck out of you,” said state Rep. Jonathan Singer, a Democrat, in last week’s debate.
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About the Author
Valerie Richardson covers politics and the West from Denver. She can be reached at email@example.com.
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