- Associated Press - Thursday, April 24, 2014

DENVER (AP) - The federal government has reluctantly agreed to let Colorado be the first state to collect taxes from the legal sale of recreational marijuana, but it also has made clear it doesn’t agree with the move and may try to stop it, if isn’t tightly controlled.

Instead of keeping a low profile with the money, however, some Colorado lawmakers are trying the bold move of using millions of dollars they’ve collected so far from pot sales to seek matching funds from the federal government to keep kids off drugs.

The plan calls for transferring $3.5 million from the state’s marijuana cash fund to its general fund and then sending the same amount to a state department that would apply for a federal match.

Democratic state Sen. Pat Steadman, the measure’s sponsor, joked that the bookkeeping move “is what I’m calling money laundering.”

Supporters say the transfer shouldn’t raise any concerns since federal authorities already collect marijuana dollars from the state’s medical pot industry and have established guidelines for recreational sales that include keeping the drug away from minors and off federal lands.

Moving the money from one fund to another, proponents say, simply acknowledges and avoids potential conflict.

Colorado just needs to do “a little two-step” to calm federal nerves, Steadman said, explaining the plan to fellow budget writers. “We wouldn’t want the tainted money to draw a federal match, now, would we?” he added, sarcastically.

Skeptics are rolling their eyes. “Colorado is now becoming basically a cartel, a drug cartel,” said Sen. Kent Lambert, a Republican on the budget-writing committee, who nonetheless voted in favor.

“I don’t know what they’re trying to do,” Lambert said. Maybe “avoid federal scrutiny? I don’t think you’re going to hide it from the federal government.”

The match request would seek funds from the U.S. Centers for Medicare & Medicaid Services “for behavioral health community programs for school-based prevention” of child drug use.

Federal Medicaid authorities would have to approve the idea, but it’s not immediately clear how the agency would respond. A CMS spokeswoman declined comment Thursday.

The idea of sending marijuana revenue to the state’s general fund isn’t new. Colorado has for years put a 2.9 percent sales tax on medical pot, with the revenue going to the general fund, which routinely sends money along to federal accounts.

But the recreational sales industry has created enough cash that lawmakers for the first time will be able to seek a dollar-for-dollar match of pot money with federal money.

In Washington state, where retail sales haven’t yet begun, voters assigned a new dedicated marijuana fund to receive pot taxes and spend the money on health care, drug abuse treatment and education, and marijuana-related research. It’s too soon to say whether Washington lawmakers would seek federal matching funds for any of those efforts in the future.

A spokesman for the Colorado department that would seek Medicaid funding insisted that the request to federal authorities will be from general fund dollars.

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