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GUEST COLUMN: Colorado's broken marijuana revenue model

By: Walker Stapleton
March 19, 2017 Updated: March 24, 2017 at 8:22 am
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A few weeks ago, Gov. John Hickenlooper proposed a 50 percent sales tax increase on recreational marijuana in hopes of restoring $40 million to public schools. While the governor is searching high and low for pots of money, he may want to look right under his nose at the most glaring revenue problem associated with the marijuana industry in Colorado.

The fraud and abuse around the issuance of medical marijuana cards has undercut the economic contributions this industry should be making to Colorado. Legal marijuana contributed roughly $150 million to Colorado's $28 billion dollar budget, through the end of October. While this isn't a small amount of money, given our funding challenges for education and infrastructure, one could argue it is far from a silver bullet for our budget woes. And the way our marijuana system is constructed leaves money on the table.

Here is the problem with medical marijuana in Colorado:

Colorado has issued more than 100,000 medical marijuana cards and about two-dozen "doctors" are responsible for writing the majority of these prescriptions. To get a medical marijuana card, you do not need a referral from a doctor or even a pre-existing medical condition to qualify. An additional problem lies in the fact that younger consumers can obtain a medical marijuana card at 18 as opposed to the 21-age requirement to use recreational marijuana, further incentivizing the medical marijuana route. You simply need about 30 minutes and $150 dollars.

Once you obtain the card, you enter the medical marijuana line at your nearby dispensary and pay no county or state tax while recreational users pay about 30 percent more in taxes for the same product. There is no "ceiling" when it comes to the amount of marijuana a physician can recommend based on "medical necessity." Additionally, a patient or caregiver can grow up to 99 plants and supply a small village of friends and neighbors with tax-free pot as well.

Colorado has found that 95 percent of these cards have a general listing of "pain" as their qualifying diagnosis as opposed to a specific medical condition. There are backaches and writer's cramps, that some of us remedy with a quick trip to Walgreens for some aspirin- for which we pay taxes.

I do not mean to suggest that there are not legitimate medical uses for marijuana for children or adults suffering from seizures or chronic illness and pain. What I am suggesting is the majority of medical card users are taking advantage of a way-too-easy-to-game medical marijuana system.

Many of these 95,000 medical marijuana card holders, the ones listing "pain" as their qualifying condition, may also represent some of legal marijuana's best customers. They enjoy tax-free marijuana at a 30 percent discount. This is a broken revenue model that must be fixed.

The state has begun to attempt to crack down on the prescription happy doctors responsible for these cards, but more needs to be done. Fraudulent cardholders and the doctors that enable them are doing a disservice to the state and to the legitimate patients that truly use medical marijuana the way the system was designed. The abuse around medical cards will not be a simple process to fix. The folks who have taken advantage of the system will most certainly cry foul. Marijuana doctors will likely search for more ways around new regulations to continue their lucrative practices. As treasurer, I am committed to working with interested parties to close the gaps and address defects in our marijuana policy.

Given Colorado's many economic challenges, allowing 95,000 of the state's most habitual users to buy their marijuana at a 30 percent discount makes no sense. The industry should want to see this fixed so it can contribute in an even more meaningfully way to Colorado's budget. Rural communities are being forced to deal with the unintended consequences of legalization like illegal grow operations without sharing in the economic benefits of legalized marijuana. It is time to clean up the many loopholes associated with medical marijuana so we can increase the economic benefit of the industry for Colorado. It's not a fix-all for Colorado's budget troubles, but every dollar helps as we rebuild our roads and fund our schools.

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Walker Stapleton is Colorado's state treasurer.

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