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Manitou Springs tax collections booming amid recreational marijuana sales

November 2, 2015 Updated: November 2, 2015 at 1:20 pm
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photo - Neighborhoods. Manitou Springs taken Aug. 10, 2015. (The Gazette, Christian Murdock)
Neighborhoods. Manitou Springs taken Aug. 10, 2015. (The Gazette, Christian Murdock) 

Business is booming in Manitou Springs, and its sales tax collections are at record levels.

The city brought in $2.71 million through August, more than the total for all of last year. A noteworthy figure, considering the sales tax revenue collected in 2014 was the city's largest total in at least a decade, according to data provided by its finance department.

And while a string of summer months devoid of major fires and floods and an improving economy have helped contribute to Manitou's success, recreational marijuana sales cannot be ignored.

"We were well on our way to financial health and recovery of our community," Mayor Marc Snyder said. "And the new taxes from recreational marijuana were just a real boost."

Manitou sales tax collections set a record in July 2014, which included only a few hours of recreational marijuana sales for the month.

Maggie's Farm became the first recreational marijuana store to open in the city and El Paso County, at 4:20 p.m. July 31, 2014, and was joined by a second store, Emerald Fields, April 1.

Colorado law does not allow specific tax information to be released about recreational marijuana stores in the city because there are fewer than three such businesses. But data show the two stores have made a difference, even if officials cannot disclose by how much.

Sales from the two recreational marijuana stores are included in the city's "other" industry category, a group of businesses that had a 4,268 percent increase in collections for the first half of the year, compared with the same period in 2014.

The city collects a 5 percent tax on recreational marijuana sales, on top of normal sales tax, and also receives an additional portion from the state's 10 percent tax.

In July, the city received $559,617, an 82 percent increase from July 2014. The record-breaking collections go beyond recreational marijuana sales as other industries in Manitou Springs are doing well, said Leslie Lewis, executive director of the city's chamber of commerce.

Collections from bars, gift shops, gas stations and motels are all each up by at least 16 percent in the first half of 2015, according to city data.

Collections from the restaurant industry through June 30 are down 6.2 percent from the same period in 2014, which Lewis said was affected by changes at businesses including at the Craftwood and Stagecoach inns.

Even when compared with August 2014, which included an entire month of recreational sales, collections in August of this year were up 9.8 percent.

The city has used the additional money collected to increase its reserves and consider citizen requests, flood mitigation work and infrastructure projects, Snyder said. But not all is as rosy as it looks.

Any sales tax generated between the gateway arch on the city's east side to the U.S. 24 interchange, exceeding the city's 2006collections, goes to the Urban Renewal Authority, said Rebecca Davis, the city's finance director. Collections are forecast to total $3.67 million this year, with $648,000 going to the authority to pay for improvements to the city's east end, Davis said.

Davis recommends against using tax collections from recreational marijuana sales for the city's operations, suggesting instead the funds go to infrastructure, special projects and grant matches.

If the city becomes dependent on recreational marijuana tax revenue, it could find itself in "severe budgetary problems" if other communities allow such sales, she said.

A return of devastating fires and floods could also derail Manitou's recent success, Lewis said. After heavy rain and flooding in August, Lewis said she received concerned calls from potential out-of-state visitors. The reaction was a sign of the tenuousness of the city's recent success.

"It has been a very good year, and we are so grateful that Manitou has had such a good year," Lewis said. "And hopefully we will just continue on a path of just moving upward and not have any major issues going forward."

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Contact Stephen Hobbs: 636-0275

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