Colorado Springs News, Sports & Business

To tax or not to tax: Marijuana election one month away

By Megan Schrader Published: October 7, 2013

Buy a pack of cigarettes, gamble in Black Hawk or have a pint in a bar and you'll be paying a sin tax.

Colorado voters in November will decide whether marijuana should be taxed similarly once it hits legal retail stores in January.

But opponents of the proposed 10 percent sales tax and 15 percent excise tax are saying the sin tax is being set too high compared with other sin taxes and could drive consumers to an unregulated black market.

The No on Proposition AA group handed out joints Thursday outside a fundraiser at a Denver brewery for the group supporting the ballot measure.

"We find it highly ironic that the ones behind this proposition are holding a fundraiser at a brewery yet they are refusing to regulate marijuana like alcohol," said Larisa Bolivar, spokeswoman for the No on Proposition AA campaign. "It's just one big show of hypocrisy."

Amendment 64, approved by voters last year, calls for marijuana to be regulated like alcohol is regulated. But it also called for an excise tax - a tax on the wholesale product when it's sold to distributors - of up to 15 percent that would go to the state's school building fund.

The constitutional amendment that legalized the sale, possession and cultivation of marijuana does not address a sales tax.

Rick Ridder is the campaign manager for the group supporting Proposition AA and helped write the language of Amendment 64.

"Amendment 64 said, 'yes, there would be taxes' but it did not preclude any other taxes," Ridder said. "We were cognizant and in the writing of that was a recognition that there might be local taxes and there might in fact be other state taxes levied as appropriate."

Ridder said the 10 percent sales tax - which could be increased up to 15 percent - and the 15 percent excise tax are necessary to properly fund the state's efforts to regulate the new marijuana industry. He also said the school fund component is critical to the success of retail marijuana sales in the eyes of public opinion.

According to a fiscal analysis of the taxes done by Colorado Legislative Council staff, the two taxes will bring in roughly $70 million in state revenue in 2014-15. Of that, the first $40 million raised by excise taxes must go to the school capital construction fund.

But Ridder emphasized that Colorado is among the first states to tread this path, making it difficult to accurately estimate how much will be generated and how high the taxes should be set.

The proposition allows for lawmakers to reduce the tax rates without voter approval as deemed necessary.

Almost all products sold in the state - with a few exceptions such groceries and prescription drugs - are taxed at 2.9 percent. The pot sales tax would be on top of that.

The city of Denver has proposed a 3.5 percent local sales tax on marijuana. Denver is one of few cities that will allow retail recreational pot shops to open beginning Jan. 1. Colorado Springs has banned retail sales of recreational marijuana.

Local jurisdictions will receive 15 percent of the proceeds from the statewide sales tax according to the proportion of retail recreational pot stores in their areas.

Eisa Khoury, who owns three medical marijuana stores through MMJ America and plans to open two recreational pot stores in Denver, said while he wishes the taxes were lower, he understands the need for the taxes.

"I hope it's not as high as they're anticipating it to be," Khoury said, acknowledging that will make it tough financially. "But it's a bargain price to pay, however, for users to be able to go into a legitimate, licensed business and buy cannabis that is safer rather than buying it off the street."

Khoury said high taxes were anticipated as part of the deal just as cigarettes face additional federal, state and local taxes.

Bolivar said that's part of the huge issue. She said tobacco products and alcohol are not being taxed a comparable rate to what's been proposed for marijuana.

But it's a hard comparison to make.

Beer in Colorado faces an excise tax not based on sales price but 8 cents per gallon. The state tax on cigarettes is 4.2 cents per cigarette or 84 cents for a 20-pack of cigarettes.

"You're trying to compare apples to oranges," Ridder said.

Voters will decide the issue Nov. 5 in the general election. A "yes" vote on Proposition AA would add the excise and sales taxes on to marijuana sales, while a "no" vote would result in no additional taxes.

-

Contact Megan Schrader

719-286-0644

Comment Policy

Our commenting system has changed. Please register or login with your gazette.com account to comment on a story. Click here for information.

Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
SEP
2
SEP
3
SEP
4
SEP
5
SEP
6
SEP
7
SEP
8
SEP
9
SEP
10
SEP
11
SEP
12
SEP
13
SEP
14
SEP
15
Advertisement

Latest Obits view all

Powered by Legacy.com ©