Eagle relaxes weed tax
EAGLE — It will soon be a bit cheaper to purchase retail marijuana in Eagle, thanks to a recent decision by the Eagle Town Board to relax the tax the community imposes on such transactions.
When Eagle voters approved retail marijuana sales in town, they also approved an “up to” $5 per transaction tax on marijuana sales. That fee comes on top of the regular 8.4 percent sales tax the town charges on all retail sales and the 10 percent retail marijuana sales tax charged by the state. Because it was a flat fee, it was charged equally on $1 purchases and $100 purchases and everything above and in between.
“We just want to talk about having a level playing field with our business and the rest of the valley,” said Dave Manzanares, owner of Sweet Leaf Pioneer, the sole retail marijuana operation currently open in Eagle. While other locations in unincorporated Eagle County must impose the county and state sales tax, they don’t have to impose Eagle’s municipal tax or its per-transaction tax.
Eagle Town Attorney Ed Sands noted a first compromise would be to eliminate imposition of the per-transaction tax on marijuana accessories — items that can be bought in other stores in Eagle without the tax imposed. But Sands also noted that a per-transaction tax cannot be charged on a sale amount percentage basis, because the state of Colorado reasons that percentage benchmarks mean a per-transaction tax is just a disguised additional sales tax. He suggested imposing a tiered system where purchases up to a certain amount are charged a lower tax and higher purchases are charged a larger amount. Members of the town board agreed with that reasoning.
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“I am highly sensitive to the problem you are bringing to us,” said town board member Sarah Baker. “We are driving business away from Eagle right now and I am not OK with that.”
While the Sweet Leaf owners were in favor of a tiered system that gives cost relief for smaller purchases, they noted that their point-of-sale software isn’t really programed to allow for such a system. Too many tiers would mean additional bookkeeping for the business and work for sales clerks.
Home Rule Incorporation
In the end, the town board decided to keep things simple and charge a flat $1 per-transaction tax on retail marijuana purchases up to $20 and a flat $5 fee for purchases of $20 or more. What’s more, they indicated the town really needs to look at this issue as part of a larger issue — home rule incorporation.
Eagle is a statutory town, which means it must follow rules set by the state. If Eagle decides to pursue home rule status— such as the neighboring town of Gypsum — it would have more freedom to regulate many issues including the taxation of retail marijuana.
“I believe this is interim relief because we will be looking at a home rule petition in the near future,” said Baker.
Town board member Geoff Grimmer agreed that pursuing home rule status would likely be a positive change for Eagle. “There are some lasting, positive, long-term benefits from that process,” he said.
Grimmer also noted that Eagle has found that retail marijuana sales and growing operations can coexist with a family-friendly community atmosphere.
“I think having grow warehouses (in town) is an interesting option,” he said.