Avon to revisit bringing retail marijuana to town
Council to discuss whether or not to pursue a marijuana tax, as well as a construction use tax question in November
In 2014 — following the statewide legalization of marijuana — Avon passed an ordinance banning marijuana businesses in town. However, last fall members of the Town Council Planning & Zoning Commission expressed a desire to re-evaluate the ban.
At the November 16, 2021 meeting, council members and P&Z members supported the idea of allowing a finite number of recreational marijuana businesses to set up in town. There was less support, however, for allowing any cultivation or testing facilities over concerns of smell and that the facilities would go against the town’s climate action initiatives.
This shift in attitude was based on two primary rationales, supporters said. First, time has shown that many of the community fears around legalization haven’t come to fruition. And second, that the proximity and allowance of retail marijuana in EagleVail — many of which have Avon addresses — won’t lead to any perception and use changes among visitors and residents should Avon lift its moratorium.
Ultimately, in allowing the retail locations in Avon, the town could bring a tax question to voters, possibly as soon as November 2022. The Avon Town Council is scheduled to have a work session on the potential of the tax — as well as other considerations on allowing the businesses — at its Tuesday, May 10 meeting.
The state of Colorado has three taxes for retail marijuana: a 2.9% state sales tax, a 15% recreational marijuana retail sales tax (10% of which is distributed to local governments), and a 15% excise tax (earmarked for Colorado public school construction). In addition to these taxes, local municipalities are also able impose and collect their own sales and/or excise taxes on retail marijuana.
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According to a report in the May 10 Avon Town Council packet, town “staff found a 5% local marijuana tax to be the most common rate for municipalities within the state,” going on to compare these taxes among neighboring communities.
The report identified that for retail marijuana purchases — in addition to the state taxes — the town of Eagle has a 4.5% sales tax and a 2.5% marijuana tax; Breckenridge has a 2.5% sales and a 5% marijuana tax; Carbondale has a 3.5% sales and 5% marijuana tax; Silverthorne a 2% sales and a 5% marijuana tax and Basalt a 3% sales and a 5% marijuana.
On Tuesday, council is expected to discuss not only what an appropriate tax might be, but also how the tax funds would be utilized.
Should the council decide to pursue a ballot question for November’s election, the town has until Aug. 23 to adopt a resolution certifying ballot content to the County Clerk and Recorder for the Nov. 8 general election.
At the November 2021 Town Council meeting, council members also expressed a desire to do public outreach — including with business owners — as part of any process to allow retail marijuana businesses in town. This should be expected as part of any ballot process, if the council decides to pursue that direction.
Ironing out details
In addition to the question of a tax, Tuesday’s work session will also include evaluating certain land use controls and licensing regulations. This includes potential location, licensing and aesthetic requirements.
The federal, state and county governments all have a number of requirements as to the allowed locations of retail marijuana businesses. This includes, primarily, buffer zones between the potential retail locations and things such as drug rehabilitation centers, community centers, schools, parks, playgrounds and more.
Given these buffers, the report identifies “that there are commercially zoned parcels with potential to host marijuana businesses between Avon Road and Chapel square in ‘East Avon,’ and the small area of Neighborhood Commercial zoned parcels near the Interstate 70 Interchange.”
The packet also contemplates capping the number of licenses at two for the town — responding to an ask to do so that was made by all council members and commissioners at the November 2021 meeting.
In addition to these types of location requirements, the report includes certain possible aesthetic requirements that could be added to zoning requirements for marijuana retail. These could include certain signage requirements, lighting standards, store names, storefront design and more.
As the council debates all these details, the packet contemplates three options for council in proceeding with introducing retail marijuana business to town. This includes delaying action until next year; introducing an ordinance with land use controls and licensing regulations without a tax; or proceeding with the ballot process for introducing a marijuana tax to voters this fall.
Construction use tax
Also at its Tuesday meeting, Avon’s council will revisit the possibility of a 4% construction use tax, something it had considered bringing before voters in November 2021. Ultimately, this use tax was sidelined in favor of a short-term rental tax — which voters approved in the election. Now, council members will consider whether or not they want to bring this tax before voters in November.
A construction material use tax would be collected at the time a building permit was issued by the town and use a predetermined formula to calculate the construction value and therefore the tax. Commonly, construction use taxes calculate a use tax based off of 50% of the construction value. Once the use tax was collected, a build would be exempt from paying further sales taxes on materials related to the permit.
Since council last contemplated the 4% construction material use tax, town staff is proposing two main changes. The first, is that the funds would no longer be earmarked for community housing as was the original plan. This is because the passed short-term rental tax now fulfills that need.
The second is that in order to limit the impact on local residents, staff recommends allowing an exception for projects requiring a building permit of less than $50,000.
Avon is the only municipality in Eagle County without such a use tax: Eagle, Minturn and Vail all have a 4% use tax and Gypsum and Red Cliff both have a 3% use tax. According to a report in the May 10 packet, there are a number of benefits to the tax. This includes reducing the burden of tax collection (compared to sales tax); keeping business in Avon; reducing tax liabilities for sub-contractors and more.
Tuesday’s meeting starts approximately 6:30 p.m. Meetings are held both in person at Avon Town Hall (100 Mikaela Way) or online via Zoom. To attend online, register at Avon.org.