Will voters choose to tax legal marijuana?
EAGLE COUNTY — This past year’s Amendment 64 made some promises that have to be fulfilled at the ballot box this fall.
Amendment 64 legalized the possession and use of small amounts of marijuana. But the amendment also cleared the way for taxable retail marijuana sales, which must go, in part, to the state’s school construction fund. Because the state constitution requires voter approval of all new taxes, the Colorado Legislature this year passed Proposition AA, which put Amendment 64’s promise of tax money for school construction before voters.
The proposition imposes a 15 percent excise tax on transactions between growers and retailers, and also imposes a 10 percent sales tax on retail sales. According to the Proposition AA ballot language, those taxes could raise as much as $70 million per year, with the first $40 million from the excise tax going to school construction. Money from the sales tax will be used to pay for regulatory enforcement.
Red Cliff and Eagle voters will also be asked to impose town sales taxes and fees on retail marijuana sales. Red Cliff’s proposal is another 5 percent sales tax in addition to the town’s existing sales tax. Eagle voters are being asked to approve a $5-per-transaction fee.
Dieneka Manzanares, co-owner of Sweet Leaf Pioneer, a medical marijuana dispensary in Eagle, worries that the new taxes might be too high. If the tax is approved, then the tax rate on retail marijuana will be 18.4 percent. Sales tax on medical marijuana in Eagle is taxed at the town’s regular rate of 8.4 percent.
But Joe Megyesy, the communications director for the “Yes on Proposition AA” campaign, said estimates from neighboring states show that taxed, legal marijuana will be competitively priced with illegally-purchased marijuana in other states.
Plus, Megyesy said, having retail shops means buyers won’t have to find “a guy.”
“There’s definitely a convenience factor,” Megyesy. “With retail stores, consumers have a nice environment, in a clean store, and people know what they’re getting.”
Even if legal pot is more expensive than black-market stuff, Megyesy said he believes people will pay for the convenience of not having to find “a guy.”
While Manzanares isn’t a big fan of the tax, she also believes people will choose convenience rather than a private seller. That’s why she and her husband, Dave, plan to apply for a retail license Nov. 6, if Eagle voters approve a ballot measure allowing retail sales in town. Voters there in early 2012 voted strongly in favor of keeping Sweet Leaf Pioneer open, overturning a town ordinance that would have shut down the shop.
Buddy Sims, of Edwards, is one of the valley’s most vocal opponents of legal marijuana in any form. He said he voted against Proposition AA in the hopes of a long-term victory. If voters turn down the tax, then Sims believes that state legislators will soon tire of spending general-fund money on the required regulation and enforcement and will ask voters to repeal Amendment 64 altogether. Sims believes that if voters see that the measure isn’t self-funding and isn’t providing the promised money for schools, they’ll vote for a chance to repeal.
But Mason Tvert, one of Amendment 64’s original backers, said the amendment so far has been smoothly brought into state law.
“Things have been moving in a timely, efficient manner so far,” Tvert said. That’s included both Governor John Hickenlooper and the state legislature meeting the requirements of Amendment 64 on the schedule the ballot measure intended.
“It’s refreshing to see the system working the way it’s supposed to,” Tvert said.
Megyesy acknowledged that taxes proposed by Proposition AA are high, but reiterated that the taxes don’t seem excessive compared to black market prices.
And, Manzanares said, Colorado’s proposed pot taxes are much, much, lower than those proposed in Washington, where voters last year also legalized the possession, use and retail sale of marijuana.
“They’re putting 75 percent excise taxes on,” Manzanares said. “This could be a lot worse.”