Colorado passes tax on marijuana for schools, regulation

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— Steamboat Springs voters rejected a ban on medical marijuana businesses by a 60-40 margin in the past odd-year election in 2011, so it made sense Tuesday night that 74 percent of the 7,135 who voted approved a tax on retail marijuana sales.

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Those in favor of Proposition AA in Routt County numbered 5,282, and only 1,853 were against the plan. Statewide, the tax was passed with nearly 65 percent of voters in favor with 71 percent of the vote counted.

Proposition AA imposes a 15 percent pot excise tax plus a 10 percent sales tax — taxes that are estimated to bring in $70 million per year statewide.

The taxes are in addition to a 2.9 percent sales tax that pot stores will be subjected to for marijuana regulation. Sales of recreational marijuana become legal in Colorado on Jan. 1.

"The passage of Proposition AA means Colorado will have a strong and well-funded regulatory system, along with funding for education, prevention, treatment and other safety issues that may arise," said Michael Elliott, executive director of the Medical Marijuana Industry Group.

Opponents argued that marijuana should be taxed like beer, which has a lower tax rate. They handed out free joints at rallies to show their displeasure with the suggested tax.

"They won. The people have spoken," said Robert Corry, a prominent marijuana attorney who opposed the taxes. "What I'd like to see is everyone coming together and trying to make this recreational-marijuana market work."

Opponents of the taxes expressed concern that the proposed taxes were so substantial that they would drive recreational marijuana users into the black market.

"That's a major concern. We still have that concern," Corry said. "We hope we're wrong."

But supporters, including pot legalization advocates, called the measure an opportunity to show that the marijuana industry can be beneficial. They also said it fulfilled a promise made to voters who approved the recreational use of marijuana last year with the assurance that there would be a tax to fund school construction.

Many municipalities are counting on the windfall from additional taxes to deal with unexpected consequences of marijuana legalization.

It's not yet known how the taxes will affect recreational pot prices when retail sales begin. But if current prices hold, Colorado's proposed tax rate would add about $50 to an ounce of medium-quality loose marijuana, roughly the amount that would fit in a sandwich-sized plastic bag.

Still, exact tax burden on individuals is less clear.

Like alcohol, marijuana can vary widely in potency, quality and price. Washington and Colorado each plan to use taxes based on price. By contrast, alcohol is taxed by the gallon and cigarettes by the pack.

Another unknown is how much regulation will cost.

Democratic Gov. John Hickenlooper and Republican Attorney General John Suthers, both of whom opposed the legalization of pot, supported the taxes.

Steamboat Today reporter Tom Ross contributed to this report.

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Comments

rhys jones 11 months, 2 weeks ago

This just assures that more of the trade will go unregulated, and untaxed. It will be interesting to see how the pot shops (I can't wait) can compete with private industry, saddled with yet another tax, and an exorbitant one at that. Everybody wants a good deal.

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Scott Wedel 11 months, 2 weeks ago

Retail pricing may still be pretty competitive because of other barely noticed changes.

Park County passed and Eagle County is considering new retail mj laws allow cultivation in greenhouses in Ag zones. So cultivation switches from higher rent warehouses to lower cost greenhouses that need a small fraction of the electricity. The counties want to preserve their commercial warehouses for businesses and not mj cultivation.

With that change, the legal growing should become cheaper than illegal growing. And already smuggled mj gets a higher price in other states. So I think the move to greenhouses will put a squeeze on illegal pot in Colorado.

The winners will be the counties that allow greenhouse growing. There will be a boon for building greenhouses and local growers. And if feds ever lift mj criminality and growing moves to places with better growing climates then those counties will have warehouses for boutique growing of local organic food.

I am surprised that Routt County Ag interests are sitting idle while Park and Eagle counties move forward.

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