Fight on in Colorado over marijuana tax

The Associated PressOctober 7, 2013 

Marijuana sellers and growers in Colorado joke that it’s rare for an industry to seek a tax on its own product — in their case, a 25 percent tax rate that goes before voters next month. Washington state, the only other place in the U.S. that has legalized recreational pot, will tax retail pot at 75 percent. That rate was included in the ballot measure voters approved last year.

In Colorado, Democrats and large dispensary owners agree the taxes will boost state revenues and pay for the nation’s first intense state oversight of the recreational pot business.

But not everyone is happy about the proposed sales and excise taxes, which, if approved, would go into effect when sales begin Jan. 1.

A few dozen marijuana activists have banded together to oppose the tax rates, saying they’re too high and will keep people in the black market. They’ve organized three joint giveaways, events that don’t violate state law as long as the joints are free and recipients are over 21.

Their protests have been spirited. At a Denver joint giveaway last week, activists jeered dispensary owners who support the tax and even Democratic Gov. John Hickenlooper, who attended a $1,000-a-person fundraiser to support the tax campaign.

“If we overtax it, just watch. The whole thing’s going to collapse, and the black market isn’t going anywhere,” said Larisa Bolivar, a former dispensary owner in Denver and executive director of the campaign against the tax.

If approved, Colorado pot taxes would be lower than taxes on tobacco but higher than taxes on alcohol. Tobacco has a 34 percent excise tax. Colorado excise taxes for alcohol are 8 cents per gallon for beer, 7.33 cents per liter for wine, and 60 cents per liter for liquor.

The Nov. 5 ballot measure includes a 15 percent excise tax and an initial 10 percent sales tax.

Still, all sides agree that there’s no way to know what the marijuana tax rate should be. Economists can only guess what pot users are paying now and how much they’d pay to shop in a regulated store, not grow their own or shop on the black market.

In an April report, Colorado State’s Colorado Futures Center predicted the rates won’t make a big difference in the state budget. The forecasters used a higher rate than the one proposed to voters — a 30 percent combined sales and excise tax — and put the post-legalization price at $185 an ounce, including taxes.

They said that marijuana demand might not spike just because it’s legal, depressing a possible tax windfall.

Colorado’s rate requires separate voter approval because of state tax law. Up to $40 million in excise tax is designated for school construction, with the rest designated for marijuana enforcement.

The architects of Colorado’s marijuana amendment insist the taxes are fair. They pointed to a recent U.S. Department of Justice memo that makes clear states need vigorous pot enforcement to avoid federal intervention.

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