Love it or hate it, consensus is Colorado Prop AA pot tax will pass

BOULDER — It’s not just about forcing marijuana customers to pay more, it’s also about setting precedent for legalization around the country, say advocates opposed to the steep consumption tax voters are being asked to approve next month.

“Yes we want to end prohibition — but not at any cost,” said Rachel Gillette, executive director of the state chapter of the National Organization for the Reform of Marijuana Laws (NORML). “We have to think, going forward, how is setting a precedent of an excessive tax going to affect other states that are going to follow Colorado?”

The proposed law, Proposition AA, directs a 15 percent excise tax on marijuana going from farms to retail shops. The tax is not new and was part of Amendment 64, the legalization initiative passed overwhelmingly by voters last year. This year’s proposition also includes the more controversial addition of a 10 percent special sales tax on top of the 2.9 percent state sales tax already in place.

Although NORML opposes Proposition AA, it has no affiliation with the official No campaign. The group specifically takes aim at the 10 percent special sales tax, which it calls excessive and more than enough to cover the cost of financing an adequate regulatory system.

The vote will occur just months after of the Department of Justice’s historical decision to allow a retail market in Colorado and Washington.

With the feds scrutinizing every move Coloradans make on marijuana, supporters of Prop AA argue that passing it is essential to meet the criteria the DOJ laid out for a legalized industry.

“There’s a really big worry that the feds could come in and shut the whole system down,” said Joe Megyesy, communications director of the Yes on Prop AA Campaign. Without the taxes, and specifically the special sales tax, proponents worry about the financial feasibility of regulating the industry. If the tax was nixed, Megesy said there is a big worry the legislature might draw resources from other revenue streams to flesh out an effective regulatory system.

“The key of this to succeeding is in local government, local governments opting to allow marijuana activity in their communities. We’ve already seen a number of local communities that don’t want to regulate this,” Megyesy said. The special sales tax incentivizes local governments by kicking 15 percent of the 10 percent tax revenue to participating communities. Megyesy said the tax is low enough to draw marijuana out from the black-market into a regulated system.

“If you don’t use marijuana, you won’t pay anything,” Megyesy said.

For their part, Yes on Prop AA hardly have any bucks in the bank to back its campaign. Until a fundraiser on Wednesday night with Governor Hickenlooper, in which the Yes campaign took in “around $30,000,” the campaign had only $10,100 in contributions. The opposition group, No on Proposition AA, reported even less, only $1,846, according to the Secretary of State’s website.

The No campaign is headed up by attorney Rob Corry, who invited Vice President Joe Biden to a free joint giveaway he and other No on Prop AA activists have been organizing in recent weeks.

The low cost, low noise made on either side about the issue might come from a sense that the proposition is going to pass. Though the most recent poll, conducted in April, found that nearly 77 percent of Coloradans approved the measure.

The projected sales in the Blue Book — Colorado’s non-partisan guide to the November ballot — of the revenue generated from retail sales in the new industry is $394 million. Gillette thinks the numbers aren’t realistic. They don’t take into account an increased demand from tourism and a limited supply from pot shops. The situation, she says, in at least the first two years, will drive the price of a wholesale ounce above $90, and a retail ounce above $200 — the estimates the Blue Book uses to make its economic predictions.

The end game is a heavily taxed product, and excessive amounts of tax revenue thrown at a regulatory body, the Marijuana Enforcement Division, which has appropriated nearly $6 million to do its job.

“I mean I would use this analogy: you know you see this beautiful Ferrari, right? You want to buy this Ferrari, it’s fabulous. But it’s got a Pinto welded onto it. Do you still want to buy the Ferrari? Probably not,” Gillette said. The Pinto is the 10 percent special sales tax.

“The legislature had the option of enacting a reasonable sales tax, and if it did, we might have had a different perspective on this.”

Despite objections, NORML hasn’t joined the coalition to oppose the proposition nor does it plan on actively campaigning against it — though some of their members may do just that. They have stated their position on behalf of protecting consumers, Gillette said. For the most part, they’re staying out of the so far quiet fight.

If the measure does pass, Gillette says NORML will go to the legislature to decrease the special sales tax.

“I think it could pass. I think it’s probably going to pass. And I think we’re OK with that.”

[Image by Chris Yarzab]

2 COMMENTS

  1. Why would the Marijuana Enforcement Division need $6 million to regulate an industry in the hundreds, when the 14,000 plus liquor licenses are regulated with an annual budget of well under $2 million? License and application fees alone will be plenty enough to pay for the enforcement or marijuana regulations, the additional sales tax is a unnecessary government scam.

  2. I voted for it to be treated like alcohol, not like medical marijuana with high taxes. I will be voting no.
    The MMED is a bunch if bumbling buffoons. They wasted so much money already. They bankrupted their own department. Now we are going to give them millions more to buy fancy cars etc.
    Again we see government come running with its hand out and doing NOTHING to protect the people’s interests. State power only cares about state power.

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