Coming to a November ballot near you: Should the state keep $58 million in excess marijuana tax revenue that in part pays for K-12 public school construction, or should marijuana dispensaries and growers get the lion’s share of that money back?
This morning, Gov. John Hickenlooper signed into law House Bill 15-1367, which will send that question to the November ballot.
It all starts with the Taxpayer’s Bill of Rights (TABOR), the 1992 citizen-initiated constitutional amendment that requires voters to approve any new taxes. That includes sales and excise taxes for recreational marijuana.
In 2012, when voters approved marijuana legalization under Amendment 64, it included a request to the General Assembly to devise an excise tax that would pay for state regulation of the industry. A year later, voters were asked to approve both a 15 percent excise tax and a 10 percent sales tax for marijuana, under Proposition AA. Voters gave an enthusiastic thumbs-up on Proposition AA, with about two-thirds of voters in favor of the tax.
The excise tax would pay for K-12 school construction. The sales tax would pay for industry regulation. Neither of these taxes applies to medical marijuana, which was approved by voters in 2000.
At the time Proposition AA was passed, economic forecasts estimated the excise tax would bring in about $27.5 million per year. The legislative “blue book,” a guide to voters on ballot measures, estimated sales-tax revenues in the first year of about $39.5 million. About $6 million of the sales-tax revenues would go to local governments; the rest would go to the state.
But lawmakers discovered a glitch this session. Under TABOR, a second vote is required if a new tax generates more revenue in the first year than anticipated. That’s what happened this year. Marijuana taxes brought in $58 million more than was expected. Without approval from voters, those dollars would have to be refunded.
Lawmakers pointed out that voters approved the marijuana taxes to go to specific purposes and want to ask one more time for that approval.
The ballot measure in November will ask voters to allow the state to keep the $58 million and put $40 million toward K-12 school construction. The rest will go to public health, to educate young people about the risks of marijuana use, and for training for law enforcement in how to detect marijuana impairment, according to Sen. Pat Steadman, D-Denver, the author of HB 1367.
Steadman pointed out this morning that the vote is a one-time request. If voters do not approve the measure, the money would be refunded in 2016. Approximately one-third would go back to marijuana growers, as a refund on the excise tax. Another third would go to marijuana dispensaries, through a sales-tax “holiday” for the first couple of months in 2016. The last portion would be refunded to all taxpayers through 2016 income tax returns, even to taxpayers who never purchased marijuana and hence never paid the sales tax.
Most ballot measures come with big money campaigns, either pro or con. That’s not likely to happen with this one, according to Hickenlooper. He said he intends to ask for voter support in statewide town halls throughout the rest of the year and believes lawmakers will do their part to promote a “yes” vote on the measure.
“We want to fulfill the will of the voters” from Amendment 64 and Proposition AA, Hickenlooper said.
Will marijuana be part of Hickenlooper’s legacy? Certainly. But not one that he necessarily welcomes. Hickenlooper laughed when he was asked about that part of his legacy. “It’s one of those things that you don’t ask for and you can’t anticipate, but you have a responsibility to figure out how to make it work,” he explained.
“When no one’s ever done something before, making something out of whole cloth is a challenge,” he said. The state has made tremendous progress on marijuana regulation, but there’s more work to be done on edibles, preventing underage children from getting access to marijuana and monitoring those who drive under its influence, he added.
There’s one other issue with the bill Hickenlooper signed Thursday: a last-minute amendment on pesticide use in marijuana. Its sponsor, Sen. Jerry Sonnenberg, R-Sterling, intended the amendment to clarify the state’s authority over pesticide regulations. The issue arose after the city of Denver’s Department of Environmental Health inspected 10 marijuana grow facilities in Denver. Those inspections resulted in quarantines of more than 60,000 plants, meaning they could no longer be sold for public consumption. The Department insists its authority on pesticide inspections comes from its mission of public health. The state also has a mission on pesticides: authority on pesticide regulations and inspections under worker protection standards.
The marijuana industry sought the change to halt the city’s inspections, although city sources and state regulators both said they did not believe it would change anything. The two agencies often collaborate on pesticide inspection issues.
However, the amendment did raise the specter of a possible legal challenge. Under state law, bills can only deal with a single subject. The pesticide amendment raised concerns that it violated the single-subject law. Should such a challenge be mounted, however, the governor’s office has said the amendment could be “severed” from the law without any impact on the ballot measure.
Hickenlooper said Thursday he’s leaving that issue to the lawyers.
Photo credit: Nick Ares, Creative Commons, Flickr.