Taxing pot requires accepting its use
Colorado voters made it abundantly clear last Tuesday that they want legal marijuana to pay its way through substantial taxes.
Statewide, 65 percent of voters approved Proposition AA, which allows the Legislature to impose an excise tax of up to 15 percent on wholesale marijuana sales and an additional 10 percent sales tax on retail sales of recreational marijuana.
The tax regime is estimated to raise $67 million annually, a portion of which will go into a fund for school construction. A major chunk of the remainder will go to the state regulatory agencies that are assigned to oversee the growing operations and retail outlets for marijuana. But some of the money, estimated at $6 million a year, will go to communities that allow retail marijuana sales.
But the Mesa County commissioners and officials in other counties that have rejected retail sales within their jurisdictions have said they should also receive some of the tax revenue because it’s likely residents of their counties will be using marijuana — even if they have to go to other communities to legally purchase it — and pot-prohibiting counties will face problems similar to those that have legalized retail sales.
There are a couple of problems with that argument, of course. The first is that Proposition AA specifically says that a portion of the sales tax revenue from retail sales must go to those communities that approve retail outlets, based upon the amount of sales in each community.
But more importantly, the argument for pot-prohibiting communities to receive some of the taxes is disingenuous.
On one hand, county officials are acknowledging that some percentage of their residents are going to consume recreational marijuana (never mind that a significant portion already does so) and will go outside the county to obtain it.
On the other hand, they essentially acknowledge that they are making it more difficult for these residents to obtain a legal product by forcing them to go elsewhere to find retail outlets.
Counties such as Mesa County will have to deal with any problems caused by their constitutents using legal marijuana regardless of whether there are retail outlets here or not. If they want a portion of the tax revenue from those retail sales, they must allow the marijuana stores within their boundaries.
We’re not arguing that Mesa County or other jurisdictions that have banned retail marijuana outlets should immediately reverse themselves. Colorado’s experiment with legalized marijuana is still very much in its infancy. It will take many months, perhaps years, before we see what sort of problems it creates, and how much revenue the new taxes generate.
But, once more information is available, local government entities should re-examine the issue and decide whether the revenue that comes from taxing retail sales — along with the economic activity and the ability to set their own rules on such sales — outweigh the problems they may generate.