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Amendment 64 opponents threatening to repeal measure if tax rates aren't high, campaign says

Amendment 64 opponents are threatening to force a repeal of the measure allowing adults 21 and over to use and possess small amounts of marijuana if legislators don't approve a sales tax that's higher than necessary to cover costs.

That's the claim of A64 proponents, who have scheduled a press conference for 11:30 a.m. this morning to lay out their case.

Below, activist Mason Tvert offers us a preview.

"According to lawmakers at the State Capitol, Smart Colorado has been floating the idea of referring a measure to voters that would repeal Amendment 64 if a special sales tax of 15 percent does not pass," Tvert says, adding, "This amounts to extortion of the voters. They're being told they must approve a higher tax level proposed by legislators or otherwise the constitutional amendment they adopted in November would be repealed."

Smart Colorado's response? We reached out to the organization, and -- update -- have just received a response from spokesman Eric Anderson. He denies that Smart Colorado came up with the concept, attributing it instead to unnamed legislators. But the organization thinks the notion is worthy of consideration.

Eric Anderson.
Eric Anderson.

Here's an excerpt from the statement, which appears in full below:

Amendment 64 backers sold the ballot issue to Colorado voters as a way to pay for state priorities like education but increasingly it's looking like it could be a net drain on the state budget. Amendment 64 raised the possibility of new taxes on marijuana but didn't enact them. If voters don't now approve new taxes on marijuana, Colorado's budget will take a major hit and Amendment 64 will have exactly the opposite effect from what was promised to voters.

In the meantime, here's some context about the tax question. As Dean Toda, spokesman for the House Democrats, explained in a marijuana-legislation update yesterday, House Bill 13-1318 deals with implementing the tax structure for retail sales of cannabis under Amendment 64. "Because of TABOR, any new taxes have to be referred to the people," he told us. "So the bill sets up a referendum this November on the creation of an additional sales tax of up to 15 percent on recreational marijuana and an excise tax of up to 15 percent."

While the excise tax is specifically mentioned in Amendment 64, a sales tax is not -- but concerns about the cost of implementing the law have risen lately thanks to a report from CSU's Colorado Futures Center. The full analysis is below, but there are its main five points:

1. The adult recreational marijuana market in Colorado will be $605.7 million and taxation of that market will bring an additional $130.1 Million in state tax revenue in fiscal year 2014‐15.

2. The 15% wholesale excise tax created by the amendment will not reach the goal of $40 Million for school construction as stipulated in the ballot language approved by voters.

3. The high water mark for marijuana tax revenue is likely to be in the first few post‐legalization years with revenue flattening or declining thereafter.

4. Marijuana tax revenues may not cover the incremental state expenditures related to legalization.

5. Marijuana tax revenues will not close Colorado's structural budget gap.

The fourth and fifth items above can be seen as arguments for a sales tax. But the higher the taxes, the higher the cost to consumers -- and the likelier use will be suppressed.

Is this the Smart Colorado strategy -- to win taxes that are so high fewer people will use marijuana, thereby potentially causing the industry to fail?

Continue for more about the alleged threat to repeal Amendment 64, including the new study.  

Mason Tvert at a press event earlier this year.
Mason Tvert at a press event earlier this year.
Photo by Sam Levin

Tvert can only speculate about Smart Colorado's approach. But whatever the case, he says any repeal attempt would be unconstitutional, because only fiscal matters are supposed to reach statewide ballots in odd-numbered years. And he also questions the imposition of a 15 percent sales tax from a numbers standpoint.

"The Colorado Futures Center report says that a 15 percent special sales tax would generate $90.9 million -- and officials in the administration have informed representatives of the campaign that enforcing the regulations would cost $30 million," Tvert says. "So a 15 percent special sales tax would generate three times that much."

For this reason, he supports a 10 percent sales tax thought to raise around $60 million -- double the anticipated enforcement costs. And he believes Colorado voters will sign off on it.

"We're going to be releasing a poll conducted by Public Policy Polling on April 15 and 16," Tvert reveals. "It found that 77 percent of voters would support a 10 percent special sales tax and only 18 percent would oppose one. If legislators are concerned about whether a 15 percent tax would pass, they should consider reducing it to 10 percent instead of embracing the nuclear option.

"Smart Colorado is expressing so much concern that voters will reject a 15 percent tax that they're actually entertaining the idea of allowing for the repeal of Amendment 64 entirely."

Here's the Colorado Futures Center report, as well as the original version of House Bill 13-1318 and the complete Smart Colorado statement:

Colorado Futures Center: Fiscal Impact of Amendment 64

House Biill 13-1318: Recreational Marijuana Taxes

Smart Colorado statement:

Mason should check his facts before he issues midnight press releases. The proposal did not come from Smart Colorado. Several legislators floated the concept and instructed Legislative Legal Services to draft the proposal. We talked to many legislators about the concept throughout the day. Although it's not our proposal, we appreciate the leadership demonstrated by its authors and believe it's worthy of consideration. Amendment 64 backers sold the ballot issue to Colorado voters as a way to pay for state priorities like education but increasingly it's looking like it could be a net drain on the state budget. Amendment 64 raised the possibility of new taxes on marijuana but didn't enact them. If voters don't now approve new taxes on marijuana, Colorado's budget will take a major hit and Amendment 64 will have exactly the opposite effect from what was promised to voters.

Smart Colorado was formed after the election by concerned Colorado citizens to ensure that our elected officials are not solely hearing from the marijuana industry but also from everyday citizens who want to limit the mass commercialization of marijuana and protect children and all Coloradans from negative impacts. The legislators who came to us are concerned that the revenue necessary to address the public health and regulatory issues should be the responsibility of the marijuana growers and sellers. We agree that the cost of regulation should not come from the state's limited funds already committed to higher education, roads, bridges and other essential state functions.

The legislators suggested a simple, two-part proposal. Colorado voters would first decide whether to authorize a tax regimen developed through discussions over the past several months. Should the tax measure pass, the marijuana industry would come closer to covering its regulatory costs. A second question on repeal would be decided by voters only if the tax measure failed. Ultimately, all these decisions would remain in the hands of voters. The constitutionality of the proposal was thoroughly considered by the General Assembly's attorneys and carefully drafted to comply with the Taxpayers Bill of Rights.

More from our Marijuana archive: "Marijuana retailers may not have to grow their own -- and that's great, attorney says."


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