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Amendment 64 sales tax proposal at 10 percent, but Smart Colorado wants it higher

Update: Yesterday, we shared a draft proposal that would repeal Amendment 64, which allows adults 21 and over in Colorado to use and possess small amounts of marijuana, if voters don't approve a 15 percent sales tax during a November election. Also included was an opinion by attorney Ed Ramey that such a measure would be unconstitutional; see our previous coverage below. We've now heard back from a rep with a group that sees value in such an approach even as a modified tax proposal is moving forward. Details below.

As we've reported, the Taxpayers Bill of Rights, shorthanded as TABOR, requires a vote to approve tax increases. Hence, House Bill 13-1318, the original version of which can be seen below, was designed to set rates to be considered in this November's election. An excise tax of 15 percent was envisioned in A64's language, but a sales tax of up to 15 percent not sketched out in the amendment has also been pushed.

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

Amendment 64 proponent Mason Tvert sees the 15 percent sales tax as too high. He supports a 10 percent tax, which he believes would cover enforcement costs with plenty of room to spare. Moreover, in an interview last week, he pointed to a Public Policy Polling survey conducted on April 15 and 16, which "found that 77 percent of voters would support a 10 percent special sales tax and only 18 percent would oppose one."

Given that, Tvert said that "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."

That's what wound up happening yesterday. As reported by the Denver Post, the version of the bill that will face a final vote in the House before continuing to the Senate sports a 15 percent excise tax and a 10 percent sales tax. The latter number was supported by Republicans, who feared that if rates were too high, voters might reject the tax in November, putting the state on the hook for enforcement without new revenues to pay for it.

Still up in the air is the prospect of A64 repeal language should the taxes be voted down. Attorney Ed Ramey believes such a tactic is unconstitutional, as outlined below, but Smart Colorado spokesman Eric Anderson says his organization sees value in the concept. He also insists that Smart Colorado supports a 15 percent tax, despite Tvert's claim to the contrary. Here's how Anderson put it in a statement supplied to Westword just prior to the final vote yesterday:

As we've stressed before, we're not taking the lead on the accountability amendment proposed last week but understand that its legislative proponents are confident in its constitutionality.

We've stated our support of House Bill 1318's tax structure and the inclusion of the same numbers in the potential two-part accountability amendment, which we support. We applaud the bipartisan leadership of legislators who are proposing this accountability amendment to ensure that Coloradans don't subsidize the cost of regulating recreational marijuana.

These measures would be consistent with the recommendations of the legislature's Joint Select Committee on the Implementation of Amendment 64: a 15 percent excise tax on the wholesale value of commercial marijuana, a 15 percent retail sales tax, and an extension of the state's existing 2.9 percent general sales tax to sales of marijuana. Those levels come closest to creating the necessary tax structure although, as the new report from Colorado State University's Colorado Futures Center notes, even then "marijuana tax revenues may not cover the incremental state expenditures related to legalization." We're focused on the legislative debate right now and we're not looking beyond the legislative session at this time.

Amendment 64 proponents told voters that passage of the measure "would result in immediate savings, and it will quickly grow into a major new revenue stream for our state and localities." Citizens must now demand that the industry be held accountable and deliver on promises made. So, let's see if the marijuana industry will back up its campaign promises by supporting this proposed accountability amendment instead of fighting it.

It's important to note that while the legislative session ends Friday, changes can still be made between now and then -- so it's entirely possible that the 10 percent sales tax currently envisioned could be increased to 15 percent, and repeal language could be inserted.

Here's the original version of 13-1318, as well as the Colorado Futures Center report mentioned by Anderson. That's followed by our previous coverage.

House Biill 13-1318: Recreational Marijuana Taxes

Colorado Futures Center: Fiscal Impact of Amendment 64

Continue for our previous coverage of the Amendment 64 repeal attempt, including draft language and more.

 

Original post, 4:20 p.m. April 29: Last week, proponents of Amendment 64 , which allows adults 21 and over in Colorado to use and possess small amounts of marijuana, charged a rival outfit, Smart Colorado, with conceiving an effort to repeal the measure if taxes weren't high enough by its standard -- and while the group denied coming up with the plan, a spokesman admitted to liking it.

Now, with the tax still up in the air, A64 backers have gotten a copy of the repeal language (read it below), with a lawyer deeming it unconstitutional.

"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," A64's Mason Tvert told us on Friday. "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."

Tvert favors a 10 percent sales tax rate, which he believes would collect more than enough revenue to cover the cost of regulatory enforcement.

Eric Anderson.
Eric Anderson.

Eric Anderson, a Smart Colorado spokesman, responded to Tvert's allegations with a statement via e-mail. After attributing the repeal concept to unnamed lawmakers, not his organization, he wrote:

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.

Later on Friday, the tax debate got nasty. The Associated Press reveals that the Republican caucus split when House Democratic leader Dickey Lee Hullinghorst interrupted a GOP rep talking about tax rates. The walkout wasn't specifically about the marijuana matter, the AP maintains, but even after the Republicans returned, nothing was resolved on the topic despite a marathon session that stretched into early Saturday, prompting more debate on the issue today.

Meanwhile, Tvert has gotten a copy of the repeal language, which focuses on the ballot measure about tax rates that must be put before voters this November according to the provisions of Colorado's Taxpayer Bill of Rights, or TABOR. The entire document is below, but here's a key section:

Repeal. In the event a majority of the electors voting on the question to impose the state excise and sales taxes on legalized retail marijuana as proposed by this measure shall have voted "No" at the statewide election held on the first Tuesday in November in 2013, this section is repealed, effective December 31, 2013.

Is this legal? Lawyer Ed Ramey doesn't think so. Continue for more about the Amendment 64 repeal effort, including original documents.

 

Ramey, an attorney for the Heizer Paul Grueskin law firm, wrote an opinion letter about the repeal effort; see it below. His main point involves rules calling for proposed constitutional amendments to be considered only during elections that fall during even-numbered years, with elections in odd-numbered years featuring questions concerning "issues of government financing, spending, and taxation."

For that reason, Ramey sees it as logical that a repeal could only go forward during an even-numbered year, with 2014 presumably being the next opportunity to strike the amendment from the books. Should such an attempt be made in 2013 instead, Ramey sees it as "possible that the courts could invalidate the repeal...while sustaining the vote on the tax component." That could potentially leave Amendment 64 intact but kill taxes on marijuana entirely.

We reached out to Smart Colorado's Anderson for his take; when and if he replies, we'll share his thoughts. In the meantime, Tvert says it doesn't much matter if Smart Colorado came up with the repeal notion or not, since the organization "is vigorously promoting this unconstitutional proposal."

He also charges that Smart Colorado "refuses to say they support the tax they say is so critical." In his view, that makes the repeal effort even more "disingenuous and shady."

Here's the repeal draft, followed by Ramey's analysis.

Amendment 64 Repeal Language

Edward Ramey Repeal Memo

More from our Marijuana archive: "Amendment 64 opponents threatening to repeal measure if tax rates aren't high, campaign says."


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