Jacqueline Collins
Audio By Carbonatix
In the 1970s, there were more than 1,600 state hospital beds for adults with severe mental illness in Colorado. By 2023, that number had shrunk to fewer than 500 beds, despite the state’s population growing by nearly four million.
State Representative Bob Marshall ran for office with the goal of addressing that care shortage. “The people who need this care have not disappeared or suddenly become better,” Marshall explains, “but have wound up on our streets or in the jails. We have turned law enforcement into our default mental health system.”
Advocates approached Marshall in January, seeking to establish a new state mental health hospital in Aurora. The facility could provide up to seventy more beds for patients, and it would be closer to major population centers, saving the time and money currently spent transporting individuals to the main state mental health hospital in Pueblo.
“This is, and has been, a gigantic need,” Marshall says. But as Colorado faces a roughly $850 million budget deficit, how will the state pay for the hospital? Enter: House Bill 26-1301.
The bill would refer a measure to the November ballot, asking voters for permission to increase excise taxes on alcohol and increase sales and excise taxes on marijuana. The revenue would fund the construction and operation of the mental health hospital in Aurora, as well as the operations of long-term civil commitment facilities in Mesa County. Before the proposal can earn a spot on the ballot, it must be approved by state legislators.
The bill comes on the heels of a different measure, House Bill 26-1271, which seeks to impose new fees on alcohol to fund prevention and treatment. State Senator Judy Amabile is sponsoring both of the bills. Marshall is sponsoring just House Bill 1301.
“We need more hospital beds for people with serious mental illness,” Amabile says. “We also need more residential treatment beds. We have people living on the streets or ending up in jail because we don’t have adequate facilities to help them recover. And the state doesn’t have the money to build and run these beds.”
Representatives of the cannabis and liquor industries aren’t eager to foot the bill.
The Wine Institute, Distilled Spirits Council, Sazerac Company and Colorado Leads are all registered in opposition to HB 1301. No organizations were registered in support of the bill as of Friday, February 27.
“We recognize the urgent need for expanded mental health resources…however, HB26-1301 would effectively double the excise tax on wine, placing a serious burden on wineries that have invested heavily in the Colorado market, and the consumers who enjoy them,” says Tyler Rudd of the Wine Institute. “With our industry already absorbing significant new costs from Colorado’s recycling program, we urge the legislature to find a funding solution that doesn’t disproportionately target a single industry.”
If approved by legislators and voters, the bill would increase the excise tax on alcohol by $0.0733 per gallon for malt liquors and hard cider; $0.08 per liter on all vinous liquors except hard cider; and $0.6026 per liter on all spirituous liquors.
It would increase the state sales and excise taxes on retail marijuana by 0.42 percentage points each.
“Marijuana in Colorado is already subject to substantially higher taxes than other consumer products, and neither the businesses nor consumers can afford another increase,” says Mason Tvert of Colorado Leads. “Colorado’s cannabis industry is already pulling more than its fair share of the state’s tax burden. We encourage lawmakers to focus on stabilizing and supporting this vital sector — not taxing it further.”
Tvert points to a recent legislative memo, which found that marijuana generated $231.1 million for the state in fiscal year 2024-25 — more than four times the amount raised from alcohol, despite there being significantly more alcohol consumers.
“At the same time, marijuana sales have declined for four consecutive years, shuttering hundreds of businesses and costing thousands of jobs,” he adds. “Imposing additional tax burdens on an already struggling industry will accelerate these economic losses and undermine the very revenue stream the state relies upon.”
Recreational marijuana sales are currently subject to a 15 percent special state tax, a 2.9 percent state sales tax and additional local taxes. In Denver, for example, the total tax rate on recreational marijuana sales is currently 26.75 percent.
Marshall says he decided on an alcohol tax to fund the mental health hospital because many people with serious mental illnesses tend to self-medicate with alcohol, and because Colorado has among the lowest alcohol taxes in the country. He says marijuana got thrown into the mix at the recommendation of law enforcement stakeholders.
Sponsors are considering changing House Bill 1301 to make it a general sales tax increase instead of targeting alcohol and marijuana specifically. Marshall says the change “might be more palatable to the voters.”
“We just need to find a way to fund it,” Marshall says of the hospital. “I really don’t care how we do it.”
House Bill 1301 was introduced on February 25 and assigned to the House Health & Human Services Committee. It has not yet been scheduled for its first committee hearing.
