Recreational marijuana purchases carry several layers of sales taxes in Colorado, at both the state and local levels. In Denver, there is currently a special marijuana tax of 5.5 percent on recreational pot sales, combined with a standard 4.81 percent retail sales tax, amounting to just over 10.3 percent. Now the campaign for the Denver Pandemic Fund believes the time is right to raise Denver's special marijuana tax to 7 percent, which would push the total local sales tax on recreational purchases in the city to just under 12 percent at the register.
According to the ballot petition filed with the Denver Elections Division, this bump would raise around $7 million annually, all of which would go to the University of Colorado Denver CityCenter — a partnership between CU Denver, the City of Denver and local businesses — to research pandemic-related protective technology, including personal protective equipment, as well as update plans for public health and economic responses. If the Denver Pandemic Campaign's calculations are correct, the CU Denver CityCenter would be able to dedicate around $5.25 million a year to research and another $1.75 million to planning and policy.
"Part of the recreational marijuana legalization argument in Colorado was the good that could come from marijuana sales taxation. This measure falls under that initial framework that Denver voters agreed to," says Gabe Claeson, a member of the campaign pushing the petition.
In 2013, Denver voters approved language allowing the city to raise the special marijuana sales tax to as high as 15 percent, but any proposed raise has to be approved by voters or Denver City Council. In 2018, council approved increasing the tax from 3.5 to 5.5 percent, with the extra 2 percent going to affordable housing. But that leaves room for raising the tax again and pursuing more projects to fund, Claeson says.
Denver's local sales taxes aren't the only extra charges placed on recreational marijuana purchases, however. The state's sales and special marijuana taxes add up to a little more than 15 percent, which raises the overall sales tax on purchases in Denver to just over 26 percent. (Medical marijuana purchases aren't subject to the same tax rates, because the state Department of Revenue classifies MMJ as medicinal.) If the pandemic ballot initiative passes, that rate would be closer to 28 percent, adding about 40 cents on a $30 purchase at the pot shop.
In a city that made nearly $70.5 million in local tax revenue from legal marijuana sales in 2020, any bump makes a big difference.
A veteran of Colorado election campaigns, Claeson has experience in securing new forms of tax revenue through a popular vote. In 2018, he organized a successful campaign for a Denver ballot initiative to raise funds for mental health and affordable-housing funds by adding a city sales tax of .25 cents on every dollar spent on restaurant meals and consumer goods.
"From elderly populations living in fear to communities of color disproportionately impacted by COVID-19; from homeless populations in shelters unable to socially distance to students and families struggling to cope with remote learning — the pandemic has negatively impacted every corner of Denver," Claeson says. "Denverites have a history of taking charge of our own fate, and not waiting for Congress to take action."
The campaign is in "very early stages of reaching out to community members," he adds, but it may already have an opponent in the pot industry. The Marijuana Industry Group, a Colorado-based trade organization that represents approximately 400 cannabis businesses, will oppose the measure, according to executive director Truman Bradley.
"Hopefully, Denver voters will see it for what it is: a vaguely worded money grab on the backs of Denver residents. Of all the worthy causes cannabis could fund, this one is a huge stretch," Bradley says. "If it passes, Denver customers would end up paying a tax to fund something that, frankly, gets plenty of money from legitimate sources."
The campaign for the Denver Pandemic Fund has been collecting signatures since March. According to Claeson, the campaign has collected over 7,100 of the 9,184 signatures that will be required by July 5 in order to make the November 2 election.