Northglenn's days of having some of the lowest marijuana sales-tax rates in the state could come to an end. In a close decision on Monday, August 27, the Northglenn City Council voted in favor of asking voters whether or not to increase the city's special sales-tax rates on both medical and retail marijuana in November.
Northglenn pot shops currently charge a 2 percent special sales tax on all marijuana sales, which was voted on in 2014, when retail sales first began. Dispensary owners say these low rates attract customers from nearby towns such as Denver, Federal Heights and Thornton, despite all three having dispensaries of their own. Still, the measure passed, with two councilmembers absent from the meeting.
Local marijuana sales-tax increases were all the rage on August 27. That same day, the Denver City Council voted in favor of a proposal from Mayor Michael Hancock that would raise the city's special marijuana sales tax from 3.5 to 5.5 percent as part of an effort to double Denver's affordable-housing fund. That initiative was approved unanimously and has support from several marijuana industry groups; it will take effect on October 1.
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In 2013, Denver voters gave its city council the power to raise the retail marijuana sales tax as high 15.5 percent, and that's the same power the Northglenn City Council would have if the ballot measure is successful in November. The proposal would initially raise Northglenn's special marijuana tax from 2 to 4 percent — but would also allow the city council to raise that tax by 1 percent every year after until it reaches 10 percent.
Unlike Denver's recent measure, Northglenn's marijuana industry was vocal in its opposition.
Representatives from Northglenn dispensaries Green Tree Medicinals, Doc's Apothecary, Bgood and The Green Solution disapproved of the 10 percent cap the city would have if the measure were approved, and many of them opposed any increase at all. Bgood community relations director Tim Morgen says he and his peers expected an increase on retail marijuana sales tax, but says they believed it would be a singular raise of 3 percent, and that adding medical marijuana sales to the mix "took him by complete surprise" when he found out earlier in August.
"I think we've had a really healthy relationship with the City of Northglenn until now, but this is clear evidence of borderline irresponsible government," Morgen says in an interview with Westword. "We're very concerned, especially with the medical side. We don't want to see a trend of higher taxation on medical cannabis across the state. I think the idea of collecting a sin tax on medical cannabis patients is irresponsible and immoral."
Although the state's retail marijuana sales-tax rate of 17.9 percent was created to help fund marijuana enforcement efforts and contribute to Colorado's general fund, medical marijuana's 2.9 sales tax has never been viewed as an opportunity for huge revenue boons, and Colorado towns and municipalities have followed that path; Northglenn is the only town in the state that has an extra sales tax on medical marijuana.
Green Tree Medicinals patient services coordinator Lynne Carroll told the council that the proposed increase in medical marijuana sales tax will "create a hardship" for patients. "Some of them are on a fixed income, and this tax increase would be very difficult for them to maintain," she explained during the meeting.
City projections estimate Northglenn would make around $1.4 million more in marijuana sales-tax revenue from the initial 2 percent raise. Before the vote, Councilwoman Meredith Leighty told the community she was open to reassessing the measure's language, but felt the increase was needed to reflect the rates of surrounding towns and counties, which charge anywhere from 5 to 10 percent in local marijuana sales taxes.
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"I don't believe we're going after a pot of money that we perceive is there for special projects for the city," Leighty said during the meeting. "This is also going to the voters. We are not saying that this has to happen. The voters in our city will get to do that."
Northglenn Mayor Carol Dodge said the measure gave her "heartburn," and believed it was unfairly targeting one industry in the city. "I have an issue with the city targeting one business to do the good of the city and to build infrastructure that affects all of the residents in the city — but we're taking it off the backs of one certain business."
Dodge was taken further aback upon finding out that Northglenn was the only Colorado town charging a special sales tax on marijuana. "Now that I do know that, it makes me have more heartburn. If this would move forward, the language would have to be changed, for me, to get medical marijuana out of the language," she said before the vote. "In the end, I think we would actually benefit if we do nothing."
Despite the mayor's strong opposition, the proposal passed, 4-3. The measure will go in front of Northglenn voters during the November 6, 2018, elections. If passed, the tax increase would take effect in the next fiscal year.