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Marijuana: Boulder agrees to 5 percent excise tax on marijuana producers and manufacturers

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The Boulder City Council approved a 5 percent municipal excise tax on cannabis for growers and manufacturers last night and decided against enacting a separate sales tax -- for now, at least. The city did leave open the option of a 5 percent sales tax if other cities -- namely Denver -- introduce a similar sales tax.

As several councilmembers pointed out during the discussion, they don't want to be too far off from every other city that allows cannabis lest Boulder be seen as either too friendly or too harsh on cannabis businesses. Council also approved allowing the excise tax to be increased to 10 percent at a later date.

Council heard from several pro-cannabis speakers who opposed the high tax before the vote, including lobbyist and cannabis activist Shawn Coleman, who said that asking voters to approve anything higher than 5 percent simply to cover costs would not be successful. The initial Boulder tax plan called for as much as 50 percent of tax money collected going to future treatment programs.

Coleman also urged council to abandon the sales tax proposal, arguing that raising the prices too high for the consumer will send people back to illegal cannabis sales.

"The current proposal will result in only medical marijuana patients to access the safe, regulated, tested, labeled system that the city has put into place," Coleman said. "Marijuana use won't change at all, because people will still be getting it from their friends' living rooms, and you'll have no new revenues for the city."

An excise tax on producers will also help evenly distribute the tax burden, he suggested. Theoretically, grow facilities for the recreational industry won't conduct retail sales; establishing an excise tax on sales from growers would really be the only way to collect any additional tax revenue from the stores. Basically, it would balance things between growers and retailers who would be coughing up money in the form of Boulder's general sales tax, anyway.

Jeff Gard, a Boulder attorney representing Options Medical Center, pointed out that the city is already set to receive money from cannabis sales through the state, as half of the state application fees go back to the licensing municipality, as does 15 percent of the gross sales tax collected.

"The taxes have to have a purpose and justification," Gard told council. "We don't tax because we can, we tax because we should."

Boulder cannabis activist Terri Robnett put it more bluntly: The high tax rate proposals make the city government look like a pack of hungry wolves surrounding a fresh kill. "It's getting to the point from the voters' perspective that it just smacks of greed," Robnett told council. "Marijuana is being charged with rescuing every state and local government from the downturn, and that's just wrong."

Council's vote Tuesday night was the first step in getting the tax proposal on the Boulder ballot this November. The next step calls for council to pass a special ballot measure at its meeting on August 5.

View the entire debate from last night in the video below:

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More from our marijuana news archives: "Survey shows parents want strict regulations"; "Medical marijuana: Active red cards continue to decrease"

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