Colo. pot taxes sail to victory

Proposition AA will add a statewide 15% excise and 10% sales tax on marijuana. Many cities, including Denver and Boulder, passed additional taxes. 

The campaign supporting taxation included some of the same folks who worked to legalize marijuana last year. Pot advocate Brian Vicente admitted the celebration for this year’s win was a bit muted.

“It’s not as sexy,” he said, “but at the end of the day, it’s what the state needs to do this right.”

With the combined state and local measures, some customers will pay a total tax of about 30% on their pot, which is three times the rate for alcohol. Vicente said the money will do a lot of good.

“We’re taking money out of the hands of cartels, and we’re putting it in state coffers for prevention, treatment and public schools,” said Vicente. “It really seems like the smart thing to do.”

Many marijuana businesses thought so too. Michael Elliot is with the Medical Marijuana Industry Group. He said most medical dispensaries will switch to recreational if they can, and they don’t view these taxes as onerous.

“We found this to be a reasonable and responsible way forward,” said Elliott.

He said there needs to be money available to enforce regulations, pay for inspectors, and finish a marijuana tracking system currently under construction.  

The pro-taxes campaign outspent opponents more than 20-1, but there was no large advertising campaign or get-out-the-vote effort.  In fact, it was hard to tell what, if any, campaigning was going on.  Elliott said supporters didn’t need to spend big money to pass the state tax.

“It was popular in the polls back in April, and it stayed that way up until today,” he said.

The state estimates the tax will bring in about $70 million in revenue in the first year, with a large portion going to school construction, marijuana regulation, and local governments that have approved recreational sales.  

State Representative Jonathan Singer, who sponsored the bill that eventually became Proposition AA, brushed off concerns that the high tax rate would push people away from the regulated stores.

“You haven’t seen cigarettes go into the black market simply because we tax it at a higher rate than other goods,” said Singer, “and you’ll see the same with marijuana.”

Other disagree.  Rob Corry led the No on AA campaign.

“It’s a money grab by politicians,” said Corry.

Still, he conceded his side was likely doomed from the start. Popular opinion was against the tax opponents, and they had few resources to do anything about it. Corry said that’s why the campaign staged several high-profile joint giveaways in Denver and Boulder. 

“We had to get the word out somehow. Nobody was talking about this before we burst onto the scene,” said Corry. “I mean, this thing would have passed without a fight. I guess tonight, we in the ‘No’ campaign are not in the winning business; we’re in the fighting business.”

No matter how many resources his campaign had, it would have been a tough battle.  Even in an anti-tax state like Colorado, sin taxes have proved popular.  Most of the people who vote for them won’t be affected.  Deborah McGinnis, a Denver resident, said she didn’t support legalization but did support Proposition AA.

“I voted to tax the heck out of that stuff.  Every kind of tax they can throw at it, I’m happy with,” said McGinnis.

Attention now turns to the question of what the demand for recreational marijuana will be when sales begin in January. That will determine how much these taxes will actually raise.