State Law Technicality Forces Another Pot Tax Vote

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Photo: Marijuana Transaction Dispensary (AP)
Buying marijuana at 3D Cannabis Center in Denver.

Consider this figure: $66 million. That's the amount in taxes Colorado collected last year on recreational marijuana. But because of a quirk in the state constitution, all of that revenue must be given back to pot stores and state taxpayers.

That is, unless voters elect not to keep the money.

Confused? So were the nearly 2 dozen people I talked to about it at Civic Center Park in Denver.

One of them, Cameron Bridgeford, says he voted for recreational marijuana in 2012, and for the pot taxes in 2013.

“That was the benefit that voters were sold on,” Bridgeford said about the tax revenue. “I read up on the issue before I voted on it, and the reason I voted on it wasn’t necessarily because I smoke marijuana, it was because I thought the benefits outweighed the costs, so if we’re going to give back the benefits we really haven’t gained much here.”

No one I talked to knew about a statewide ballot initiative called Proposition BB. It’ll be on ballots you should be getting any day now. It says if you vote “yes,” the state will get to keep the tax money.

Jeremiah Crawford, who was smoking a cigarette in the park, was dumbfounded.

“If we’re taxing beer and cigarettes, I don’t see why we wouldn’t tax marijuana,” said Crawford. “And obviously it’s a lot of money that can do a lot of good.”

If voters say “no” to proposition BB, then the $66 million in pot tax money will be sent back to citizens, to the tune of about $8 a taxpayer. That’s according to state Sen. Pat Steadman, who runs the Yes on BB campaign effort.

That $8 "may buy lunch,” Steadman said. “But if we collectively let the state keep that money it’s going to repair an awful lot of school buildings across the state.”

“When we voted to legalize marijuana I think we all went into that knowing that here’s an opportunity to tax it, generate revenue, and use that money to do some good,” Steadman said.

According to the Yes on BB website, if it ballot measure passes:

  • $40 million will go to school construction
  • $2.5 million on marijuana education
  • $2 million on school bullying prevention
  • $2 million on prevent school drop out

Here’s how we got to this point: Under current law, voters in Colorado must approve tax increases. And, a little-known provision of Colorado's Taxpayer Bill of Rights, known as TABOR, says that if either the new tax's revenue, or all state tax revenue minus the new tax revenue, exceed estimates, all of the new tax revenue must be given back to voters.

Because of a booming economy, total state tax revenue did exceed estimates this past year, triggering an automatic refund -- unless you vote yes on BB, Steadman said.

“It’s a little annoying that we have to vote on it again,” he said. “And yet, welcome to Colorado. We have stuff on the ballot to vote on every year, and I think most people are pretty used to that.”

The campaign for Yes on BB has only about $2,000 cash on hand, which may help explain the ballot measure's low profile. Steadman says pot dispensaries are not contributing any money this time. The industry says they don’t have a position on BB.

“The heart and soul of our industry is with me on the No on BB side,” claims Rob Corry, who's running an equally almost-invisible campaign against the proposition. He has no cash on hand, according to state campaign finance records.

Corry says the state got greedy, essentially creating a 22-percent tax rate on marijuana purchases. He says the tax burden is an example of how the state treats pot businesses as a lower-class enterprise.

“That sort of knee jerk, emotional reaction, regulate it and tax the hell out of it, threatens to undermine the whole system,” because it inflates the price of marijuana relative to the black market, Corry said. That keeps the black market alive.

Denverite Matt Occhipinti, walking through Civic Center Park, agrees with that sentiment.

“I think that’s why there’s still weed dealers walking the streets," he said. But still, he supports the state keeping the taxes it’s already collected.