Pubdate: Sat, 02 Mar 2013
Source: Richmond Register (KY)
Copyright: 2013 Associated Press
Contact:  http://www.richmondregister.com/
Details: http://www.mapinc.org/media/4305
Page: A8

COLORADO TASK FORCE PONDERS HOW TO TAX LEGAL POT

DENVER (AP) - Pot smokers in Colorado were the biggest winners in the 
vote that legalized the drug. Now state regulators are working out 
the details of exactly how to tax it, so the benefits are shared 
statewide in the form of increased revenue.

A state panel meets Thursday to draft final recommendations based on 
the voter- approved marijuana legalization question that asked for 
excise taxes up to 15 percent to fund school construction.

Colorado lawmakers could set a lower tax, or they could add sales 
taxes beyond the current statewide 2.9 percent. Legislators could 
even create a special new "marijuana tax" for consumers, plus a 
series of required licensing fees for growers and sellers. Besides 
schools, the taxes must fund marijuana safety enforcement and drug 
education measures.

Any option would have to go back to voters for final approval.

Marijuana proponents and critics agree that taxes should be hefty. 
But if levies are too high, legal pot could be so expensive that 
people continue buying it underground.

"If this doesn't work and taxes are so high the black market still 
dominates, then what was the point?" asked Mike Elliott of Colorado's 
Medical Marijuana Industry Group.

Fiscal analysts have no idea where to begin predicting how much tax 
pot smokers could produce. The unknowns include how many people are 
buying pot now and what they're paying, how many people will start 
smoking marijuana now that it's legal and whether prices will drop 
once commercial sales begin. If the federal government blocks 
commercial pot sales, the marijuana tax windfall would be zero.

"It's a big question mark," said Colorado state budget analyst Dan 
Krug, who ran through multiple tax scenarios with the marijuana task 
force set up to recommend legislation to regulate weed. Krug's 
estimates ranged from a few million dollars a year up to $ 72 million 
annually, depending on tax rates and growth of the industry.

In Washington, the only other state to legalize marijuana for 
recreational use, the tax picture is clearer.

Voters there set 25 percent taxes at each of three different stages - 
from growers to processors to consumers. The measure also defined 
exact spending levels on things like education. For example, 
Washington will spend exactly $ 20,000 on Webbased education on the 
health and safety risks of marijuana.

Colorado's task force is likely to adopt a vague recommendation 
asking state lawmakers to set excise fees and add licensing fees 
steep enough to cover the costs of regulation. They'll leave it 
lawmakers to figure out those exact costs.

Task force members will also settle recommendations Thursday on 
regulations unrelated to taxes, including rules for growing marijuana at home.

The task force already has asked for potency labels, limited 
marijuana advertising, set residency requirements for marijuana 
workers and limited commercial sales to less than an ounce. The group 
decided against a residency requirement for pot customers, opening 
the door for marijuana tourism.
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MAP posted-by: Jay Bergstrom