Pubdate: Thu, 03 Oct 2013
Source: Fort Collins Coloradoan (CO)
Copyright: 2013 The Fort Collins Coloradoan
Author: Robert Allen


A small bag of weed still will cost more than a six-pack of beer, but
Colorado voters next month decide whether to tax it more.

Proposition AA could mean a difference of $7 for an 1/8-ounce bag of
marijuana priced at $32.38 in unincorporated Larimer County.

That's a 15 percent excise tax on wholesale marijuana, if passed
directly to the consumer, plus a 10 percent sales tax added to
existing sales taxes of 3.5 percent.

"This is the largest tax increase ever in Colorado history," said
Denver marijuana lawyer Rob Corry, whose opposition efforts have
included passing out free joints in Denver and Boulder. "These taxes
are many orders of magnitude higher than what alcohol pays."

The ballot measure to deal with the unprecedented, legal marijuana
industry does call for higher taxes on pot than for alcohol. But
marijuana would be taxed less than a pack of cigarettes, which is
subject to state and federal excise taxes of 34 percent, plus 2.9
percent sales tax in Larimer County.

See how much you would pay in taxes for recreational marijuana under
Proposition AA compared with what you pay for alcohol and cigarettes

Proposition AA supporters, many of whom campaigned to legalize
marijuana in 2012, say the taxes will help ensure compliance with a
recent statement from the federal government. The U.S. Attorney
General's Office issued a memo in August indicating medical and
legalized marijuana is OK as long as it isn't distributed to kids or
to states where it's illegal, among other concerns. Only Colorado and
Washington have approved legalized marijuana.

"We have to fund this," said Erica Freeman, co-owner of Choice
Organics, a medical-marijuana dispensary that could be selling retail
pot in January. "That's the most important, bottom-line thing we have
to do besides keeping it away from kids."

She said failure of Proposition AA could have her rethinking the
conversion to retail marijuana for fear of Colorado drawing the ire of
the federal government. Federal agencies have raided and ordered
shutdowns of medical-marijuana businesses deemed too close to schools
or otherwise unacceptable.

State Sen. John Kefalas, D-Fort Collins, supports the measure. He said
if it failed, finances to regulate retail marijuana likely would come
out of the general fund. That could affect higher education.

Supporters are confident Proposition AA will pass. Some 77 percent of
900 Colorado voters either strongly or somewhat supported it in a poll
last April by Public Policy Polling.

With Election Day about a month away, proponents have been sitting on
a $10,100 war chest. The opposition group led by Corry has spent more
than $2,200 and is about $400 in the red, with expenses including
$19.37 for rolling papers, according to the Colorado Secretary of
State website.

Campaigns are muted compared with last year's successful Amendment 64
ballot initiative that legalized marijuana. Supporters then spent $2.2
million while opponents spent $664,833, according to the website.

If approved, the excise tax is expected to bring $27.5 million to the
state's Building Excellent Schools Today program that, in combination
with local dollars, helps renew or replace deteriorating school
buildings. The sales taxes are to go toward marijuana regulation,
enforcement and education.

Pot sales expected to hit nearly $400 million in 2014

Marijuana stores for anyone 21 and older weren't allowed anywhere
until now, and nobody - from medical dispensary owners to law
enforcement - knows just what to expect.

Larimer County Sheriff Justin Smith, a vocal opponent of legalized and
medical marijuana, has repeatedly declined to comment on impacts or
take a position on the ballot measure, citing uncertainty.

Retail marijuana sales are predicted to be $395 million in 2014, and
the ballot measure would bring $33.5 million to state government plus
$6 million to local governments that allow retail marijuana stores,
according to Colorado's 2013 Blue Book on election issues.

Mason Tvert, co-director of the 2012 Campaign to Regulate Marijuana
Like Alcohol that succeeded in legalizing marijuana, supports
Proposition AA.

He said he's not especially concerned about taxes making it hard to
compete with the black market and said prices should continue to
decrease as they have since before the medical-marijuana boom of 2009.

"There's not necessarily a way to know for sure that it's needed," he
said of the taxes. "It is necessary to ensure the program is
adequately funded and to insure the federal government is confident
that the state is appropriately regulating marijuana."

Initially, only medical-marijuana dispensaries will be able to convert
to retail marijuana stores as early as New Year's Day 2014.

Unincorporated Larimer County is allowing two retail marijuana stores,
and the likely candidates are both within a few miles of east Fort
Collins. City officials are banning them until at least March, and
surrounding communities such as Greeley, Loveland and Windsor all have
banned the retail stores.

Larimer County commissioners said they're allowing the stores to open
because 56 percent of local voters supported Amendment 64 legalizing

Commissioner Lew Gaiter said he's "pretty neutral" on Proposition AA,
and there haven't been any conversations on how the potential extra
money would be distributed - partly because with only two stores,
they're not expecting much.

Several Fort Collins medical-marijuana dispensary owners recently got
back in business after voters overturned a ban on those stores last

Fort Collins City Council is waiting to see what happens elsewhere
before deciding to allow any local dispensaries to convert.

"That's ridiculous what they're doing to us, of course," Don
Cruinkshank, owner of A Kind Place said. "We've already been kicked
around quite a bit."

He and others paid rent on buildings to sit empty for months this year
as their applications were processed to sell medical marijuana. After
opening in August and "barely making ends meet" while waiting for his
plants to mature, he said he might start turning a profit in December.

Meanwhile, Corry said he hopes to bring a joint-giveaway event to Fort
Collins sometime before Election Day.

Coloradoan reporter Patrick Malone contributed to this article.
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