Pubdate: Thu, 07 Nov 2013
Source: Texarkana Gazette (TX)
Copyright: 2013 The Associated Press
Contact:  http://www.texarkanagazette.com/
Details: http://www.mapinc.org/media/976
Author: Kristen Wyatt, The Associated Press

POTENTIAL OF TAX ON MARIJUANA ATTRACTS NEW ALLIES IN COLORADO

DENVER(AP) - Colorado's hearty embrace of a 25 percent marijuana tax 
this week could prove a turning point for legalization backers. 
They've long argued that weed should come out of the black market and 
contribute to tax coffers instead of prison populations.

But it's far too soon to say how much revenue the marijuana taxes in 
Colorado and Washington will actually produce when retail sales begin 
next year.

A tax windfall in the two states could win over skeptical states that 
may be interested in pot legalization but wonder about costs of 
regulation. On the other hand, if many pot smokers in Colorado and 
Washington stay in the black market to avoid taxes, supporters could 
lose a major plank of their longstanding argument that legalization 
will take money from criminal cartels and benefit government programs.

"It's a crucial question," said Sam Kamin, a University of Denver law 
professor who served on a panel that helped write Colorado's 
marijuana regulations. "There's this premise that marijuana 
legalization can be a net-net win, spending less money putting people 
in prison and seeing a tax benefit from the sale of marijuana. Voters 
are going to expect to see both."

Colorado's vote Tuesday showed it wants the benefits, even in a 
tax-adverse state that typically rejects proposed taxes. The pot tax 
question-on an excise and special sales tax that could add more than 
25 percent to the sales price of weed-passed by nearly 2-to-1.

That margin was much broader that Colorado's legalization vote itself 
in 2012. Many who opposed legalization then supported the taxes this 
time around. Last year's legalization measure also called for tax 
revenues for the state.

Washington state has already settled its pot taxation scheme, 
charging 25 percent at three possible transfer points from production 
to retail sale, plus sales taxes.

It's impossible to say precisely how much revenue the pot taxes will 
produce. A projection prepared for Colorado voters predicted pot 
taxes would bring in almost $70 million a year. Of that, $27.5 
million would go to school construction, as specified in last year's 
ballot measure that legalized the drug.

The rest of the money would go toward paying for the regulation of 
pot shops. Several Colorado municipalities approved additional pot 
taxes Tuesday, ranging from 3.5 percent in Pueblo County to up to 10 
percent in the city of Boulder.

Both Colorado and Washington are taxing pot based on the sales price, 
unlike alcohol and tobacco, which are taxed by the gallon or by the 
pack. The price of marijuana varies widely based on potency and 
quality and is likely to go down once recreational sales are legal.

Based on crowd-sourced estimates of what black-market pot smokers 
pay, Colorado's state tax rate would add about $50 to a $200 ounce of 
loose marijuana, roughly the amount that would fit in a 
sandwich-sized plastic bag. Local taxes could bring the total 
consumer tax burden near 30 percent, or a total price of $260 an ounce.

Denver approved a 3.5 percent tax Tuesday that could generate $4.5 
million a year. The Denver Post has predicted state and city taxes 
will add $8.59 to a $30 eighth of an ounce of pot.
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MAP posted-by: Jay Bergstrom