Pubdate: Thu, 20 Feb 2014
Source: Washington Times (DC)
Copyright: 2014 Associated Press
Contact:  http://www.washingtontimes.com/
Details: http://www.mapinc.org/media/492
Author: Kristen Wyatt, Associated Press

COLORADO LEGAL POT MARKET BEATS TAX EXPECTATIONS

Governor Sees $98m in Fiscal '14

DENVER (AP) - Colorado's legal marijuana market is far exceeding tax 
expectations, according to a budget proposal released Wednesday by 
Gov. John Hickenlooper, a Democrat, that gives the first official 
estimate of how much the state expects to make from pot taxes.

The proposal outlines plans to spend some $99 million next fiscal 
year on substance abuse prevention, youth marijuana use prevention 
and other priorities. The money would come from a statewide 10 
percent sales tax on recreational pot, indicating Colorado's total 
sales next fiscal year will be near $1 billion.

Retail sales began Jan. 1 in Colorado. Sales have been strong, though 
exact figures for January sales won't be made public until early next month.

The governor predicted sales and excise taxes next fiscal year would 
produce some $98 million, well above a $70 million annual estimate 
given to voters when they approved the pot taxes last year. The 
governor also includes taxes from medical pot, which are subject only 
to the statewide 2.9 percent sales tax.

Washington state budget forecasters released a projection Wednesday 
for that state, where retail sales don't begin for a few months.

Economic forecasters in Olympia predicted that the state's new legal 
recreational marijuana market will bring nearly $190 million to state 
coffers over four years starting in mid-2015. Washington state sets 
budgets biennially.

In Colorado, Mr. Hickenlooper's proposal listed six priorities for 
spending the pot sales taxes.

The spending plan included $45.5 million for youth-use prevention, 
$40.4 million for substance abuse treatment and $12.4 million for 
public health.

"We view our top priority as creating an environment where negative 
impacts on children from marijuana legalization are avoided 
completely," Mr. Hickenlooper wrote in a letter to legislative budget 
writers, which must approve the plan.

The governor also proposed a $5.8 million, three-year "statewide 
media campaign on marijuana use," presumably highlighting the drug's 
health risks. The state Department of Transportation would get $1.9 
million for a new "Drive High, Get a DUI" campaign to tout the 
state's new marijuana bloodlimit standard for drivers.

Also, Mr. Hickenlooper has proposed spending $7 million for an 
additional 105 beds in residential treatment centers for substance 
abuse disorders.

"This package represents a strong, yet cautious first step" for 
regulating pot, the governor wrote. He told lawmakers he'd be back 
with a more complete spending prediction later this year.

The Colorado pot tax plan doesn't include an additional 15 percent 
pot excise tax, of which $40 million a year already is designated for 
school construction. The governor projected the full $40 million to 
be reached next year.

The initial tax projections are rosier than those given to voters in 
2012, when state fiscal projections on the marijuana-legalization 
amendment would produce $39.5 million in sales taxes next fiscal 
year, which begins in July.

The rosier projections come from updated data about how many retail 
stores Colorado has (163 as of Feb. 18) and how much customers are 
paying for pot. There's no standardized sales price, but recreational 
pot generally is going for much more than the $202 an ounce 
forecasters guessed last year.

Meanwhile, The Denver Post reported Wednesday that banks holding 
commercial loans on properties that lease to Colorado marijuana 
businesses say they don't plan to refinance those loans when they 
come due. Bankers say property used as collateral for those loans 
theoretically is subject to federal drug-seizure laws, which makes 
the loans a risk.

Colorado's two largest banks, Wells Fargo Bank and FirstBank, say 
they won't offer new loans to landowners with pre-existing leases 
with pot businesses. And Wells Fargo and Vectra Bank have told 
commercial loan clients they either have to evict marijuana 
businesses or seek refinancing elsewhere.

"Our policy of not banking marijuana-related businesses and not 
lending on commercial properties leased by marijuana-related 
businesses is based on applicable federal laws," Wells Fargo 
spokeswoman Cristie Drumm told the Post.
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MAP posted-by: Jay Bergstrom