Pubdate: Thu, 02 Apr 2015
Source: Buffalo News (NY)
Copyright: 2015 The Buffalo News
Author: Jack Healy, New York Times


DENVER - In the state Capitol, they are calling it Refund Madness.

A year after Colorado became the first state to allow recreational 
marijuana sales, millions of tax dollars are rolling in, dedicated to 
funding school construction, marijuana education campaigns and armies 
of marijuana inspectors and regulators. But a legal snarl may force 
the state to hand that money back to marijuana consumers, growers and 
the public - and lawmakers do not want to.

The problem is a strict anti-spending provision in the state 
Constitution that touches every corner of public life, like school 
funding, state health care, local libraries and road repairs. 
Technical tripwires in that voter-approved provision, known as the 
Taxpayer's Bill of Rights, may require Colorado to refund nearly $60 
million in marijuana taxes.

Lawmakers are scrambling to figure out a way to keep that money, and 
they are hoping Colorado voters  usually stingy when it comes to 
taxes and spending  will let them. In rare bipartisan agreement on 
taxes, legislators are piecing together a bill that would seek 
voters' permission to hold on to the marijuana money.

"Despite our anti-tax feelings in the state, there's an exception 
being made when it comes to marijuana," said Michael Elliott, the 
executive director of the Denver-based Marijuana Industry Group, a 
trade organization that has not taken a position on the refund issue. 
"The industry is making a huge economic impact."

But anti-tax feelings run deep here, and some anti-tax groups said 
they would fight any effort to deprive the public of a refund, even 
if it amounts to only $11 or less a person.

"It should go back to the taxpayers," said Gregory Golyansky, the 
president of the Colorado Union of Taxpayers. "When government tries 
to keep the money that rightfully belongs to the taxpayers of 
Colorado, it is an enormous issue. There should be a tax refund."

Selling, taxing and regulating a federally outlawed drug were never 
going to be easy for states at the forefront of marijuana 
legalization. And as Colorado, the first state to legalize 
recreational use, enters its second year of retail marijuana sales, 
it is confronting a range of unpredictable problems. Among them, two 
neighboring states and several sheriffs have sued to strike down 
Colorado's law, saying that marijuana is flowing out and that the 
state's law enforcement officers are looking the other way regarding 
violations of federal law.

But few people in Colorado are pushing to repeal the state law or 
shut down marijuana dispensaries. Instead, lawmakers are mostly 
making incremental tweaks, like ensuring that food stamps cannot be 
used to buy marijuana, debating changes to the appearance of edible 
marijuana and pondering what warnings - if any - to offer pregnant purchasers.

"It's the nuts-and-bolts of how do we make the trains run on time now 
that we're here," said Rep. Jonathan Singer, a Democrat who has 
worked extensively on marijuana issues.

Distributing marijuana revenue presents a particularly thorny 
problem. After Colorado and Washington state became the first in the 
nation to legalize recreational marijuana for adults, Colorado voters 
approved a measure levying hefty taxes on the plant and on wholesale 
bulk marijuana, as well as a 10 percent sales tax. In all, retail 
customers are paying 30 percent or more in taxes at the register.

Voters dedicated $40 million of marijuana revenue to school 
construction and repairs. Other marijuana revenue goes toward paying 
for the inspectors, enforcement agents and other costs of running the 
offices that regulate the substance.

While millions are pouring into the state from locals and tourists 
buying marijuana oils and tinctures, candy and cookies and raw 
plants, the tax revenue is falling short of the $70 million that the 
state thought it might collect.

Nevertheless, the state is now in the awkward position of having to 
give back that marijuana money because it collected more than it had 
anticipated in taxes last year across the board  including 
construction, oil and gas and other sections of the state's booming economy.

Blame lies with the Taxpayer's Bill of Rights, said Tim Hoover, a 
spokesman for the Colorado Fiscal Institute, which tracks budget 
issues in the state. He compared the much-derided law to HAL 9000, 
the sinister computer in the movie "2001: A Space Odyssey."

"It has its own malevolent programming that is really hard to 
override," he said.

The complex measure, first approved by voters in 1992, essentially 
requires that when Colorado collects more money than it had 
anticipated, it has to give some back to taxpayers.

Refunding nearly $60 million in marijuana money would shortchange 
school construction and other needs that had been depending on 
marijuana taxes, and force the state to pay for them from its general fund.

"It's not that the pot tax came in too high," said state Sen. Pat 
Steadman, a Democrat who has been trying to write a law to find a 
solution. "It's that every other revenue came in high."

The marijuana refund could amount to a few dollars per taxpayer, 
handed out as a break on their state returns. But Steadman said the 
law was unclear who, exactly, should be paid back. The marijuana 
customers? The growers and wholesale businesses paying taxes? The 
public, who approved this whole setup?

"I swear, the more you work on it, the tougher it gets," Steadman 
said. "It's really complicated."
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MAP posted-by: Jay Bergstrom