Pubdate: Fri, 15 Jan 2016
Source: Toronto Star (CN ON)
Copyright: 2016 The Toronto Star
Author: Betsy Powell
Page: GT1


What Toronto can learn from Colorado's taxation of pot sales

The gym rats who join the still-under-construction recreation centre
in central Denver, Colo., will owe their workouts to weed smokers.

In Pueblo County, south of Denver, students will soon be able to walk
to school on a sidewalk paid for by marijuana tax revenue, or apply to
the world's first cannabis-funded scholarship program.

"We're taking dollars that were previously going to drug cartels in
Mexico and using them to provide opportunity and education to the next
generation," says Pueblo County Commissioner Sal Pace.

Elected officials there recently approved the use of $2.5 million U.S.
in pot taxes to fund a mix of community projects.

As Canada prepares to legalize marijuana, cash-strapped governments at
every level across the country are eyeing the potential tax revenue
recreational pot might generate.

In Toronto, where the 2016 budget process is underway, many
councillors, fearing voter backlash, are loath to raise or impose new
taxes, even so-called sin taxes, while the city falls behind in its
ability to fund public services.

But in Colorado, one of four U.S. states so far to legalize pot for
recreational use, voters and lawmakers have embraced the idea of
collecting taxes from its sale.

In a statewide vote last November, 69 per cent of voters even rejected
refunds after the state collected an unanticipated $66.1 million in
pot sales tax revenue. Instead, $40 million went to school
construction and $12 million to youth and substance-abuse programs.
The remaining $14 million went into a discretionary fund, according to
the Denver Post.

Fixing roads, building sidewalks and funding post-secondary school
scholarships with pot tax revenue "was never something I thought would
be a reality in my time in government," says Pace. "It's a bit
surreal." But marijuana-related tax revenue - projected to pump $28
million into Denver's coffers this year - is no fantasy, says Tyler
Henson, president of the Colorado Cannabis Chamber of Commerce.

"That extra tax revenue the cannabis industry is bringing in is very
helpful for the state of Colorado and the cities," says Henson, who
calls his organization a "pro-business association for the marijuana

In 2014, when there were financial difficulties with the construction
of a Denver recreation centre, the city made a one-time allocation of
$3.2 million toward the $33-million facility after months of
collecting higher-than-expected retail marijuana revenue. Shovels went
into the ground late last year.

"I would never say that single-handedly legalizing recreational
cannabis would be the solution to every government's problem," Henson
adds. "But it's a good tool to have, and it can alleviate some
problems especially, if a city or a county is looking at a budget deficit."

Ashley Kilroy, executive director of marijuana policy for the city and
county of Denver, said pot revenue is prioritized toward regulation,
education, enforcement and public health, while excess revenues go
into general revenue to pay for city services.

However, that's "a very small portion of the overall city budget," she
wrote in an email.

Marijuana revenue constitutes only 2.3 per cent of the city's general
revenue fund.

All retail marijuana and related products sold in Denver are subject
to a general city sales tax rate of 3.65 per cent, plus a special 3.5
per cent sales tax, for a combined 7.15 per cent.

To ensure robust regulation of pot and responsible implementation of
legalized sales, "it takes a significant dedication of resources, and
that costs money," Kilroy wrote. "There should not be an expectation
that marijuana revenue will make a city flush with cash."

Mason Tvert, director of communications with the Washington, D.C.based
Marijuana Policy Project, says some jurisdictions in Colorado and
other legal pot states aren't limited to imposing sales taxes.

The state also allows local government to regulate "social consumption
venues," which pay licensing fees.

As of June 2015, more than 21,000 Colorado residents held valid
occupational licences to work in marijuana-related businesses. Those
businesses employ workers and use services from other sectors, such as
construction, legal, insurance and real estate.

"There's lots of opportunities," Tvert says.
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