Colorado Politics

Pot tax issue heads to the ballot — again

There’s a line in the Grateful Dead’s “Born Cross-Eyed” that Colorado voters can relate to when it comes to votes on marijuana taxes:“Seems like I’ve been here before.”

Voters have already given the state the OK to keep taxes collected from the sale of recreational marijuana. But a glitch in state law requires the issue to go before voters again.

Gov. John Hickenlooper on Thursday signed a law to create a November ballot measure that deals with the pot tax collection issue.“We have to go back a second time and ask voters a second time, ‘Can we keep the money that they already told us to collect?’” Hickenlooper quipped during a Capitol bill signing ceremony. “That’s part of the magic of living in Colorado.”

In 2013, voters approved Proposition AA, which set up a system of marijuana sales taxes. Recreational marijuana was made legal through 2012’s voter-approved Amendment 64.

The complication is embedded in the Taxpayer Bill of Rights. The 1992 voter-approved provision triggers refunds when tax revenues or state spending exceeds estimates that are presented to voters, whenever they consider tax questions on the ballot.

That’s what will happen with $58 million in pot tax revenue this year, unless voters act this fall. Voter Blue Books — ballot information packets that are sent to voters for state elections — provided an estimate of the revenue and spending the state was expected to see this fiscal year.But, thanks to a strengthening economy, the blue book underestimated the strong tax revenues the state will actually be taking in, hence the TABOR refund trigger.

Henry Sobanet, Hickelooper’s budget director, said a “complicated variable in the TABOR amendment” affects new pot taxes that are collected in the first fiscal year. But Sobanet said the complication was not caused by the actual pot tax revenue.

“We’re not over-collecting marijuana taxes,” Sobanet said. “The budget is higher and the revenue growth is higher than was estimated in the blue book.”

By voting yet again in November, voters will ensure that $40 million of pot tax money will go toward school construction. Another $12 million will pay for public safety programs and drug addiction treatment resources. The rest of the money will be placed in the general fund.If voters reject the ballot measure, taxpayers will be issued a 100 percent refund of the taxes.

“People wanted these taxes to be in place,” said Sen. Pat Steadman, D-Denver, who helped craft the ballot language. “They wanted the money put to good use. They know the legalization of marijuana has consequences for the state budget and the taxes were meant to help handle that. And for the taxes to work as planned, people are going to have to vote yes again.”

The bill the governor signed does more than create a ballot measure. Pot smokers will get a sales tax break under the new law.Pot sales tax rates will drop from 10 to 8 percent beginning in 2017. The excise rate of 15 percent will remain the same.

And the law creates a pot tax holiday this year. Sales taxes on pot purchases will be waived on Sept. 16.

— Twitter @VicVela1


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Vic Vela

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