Two Aurora councilmembers Monday delayed a work study discussion scheduled for a proposed marijuana sales tax decrease. 

Sales tax rates on cannabis businesses have been a long-debated issue in Aurora. In a council study session last month, mayor pro-tem Curtis Gardner said “I told you so” to other city council members after hearing a presentation from the city’s budget office and an outside cannabis organization about the negative impacts of increased sales tax on the industry. 

Gardner and Councilmember Danielle Jurinsky planned to bring forward a proposal for a retail marijuana sales tax rate reduction ordinance at Monday’s study session. 

Jurinsky and Gardner asked to remove the item from Monday’s agenda and move it to a future council meeting. They did not give a reason for the item’s rescheduling.

In Colorado, on top of regular sales tax rates, the marijuana industry pays an excise tax for wholesale marijuana – or marijuana before it is sold to customers – and a special sales tax on retail cannabis sales. 

Truman Bradley, the executive director the Marijuana Industry Group, said taxes on marijuana have gone up roughly twice as fast as sales since marijuana was legalized.

In addition to paying extra in taxes, the marijuana industry is also not allowed to take normal business tax deductions for things they spend money on, such as rent and employee salaries, Bradley said. 

For a coffee shop business, for example, if the business brings in $1 million but spent $500,000 on business expenses, their taxable income is $500,000, Bradley said. For a marijuana business making and spending those same amounts, the business would be taxed on the entire $1 million. 

Statewide, total marijuana sales are down significantly. According to the Colorado Department of Revenue, total cannabis sales plunged to $137.3 million in July from the pandemic level high of $207.1 million set in March 2021.

Bradley pointed to several factors causing the decline, such as lack of tourism to Colorado after border states legalized marijuana, inflation and overproduction. 

The increase in taxes on the product make it even harder for marijuana businesses to stay solvent, Bradley said. 

While the taxes make business harder for licensed marijuana retailers, they make business easier for illicit marijuana sellers, he said.

“As taxes go up, that helps the illicit market because they don’t pay taxes,” Bradley said. “At what price point does someone go from buying at the store to buying from the guy in the alley? We don’t know. But it’s something we worry about if prices go up.”

Gardner called the continued increase in taxes on the marijuana industry “disappointing” at the September study session, saying it’s a burden on the industry – which is being treated like a “cash cow” for the government. 

“All we’ve heard tonight from our staff and outside industry group is … one of the primary causes of decrease in sales is the regulatory burden and the increase in taxes,” Gardner said. “Policymakers out of one side of their mouth say we should treat cannabis like any other business and out of the other side of their mouth continue to go back to cannabis to fund pet projects and treat it like a cash cow.”

In Aurora currently, there are 24 authorized stores. On top of the general sales tax rate of 3.75%, marijuana businesses pay an additional 5% special sales tax. 

In total in 2022, the cannabis industry brought in $11.2 million in marijuana tax revenue for Aurora. About 1% of that revenue goes toward youth violence prevention programs, according to the city’s budget office.