Biz, labor support tax on recreational marijuana

8/26/2013

By Peter Marcus

THE COLORADO STATESMAN

With less than three months before Colorado voters decide whether to tax recreational marijuana for schools and enforcement, proponents are only just sparking the proposition.

But the Committee for Responsible Regulation is not too worried. Its last polling in April showed that the measure would pass by 77 percent of the vote. And now some big names and organizations are committing to rally behind the effort, with both the business and labor communities on board.

Proposition AA will ask voters to support a 15 percent excise tax and a separate 10 percent special sales tax. Those dollars would go towards enforcement costs, with the first $40 million of the excise tax earmarked for capital school construction.

The legislature referred the measure to voters in May when Gov. John Hickenlooper signed the legislation at a ceremony at the Capitol.

The governor said at the time that he would campaign for the tax increase if necessary, but he has so far been quiet about it. A spokesman for his office, Eric Brown, said the governor supports the tax measure, but he doesn’t know whether Hickenlooper will campaign for it.

Colorado voters don’t usually have an appetite for tax increases, but the marijuana tax question is a different beast. For one, not everyone will use the newly legalized marijuana marketplace; and for those who do, they appear to understand that the constitutional right comes with some responsibility.

Even much of the industry itself is supporting the tax increase — making it perhaps the only industry in the state that supports taxation for its own regulation.

“It’s an interesting situation we’re in; it’s bizarro world,” commented Joe Megyesy, spokesman for the Committee for Responsible Regulation. “Half the industry is coming together to fund the tax campaign against itself. But it just goes to show where we’re at right now… they’re going to have to take extra steps to prove their legitimacy to the public at large.”

Megyesy — who also lobbied the legislature this year as it worked to craft a package of regulatory measures to control the budding industry — said Legislative Council recently closed the comment period on crafting the Blue Book language for the proposition. The Blue Book explains ballot questions to voters.

The Committee for Responsible Regulation includes representatives of the current medical marijuana industry, prospective newcomers to the industry, and union leaders from the UFCW Local 7, which represents food and commercial workers.

Mark Belkin, community affairs and organizing director for Local 7, said it is important for his union to get behind the effort from the beginning so that they can help craft what may become a major job creator.

“We want to play a role in developing a partnership with the industry, with the community, to help stabilize the industry to help it prosper so that employees have secured dignified jobs that pay a livable wage,” affirmed Belkin. “We don’t want another industry coming into Colorado that’s going to create thousands of thousands of jobs but it’s a low-wage industry.”

The committee has been working with lawmakers, such as Rep. Dan Pabon, D-Denver, who spearheaded the legislative effort to regulate the industry, and Rep. Jonathan Singer, D-Longmont, and Sen. Cheri Jahn, D-Wheat Ridge, who also sponsored marijuana regulatory bills.

Singer said his work with the committee has primarily served as an advisory role. But he said he has also been working with the committee to make sure that it has the resources to get its message out to voters so that the state can “responsibly regulate a substance that was previously illegal.”

Part of that discussion has included working with different community groups to explain how the system would work and how it would help schools and regulation.

“Our idea and hope is to get some of the constituent groups that might have been at odds during the Amendment 64 debate, and get them to come together with this,” explained Singer.

The largest group opposed to marijuana legalization and to the regulatory bills at the Capitol this year was Smart Colorado, a group that described itself as concerned mothers. The group had pressured proponents during the legislative session to support the tax question. It had also vowed to support the question as a group.

But Smart Colorado did not return repeated requests for comment left by The Colorado Statesman this week to see if they would play a role in campaigning for the tax question.

The Committee for Responsible Regulation, however, has earned the support of the Colorado Municipal League, which supports the tax increase because local governments will need help regulating the marketplace. Local governments were granted a 15 percent share-back from the revenue collected for enforcement. Fifteen percent of local governments’ sales tax from the marketplace would be returned.

Major business organizations are also supporting the effort, including the Denver Metro Chamber of Commerce and Colorado Concern.

Kate Horle, spokeswoman for the Denver Metro Chamber of Commerce, said it remains to be seen whether the marijuana tax would be a boon for the state. But she said her organization is supporting the proposition simply because it concludes what voters approved when they backed Amendment 64 last year, which was to legalize marijuana under the assumption that there would be a tax connected to it.

Proponents cleverly did not include the tax question in Amendment 64, instead opting simply to let voters decide whether to make small possessions of marijuana a constitutional right. The initiative allows adults 21 and over to possess up to one ounce and to grow up to six plants. But it says nothing about taxation or regulating a marketplace.

“We feel that the people of Colorado thought that they were voting to tax marijuana when they passed it, and this fulfills what they believe what they were doing in the first place,” explained Horle.

Megyesy says polling has been high for the tax question because electors realize that since marijuana is now legal, there is a need for revenue to enforce it.

“Regardless of how you feel about marijuana — good or bad — Colorado citizens have a legal marijuana right now, and it’s just a matter of if we’re going to pay for the enforcement or not,” opined Megyesy.

Opposition mounts within marijuana community

But some within the marijuana community itself feel that the 25 percent total tax is too high, which they fear could lead to empowering the black market. If the tax results in marijuana costing more than it does to purchase it illegally, some users may simply continue buying underground.

Rob Corry, a well-known Colorado medical marijuana attorney, has launched an issue committee to oppose the ballot question. The committee is called No Over Taxation.

Corry acknowledges that there has always been a split within marijuana activists over how to legalize the industry. Many within the community had opposed Amendment 64 because they feared that it would lead to over-taxation.

Corry actually played a role in writing Amendment 64. But he said he did so because he was under the impression that the campaign was to regulate marijuana like alcohol.

He said a 25 percent tax doesn’t come anywhere close to regulating the new industry like alcohol. Instead, a 0.5 percent tax would more closely resemble the alcohol industry, said Corry.

He believes that proponents are focusing too much on the concept of legitimacy, pointing out that marijuana is still illegal on the federal level, and therefore the federal government has never discussed taxing the industry.

“I’m sure there are well-meaning folks, but the marijuana industry is not a monolith, and some of them have been sold a bill of goods that there’s this theory out there that the federal government wants us to pass these taxes on recreational marijuana…” stated Corry. “The problem is that the federal government doesn’t say that and there isn’t a single official… that has ever said on the record anything even remotely approaching, ‘You need to pass… taxes in Colorado or we’re going to come after you.’

“We have legitimacy,” continued Corry. “We are protected in our state constitution; we have the blessing of the Colorado legislature… We’ve employed 10,000 Coloradans in good, well-paying jobs; we rent out thousands of retails and commercials and industrial warehouse spaces. We’re past the point of begging for legitimacy. We are legitimate and we’re not leaving, whether or not this tax fails.”

Corry points out that local governments are also passing their own taxes on marijuana, and that there is also the 2.9 percent state sales tax, which could pump the tax up to as high as 40 percent.

Denver, for example, just this week made progress on advancing a ballot question that would ask voters to approve a 3.5 percent local tax on the product. But that tax could be ratcheted up to as high as 15 percent, according to the current proposal.

The Denver City Council will hold a final vote on the proposed ballot question on Monday following a one-hour public hearing. It passed Monday on an initial vote of 7-6.

The question being advanced by the City Council was scaled back from its original form, which called for a beginning tax of 5 percent.

Meanwhile, Boulder is also asking voters to approve a local sales tax. The council unanimously approved a 3.5 percent sales and 5 percent excise tax on recreational marijuana, each of which could be raised to 10 percent.

Singer said he has been working with local governments to keep their proposed taxes lower, pointing out that voters this November are likely to see a tax increase to fund education. He is concerned that if voters are overwhelmed with tax questions, it could hurt the marijuana initiative, as well as other initiatives.

“If we can come together with them, I think this is one place to do it, and this is one place where we can be successful,” commented Singer. “It’s about making sure a substance is responsibly regulated.”

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