DENVER—The same alliance of pot aficionados and Libertarians that voted last year to legalize recreational marijuana in Colorado may not be as thrilled about taxing it.
That’s the dilemma faced by organizers of Proposition AA, the Nov. 5 initiative that would place a 15 percent state excise tax along with a sales tax of 10 percent that could rise to 15 percent on recreational pot for adults 21 and over.
The measure’s supporters, including state legislators, business interests, the Medical Marijuana Industry Group, and the legalization advocates behind Amendment 64, argue that the taxes are needed to cover the costs of regulations and enforcement necessary to ensuring the success of the nation’s first-ever legalized pot market.
“We really think that we need to keep the promise to Colorado voters by passing this, by establishing a regulatory structure to make Colorado a model for how to appropriately and responsibly regulate this product,” said Brian Vicente, co-director of the Amendment 64 campaign, at the Proposition AA kick-off earlier this month.
They’re facing opposition from another Amendment 64 backer: Rob Corry, political activist and marijuana attorney, who contends that the state legislature overreached when it approved the proposed tax structure.
He says the passage of Proposition AA, combined with Denver’s proposed 3.5 percent sales tax that could rise to 15 percent, would drive up the costs of recreational marijuana, hobble the legal market, and usher in a flourishing “gray” market.
“You’re looking at a [potential] 52 percent tax rate in Denver. I don’t know how our industry thinks it can survive this,” said Corry. “It’s too bad that the same people who said they supported Amendment 64 are going to undercut it. It’s a gigantic step backward.”
He received a boost last week when the Colorado chapter of the National Organization for Responsible Marijuana Laws (NORML) came out against the proposed tax structure, calling it “excessive taxation on marijuana consumers that does not uphold the promise of Amendment 64 to treat marijuana like alcohol.”
Corry’s group, No Overtaxation, drew headlines Monday at a Boulder rally at which they handed out about 1,000 free joints to victims of the flooding and anyone else who happened to drop by. A similar giveaway was held earlier this month at the Denver Civic Center.
During the event, foes of Proposition AA handed out stickers and literature, while Corry led chants of “Free the weed!”
Without the new taxes, however, Democratic legislators said at a Sept. 5 press conference that they would be forced to take the costs of paying for regulations out of the general fund, which could result in cuts to K-12 education.
“Without these taxes, without this additional funding, we’ll have to do one of two things: We’ll either have to take money from education and other much-needed programs in Colorado to fund much-needed regulation of this industry, or we’ll have lackluster or lax enforcement,” said state Rep. Dan Pabon (D-Denver).
Meanwhile, the passage of Proposition AA would mean more money for schools. Amendment 64 mandates that the first $40 million collected under the excise tax must go toward public-school construction.
In Washington, the only other state to approve recreational marijuana for adults 21 and over, the 2012 legalization measure included excise taxes of 25 percent each on producers, processors and retailers, for a total of 75 percent. Local sales taxes also apply.
Corry’s group has come under attack by those who say foes of Proposition AA are pulling a bait-and-switch by championing legalization but then balking at the tax bill. The liberal website ColoradoPols called the taxation foes “pothead hypocrites” in a Monday post, while the Denver Post editorial board scolded NORML for jumping on the anti-tax bandwagon.
Denver pollster Floyd Ciruli said voters could lean either way. If Proposition AA gets caught up in an anti-tax current fueled by Amendment 66, the $1 billion K-12 income-tax hike also on the ballot, then the pot tax could be in trouble.
On the other hand, the low voter turnout associated with off-year elections could work in favor of Proposition AA. Older voters will probably support the tax, and they’re much more likely to make it to the polls this year than the students and pot smokers who helped pass Amendment 64 in 2012.
“This is a low turnout election in which pot smokers will not vote,” said Ciruli. “It’s going to be dominated by senior voters. If they [campaigners] pitch this as somehow punishing marijuana, saying it needs to pay its own way, and plus you have the support from the school people, then that could be a winning combination.”