DENVER—Colorado voters may not like increases in their income taxes, but they’re more than fine with marijuana taxes.
Even as voters rejected Amendment 66, they gave their resounding approval to Proposition AA, the state marijuana retail-and-excise tax package, as well as 11 out of 11 local sales-tax proposals for recreational pot.
Proposition AA jumped out to an early lead after polls closed at 7 p.m. Tuesday and never trailed, winning handily by a margin of 65 to 35 percentage points.
“The passage of Proposition AA today completes the historic process of regulating and taxing marijuana in the state of Colorado,” said Brian Vicente, proponent for the Committee for Responsible Regulation in a statement. “We are now poised to demonstrate to the world the benefits of ending marijuana prohibition and embracing this new system.”
Colorado became the first state in the nation, along with Washington, to decriminalize recreational marijuana use for adults 21 and over in the November 2012 election. Unlike Washington, however, Colorado did not include a taxation component in its legalization measure, Amendment 64.
Proposition AA sets up a 15 percent excise tax and 10 percent sales tax that could reach 15 percent on retail marijuana. The first $40 million raised from the excise tax is scheduled to be used for school construction.
The rest of the revenue is slated to go toward funding a regulatory and enforcement system for the nation’s first-ever legal marijuana market.
The passage of Proposition AA ensures that “there will be sufficient funds to enforce the regulations governing marijuana cultivation and distribution in the state,” said Vicente.
In addition, voters approved marijuana sales taxes for 11 localities, including Denver, Boulder, Littleton and Pueblo County, along with a host of mountain towns like Breckenridge, Frisco and Silverthorne.
“Is Colorado more comfortable with sin taxes or income taxes? Bet on sin,” said Denver pollster Floyd Ciruli in Tuesday’s pre-election analysis.
Business, education and law-enforcement communities had lined up behind Proposition AA, but they faced opposition from No Overtaxation, a group formed by marijuana attorney Rob Corry to fight what he considered excessive taxes.
Corry said he worried that the tax rate would push pot-smokers into the unregulated “gray” market. The marijuana taxes come in addition to the 2.9 percent state sales tax.
Proponents countered that the taxes were needed to ensure the success of the legalization system, given that marijuana is still illegal under federal law and the Justice Department is watching to see if the state can pull off a lawful regulatory market.
Estimates from the Colorado Legislative Council have Proposition AA generating $27.5 million in excise-tax revenue and $39.5 million in sales taxes annually. Retail marijuana sales are scheduled to begin Jan. 1.
“Colorado is demonstrating to the rest of the nation that it is possible to end marijuana prohibition and successfully regulate marijuana like alcohol,” said Mason Tvert, spokesman for the Marijuana Policy Project, which supported Proposition AA and was the largest financial backer of the Amendment 64. “It is only a matter of time before voters and lawmakers in other states recognize the benefits and adopt similar policies.”