Boulder Recreational Marijuana Could Be Taxed Over 26 Percent Under Proposal

Kevin Ballinger shows his variety pack of medicinal marijuana at his medical marijuana shop, Herb's Medicinals, in Berthoud o
Kevin Ballinger shows his variety pack of medicinal marijuana at his medical marijuana shop, Herb's Medicinals, in Berthoud on Thursday, February 23, 2012. AAron Ontiveroz, The Denver Post (Photo By AAron Ontiveroz/The Denver Post via Getty Images)

Recreational marijuana could be taxed at more than 26 percent under a proposal the Boulder City Council will consider Tuesday.

Industry representatives said that tax rate could encourage the continued existence of a black market in marijuana, and they called on the city to pursue only an excise tax. Boulder officials want to ask voters for a 10 percent sales tax on retail pot, which would be added to a 10 percent state sales tax, both of which would be in addition to the 6.31 percent general sales tax.

They also want voters to sign off on an excise tax of up to 15 percent. Excise taxes could be collected on grow operations and manufactured product facilities that produce marijuana in Boulder but sell it elsewhere.

Such businesses make a significant portion of Boulder's current medical marijuana license holders, and many are expected to transition to retail sales next year.

The Boulder City Council will consider the marijuana tax proposal as part of a discussion of likely November ballot measures.

The current ballot language before the council uses "up to," with the actual tax rate to be set by a future council.

Based on current sales volume of medical marijuana, a 10 percent sales tax would generate $2.4 million in revenue every year, while a 15 percent excise tax would generate $1.4 million.

Half the money collected by the tax would go to fund substance abuse education programs and the rest would go to the general fund.

Boulder Mayor Matt Appelbaum said it's appropriate for the city to add its own sales tax, even though the state will share its marijuana sales tax revenue with local jurisdictions.

"We are taking something on that a lot of communities aren't taking on, and that has costs," he said. "We don't know what those will be. There are no historical precedents here. I think it's fair to ask voters to approve some special taxes, just as there is on alcohol and tobacco."

Reluctance to fund 'vilifying' of the industry

Shawn Coleman, a consultant who works on behalf of the marijuana industry, said marijuana business owners understand the argument for the sales tax, but don't believe Boulder should charge an additional sales tax.

Coleman said that in addition to the high tax rate, marijuana business owners have concerns about how the city has characterized the substance abuse prevention program.

"The successful approach used with tobacco education and prevention programs state-wide and locally was a broad, comprehensive approach," the memo said. "A similar approach would include: policies which prohibit or discourage use and accessibility; social norming campaigns to reduce social acceptability and preventative marketing that targets young people; education related to packaging and unintentional ingestion; consistent messaging; alignment of community strategies and youth and family focused interventions."

Coleman said phrases like "social norming to reduce social acceptability" indicate Boulder wants the industry to pay for its own stigmatization and go against the intent of Amendment 64.

Coleman said the industry has no problem paying for education on "responsible use" of all substances, including alcohol and prescription drugs, but doesn't want to be singled out as especially dangerous.

"The industry should not have to fund an education campaign aimed at vilifying the industry," he said.

Colorado voters will also need to approve a state 15 percent excise and 15 percent sales taxes on marijuana, although the actual sales tax will be 10 percent for now. Boulder will get 15 percent of the state sales tax on recreational marijuana sold within city limits.

Future of pot business still filled with unknowns

Rep. Jonathan Singer, a Longmont Democrat whose district includes portions of Gunbarrel, said he worked closely with both law enforcement and marijuana industry representatives to create a tax that would have widespread support.

He also increased the local share of sales tax revenue in response to community concerns and included a requirement that authorities report back to the legislature about whether the local share was adequate to cover the impacts of the new marijuana industry.

Singer said he has some concerns that local tax proposals opposed by the industry could prove divisive and result in the failure of both state and local tax measures.

Denver Mayor Michael Hancock has proposed a 5 percent sales tax, though he wants voter permission to go up to 10 percent, and Breckenridge is also considering a five percent sales tax.

The industry has come out in opposition to the Denver tax proposal.

Singer said he hoped Boulder and Denver would work with the industry to find compromise proposals.

Councilwoman Suzy Ageton said she's not sold on the idea of a local marijuana tax going before the voters this year. In another year or two, the city will have a better idea of what regulations will look like, what taxes other jurisdictions will implement and the state of the industry.

"There are a lot of unknowns about what it should be," Ageton said of the tax rate.

Councilwoman Lisa Morzel said she was generally supportive of a local sales and excise tax and said Boulder doesn't want to damage a new industry.

"We don't want to put anyone in a bad position or kill this industry," she said. "The people who have worked in this industry have worked hard to comply with the law. This is about giving us flexibility and covering our costs."

Contact Camera Staff Writer Erica Meltzer at 303-473-1355 or


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