The Durango City Council voted against placing questions on the ballot that could raise taxes on marijuana.
Councilors Chris Bettin, Sweetie Marbury and Dick White voted unanimously on the issue.
Council was considering placing a question on the ballot that would have asked voters to increase sales tax on retail and medical marijuana by 5 percent.
It was also considering a second question that would have raised excise taxes on marijuana grow operations and infused product manufacturing businesses by 5 percent.
The additional revenue would have been used for city buildings and equipment. It would not have been used to pay off any debt.
Bettin asked the board to consider more egalitarian options such as sales, lodgers and property tax increases to fund city needs.
He said it was likely if the marijuana tax increases were placed on the ballot, voters would approve them because many would see the taxes as being paid by others.
“If we don’t take leadership, we are essentially creating a burden on one industry that we wouldn’t want on our own,” he said.
However, he warned the crowd that the issue was likely to come up again because it is one of the few options for the city to increase revenue.
Councilor Dean Brookie recused himself from the vote because he has clients in the marijuana industry. Councilor Melissa Youssef was absent.
Council decided not to ask the public to vote on a marijuana tax increase in 2015. But councilors agreed to revisit the issue because a new state law was passed that allows counties to tax marijuana within cities.
La Plata County commissioners considered placing a marijuana tax question on the ballot but chose not to go forward with the effort.
Many residents, some marijuana business owners and employees, voiced concerns about being singled out for additional taxes when the industry is already heavily taxed. They are concerned it would drive customers to a black market.
“The marijuana industry is the most regulated, burdened industry in the state,” said Forrest Jones, owner of Sweet CO2 Oil.
Some residents were worried that if questions were placed on the ballot, voters wouldn’t understand how additional taxes would hurt the industry that has created new jobs and tax revenue.
Marijuana buyers pay a special 15 percent state sales tax on top of city and county sales taxes that apply to all goods. The state also taxes wholesale marijuana at 15 percent. Even though marijuana is not legal under federal law, marijuana businesses pay federal income taxes ranging from 60 to 70 percent.
Existing city sales tax on marijuana generates about 3 percent of the city’s sales tax revenue.
The city also receives 15 percent of the 15 percent special state sales tax on marijuana.
Since the special state sales tax increased on July 1, it’s possible the city could see some increased revenue.
Business owners called on the city to recognize their contribution to the economy rather than to place questions on the ballot that could raise taxes.
“It is hard not to feel extremely attacked,” Durango Organics owner Jonny Radding said.
The local industry employs about 500 people and supports other ancillary businesses, such as marijuana testing labs and others, Radding said.
The city presentation acknowledged that the industry employs more than 100 people.
Resident Tim Wheeler suggested the city do an economic impact study to understand the industry and look at ways to encourage growth, which could also increase revenue.
Marbury encouraged the crowd to shop local to help pay for city needs.
“You want me to help you, you help me. Don’t go to Amazon,” she said.
mshinn@durangoherald.com
