DENVER – Recreational marijuana products could see a price hike this year if a proposal from the governor’s office to raise the tax rate on them is approved.
The move is an effort to combat the shortfall of funding for K-12 schools stemming from an anticipated drop in revenue from property taxes.
The special sales tax rate on recreational marijuana was scheduled to fall to 8 percent, according the supplemental budget request submitted to the Joint Budget Committee by the governor’s office. But under the request it would instead be increased to 12 percent, which should result is a projected increase in revenue of $41.9 million.
That would fall short of the $106.2 million needed to keep the state’s “negative factor” for K-12 funding at $876.1 million, as was proposed in the November budget request from the governor’s office.
The “negative factor” is a number applied to the funding formula for K-12 education, and it represents the amount of money falling short of requirements in Amendment 23 of the state constitution.
The governor also is proposing a reduction to the Senior Homestead Exemption that was passed in 2000 and allows qualifying seniors to have an exemption on the first $200,000 of their home value, according to a release from Hickenlooper’s office.
That would allow for an additional $68.1 million to fill the gap that is caused by the “fiscal thicket” that the Gallagher Amendment, which governs the amount of property tax that is paid by homeowners, contributes too.
During a meeting with reporters on Wednesday, House Speaker Crisanta Duran, D-Denver, and House Majority Leader KC Becker, D-Boulder, said they are looking for opportunities to balance the state budget.
“We are going into a year where it is going to be very challenging to make sure we invest adequately in kids to make sure they are able to reach their full potential,” Duran said. “So we are open to a variety of options.”
Becker said there is no clear avenue to deal with the “negative factor,” so lawmakers must be open to options such as those proposed by Hickenlooper.
“I think it’s a creative solution, and that’s where we are with our budget,” Becker said.
Local recreational dispensaries, though, aren’t happy.
“For a business owner who is already paying more than he should, it is ridiculous,” said Jason Barker, co-founder of Durango Grow Co.
In addition to the special sales tax, businesses such as Barker’s pay licensing fees with both the state and the city as well as the normal sales taxes for both, he said. While the 2 percent hike would be a hit to his bottom line, it would not cause him to close his doors.
“Kinda the way I’ve looked at this industry is it’s the cost of doing business,” he said.
The first piece of legislation covering marijuana was rolled out Wednesday in the Colorado Senate Judiciary Committee. It passed a second reading in the Senate, and many more reviews are expected from both chambers this session.
Senate Bill 015 aims to make advertising for the sale of medical or recreational marijuana a Class 2 misdemeanor if the individual taking out the ad is not licensed to sell pot in the state and has a clear intent to distribute. The bill was drafted because of concerns over the use of social media sites, such as craigslist, to advertise cannabis by unlicensed individuals, said Sen. Irene Aguilar, D-Denver.
But some legislators don’t think the crackdown on such advertisers goes far enough.
“It seems we’re struggling a lot in Colorado about permitting this advertising or that advertising, and my own solution would be we restrict it such that it’s very limited altogether,” said Sen. Bob Gardner, R-Colorado Springs.
lperkns@durangoherald.com
