Pubdate: Sun, 29 Sep 2013
Source: Denver Post (CO)
Copyright: 2013 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Robert J. Corry Jr.
Note: Robert J. Corry Jr. is a Colorado attorney and treasurer of the
No on Proposition AA campaign.
Page: 1D

PROPOSITION AA IMPOSES AN UNREASONABLE TAX ON POT

Last November, Colorado's voters overwhelmingly endorsed Amendment 64,
the Alcohol-Marijuana Equalization Initiative." The drafters of
Amendment 64, myself included, campaigned and sold the measure as a
promise to treat marijuana like alcohol.

As with medical marijuana (Amendment 20), politicians have been
dragged, kicking and screaming, into compliance with the Colorado
Constitution. Cloistered officials would have never repealed
Prohibition, so the people locked it in constitutionally.

After Amendment 64 passed, the legislature continued to conspire
against it, even proposing a legislative "repeal" of the
constitution.

The strategy to undermine Amendment 64 continues with the
legislature's Proposition AA, a 10 percent sales tax on retail
marijuana (which can then be hiked to 15 percent without voter
approval), and a 15 percent excise tax on wholesale transfers. These
are literally the highest sales and excise taxes ever proposed in
Colorado history. No other product or industry has ever been taxed
this high.

This is in addition to the 2.9 percent statewide sales tax, any local
sales taxes (4.72 percent in Denver), and federal taxes. (Federal
taxes on marijuana shops and consumers are already effectively higher
than any other sector, since normal deductions are denied this industry.)

The city and county of Denver looks to feed at the trough with its own
additional 3.5 percent initial sales tax that could be raised as high
as 15 percent on marijuana sales on top of Proposition AA's.

Tax advocates mislead about the proposed tax rates, advertising the
state sales tax as "only" 10 percent and Denver's as "only" 3.5
percent, as if voters can't read the proposals in black and white.
Strangely, the campaign for Proposition AA collected in one day a
single $10,000 union campaign contribution, from the United Food &
Commercial Workers Local No. 7.

Excessive taxation creates a bloated and ineffective government, and
empowers the unregulated market to undercut legitimate regulated
producers. Amendment 64 creates a constitutional right for an
unlimited number of adults to assist each other in the cultivation,
production, distribution and consumption of marijuana, without any
licensure, regulation or taxation. Regulated shops paying extreme
taxes cannot compete.

There will be an enhanced incentive to cheat on taxes, especially
since the excise tax will be collected on transfers of marijuana
within the same entity. Yes, you heard it right: If one person or
entity owns both the garden and the store (as they all do under
"vertical integration" required until 2014), then one person bringing
marijuana from garden to store will be taxed on this
"transaction."

What tax is fair? Colorado excise taxes for alcohol are 8 cents per
gallon for beer, 7.33 cents per liter for wine, and 60 cents per liter
for liquor. That's a rate of less than 1 percent. Marijuana should be
equalized with alcohol. High sales taxes are inherently regressive and
disproportionately impact poor people by taking a higher percentage of
income.

The principal argument used by Proposition AA advocates is fear of the
federal government. Fear usually works in politics. But this time,
even the federal government itself has not endorsed Proposition AA,
and certainly not the concept of state and local governments profiting
from the sale of marijuana.

Moreover, on Aug. 29, the U.S. Justice Department issued guidelines as
to how Colorado's marijuana industry can avoid federal interference.
Nowhere do these guidelines advocate taxing marijuana. Also, the past
is prologue: Colorado's medical marijuana industry has consistently
operated and paid taxes comparable to other businesses, with nearly no
federal interference.

In fact, if Proposition AA passes, federal intervention is more
likely, since the unregulated markets will become ascendant.

The federal government does express its wish that Colorado's regulated
marijuana industry be functional. An overtaxed industry is
dysfunctional. Marijuana licensing fees are higher than any other
industry in Colorado, up to $18,000 per marijuana store, more than
enough to fund regulation. And not a penny of the excise tax will go
to regulate marijuana.

Colorado voters should vote "no" on these irresponsible and
historically unprecedented tax increases.
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MAP posted-by: Matt