Pubdate: Sun, 22 Mar 2015
Source: Gazette, The (Colorado Springs, CO)
Copyright: 2015 The Gazette
Contact: http://www.gazette.com/sections/opinion/submitletter/
Website: http://www.gazette.com/
Details: http://www.mapinc.org/media/165
Authors: Pula Davis, Wayne Laugesen, Christine Tatum

NO TAX WINDFALL FROM MEDICAL, RETAIL SALES

A year ago, Colorado's governor's office had grand plans to fund 
programs and resources aimed at protecting public safety and health 
in the aftermath of legalized retail pot sales.

The state anticipated a marijuana tax windfall from medical and 
recreational sales to pay for it all - and Gov. John Hickenlooper 
called for nearly $100 million for prevention and treatment programs, 
including a project aimed at analyzing the correlation between 
marijuana use during pregnancy and birth defects.

"Our administration is committed to the responsible regulation of 
adult-use marijuana and the effective allocation of resources to 
protect public safety and health and to prevent underage use," reads 
a Feb. 18, 2014, funding request for fiscal year 2014-15 that the 
governor signed. "Indeed, we view our top priority as creating an 
environment where negative impacts on children from marijuana 
legalization are avoided completely."

Along with legalizing pot in Colorado, voters approved Proposition 
AA, which tacked on high taxes to retail marijuana - a 15 percent 
excise tax to fund school capital projects and a 10 percent sales tax 
to offset costs associated with retail pot, such as regulation.

But sales haven't matched expectations, and complications resulting 
from Colorado's Taxpayer's Bill of Rights, or TABOR, could further 
affect the amount of money the state receives. It's possible some of 
the money collected could be refunded to voters.

Taxpayers may get two refunds under TABOR.

One refund occurs when state revenue exceeds revenue cap. The second 
occurs when a new tax is imposed, such as the taxes on marijuana, and 
the amount that officials believe will be collected is not met.

"TABOR required you do a second thing," explained Tim Hoover, 
communications director for the Colorado Fiscal Institute. "You say 
what the total state revenue would be without the new taxes, so if 
this marijuana tax didn't pass, how much money would you still have."

The legislative council's estimate of taxes the marijuana industry 
would generate was off by 1 percent, so the money must be returned, 
Hoover said.

The state can keep the tax money collected if it's shown that voters 
approve - which Hoover believes they did when they approved Amendment 
64 and Proposition AA, which imposed taxes to fund school capital 
projects and marijuana enforcement.

Last month, state officials released tax figures on recreational and 
medical sales for 2014, which amounted to roughly $63.4 million. Tack 
on additional licenses and fees and Colorado's total take was about 
$76 million.

The 15 percent excise tax dedicated for schools - projected alone to 
raise $40 million - has generated about one-third of original 
estimates. Excise taxes totaled $13.3 million from Jan. 1 through 
Dec. 31, according to data from the Colorado Department of Revenue.

The 2014-15 fiscal year, which began July 1, is shaping up a bit 
better. Between July 1 and Dec. 31, the state collected $38.9 million 
in taxes from recreational and medical sales, a monthly average of 
nearly $6.5 million. If tax revenues hold steady for the remaining 
six months of the current fiscal year, tax collections - not 
including licenses and fees - will ring in around $77.8 million.

None of this is to say a lot of pot isn't being sold. It's just that 
Coloradans have been savvy about where they shop or how they get 
their pot. Some grow their own (adults are allowed to have up to six 
plants), and others choose to make their purchases at medical 
marijuana dispensaries, where the drug isn't subject to the extra 25 
percent in taxes.

That was an unexpected consequence to many people who have followed 
the marijuana tax money - everyone from former Colorado Attorney 
General John Suthers to legislative economists.

The original plan to spend marijuana tax revenue included:

$11 million for the Department of Education to pay for more school 
resource officers and programs to address mental health and substance 
abuse prevention.

$32.2 million for the Department of Human Services for substance 
abuse programs.

$456,760 for the Department of Law to develop expertise on retail 
regulations and provide training for regulators and law enforcement.

$42.3 million ($16.9 million from the general fund and the rest 
federal funds) for the Department of Health Care Policy and Financing 
for substance-abuse initiatives, including treatment and prevention 
programs in 230 schools.

That roughly $100 million plan was drastically modified.

"We ended up with much closer to a $33.5 million budget for this 
fiscal year," said Andrew Freedman, director of the Governor's Office 
of Marijuana Coordination.

Freedman said the first priority for the tax revenue is to cover 
regulatory costs at the Department of Revenue and the Colorado 
Department of Public Health and Environment.

Money also has been spent on youth prevention, public safety and 
public health programs related directly to marijuana.

Here's where some tax money is going in the current fiscal year:

$7.6 million to enforce current regulations for retail and medical 
sales of marijuana.

$5.6 million for a statewide public education campaign.

Freedman said the "Good to Know" campaign, which currently tells 
people how to use the drug safely and legally, will expand. "There 
will be a youth prevention message coming out, I believe, in late 
spring," he said. There also will be more education on marijuana 
edibles in ensuing rollouts of the campaign.

The Department of Education is getting $2.5 million to fund health 
professionals in schools to identify and help kids at risk for drug 
use. Freedman said the money is paired with $6.3 million for 
school-based prevention and intervention services; $2.1 million of 
that is a federal match.

$2 million to Tony Grampsas Youth Services for prevention of 
marijuana use among youths.

$2 million for jail-based behavioral programs.

$2 million for prediversion programs at the local level, offering 
alternatives to incarceration.

[sidebar]

Day 1: REGULATION

Two important assumptions about successful legalization of marijuana 
in Colorado were:

1.) Regulation would provide a safer solution to the state's drug problems.

2.) By regulating the sale of marijuana the state could make money 
otherwise locked up in the black market.

Today's stories suggest the net gain from taxes and fees related to 
marijuana sales will not be known for a while, as costs are not known 
or tracked well, and there are many other unknowns about pot's 
effects on public health and safety.

About the series

After the first year of recreational pot sales, The Gazette takes a 
comprehensive look at the unintended consequences of legalizing sales 
and use of recreational marijuana.

Day 1: Colorado has a fragile scheme for regulating legal marijuana 
and implementing a state drug prevention strategy.

Day 2: One of the suppositions about legalizing pot was that 
underground sales would be curtailed, but officials say there is 
evidence of a thriving black market.

Day 3: One teen's struggle to overcome his marijuana addiction shows 
how devastating the effects of the drug can be for younger, more 
vulnerable users.

Day 4: Amid the hoopla about recreational marijuana sales, the 
medical marijuana industry is flourishing and has its own set of 
complicated concerns.
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MAP posted-by: Jay Bergstrom