DENVER - Proposition AA calls for new state taxes to fund marijuana enforcement, but 7NEWS found out there's no firm dollar amount on how much is needed to fund the enforcement of legalizing marijuana.
A YES vote on Proposition AA creates a new tax structure for legal marijuana sales. It would:
- Create a 15 percent excise tax on marijuana, meaning the retailer would pay a 15 percent tax to the supplier of the marijuana. Typically, that cost is passed down to the customer through the retail price.
- Create a special 10 percent state sales tax on marijuana purchases, in addition to the 2.9 percent state sales tax.
- Allow the state legislature to lower the excise and special sales tax or raise it no higher than 15 percent, without another vote of the people.
A NO vote on Proposition AA creates no new tax structure. There would be no excise tax on marijuana for retailers and customers would only pay the existing 2.9 percent sales tax.
-- What is needed if Proposition AA passes --
If the new excise tax were in place, Proposition AA calls for the first $40 million each year to be directed to the Public School Capital Construction Assistance Fund, which was created in 2008 to fund school construction needs.
Additional money would go to a marijuana cash fund regulation of the pot industry.
If the special 10 percent sales tax were in place, local jurisdictions would receive 15 percent of the proceeds of marijuana sold in that jurisdiction.
According to analysis completed in August by the state's legislative council, it would cost $5.5 million over the next two years for the services and staff needed to monitor the collection of those the new excise and special sales taxes.
It would cost $3.4 million to make modifications to the computer tax system used to monitor the collection of the marijuana taxes.
To review the fiscal impact if Proposition AA passes, view page 3 of this link: http://ch7ne.ws/1cjFCPk
The state's legislative council also calculated that it will cost nearly $300,000 over the next two years for the Colorado Bureau of Investigation to fingerprint and conduct background checks on new marijuana retailer employees.
When you add in the cost of a marijuana market study and costs to the Colorado Department of Revenue, more than $2 million will be needed over the next two years.
To review the costs of enforcement at a retail marijuana business, view page 6 of this link: http://ch7ne.ws/16KyOGI
The money collected from the special sales tax and regular state sales tax would likely fund these needs.
--What is needed if Proposition AA fails--
If Proposition AA fails, the only additional money the state would receive would be the 2.9 percent sales tax on all retail marijuana sales.
If there was no new excise tax and no special sales tax, the state would not need the estimated $5.5 million over the next two years to make modifications to the Colorado Department of Revenue computer system and to monitor the collection of the excise and special sales taxes.
The state would still have to pay to enforce the regulations of new retail businesses and to fingerprint and conduct background checks on retail marijuana employees.
It's possible that the basic sales tax generated by the sale of retail marijuana could fund the enforcement, but it's unclear until the retail businesses are in place and actual sales take place.
The Marijuana Enforcement Division is supposed to be funded to $5.7 million and 55 employees yearly. According to the state's legislative council, as of August it was funded to $3.5 million. Money collected from the 2.9 percent state sales tax and application and license fees are supposed to fund the Marijuana Enforcement Division.
To review the needs of the Marijuana Enforcement Division, view pages 3 and 4 on this link: http://ch7ne.ws/16KyOGI
Currently, only medical marijuana businesses can apply to become retail marijuana businesses. The license fee is $500 for a current medical marijuana business to obtain a retail marijuana license. Anyone who wants to apply to become a retail marijuana business, but does not currently have a medical marijuana business license, must pay at least a $5,000 license fee.
State Rep. Jonathan Singer, D-Longmont, sponsored the legislation that created Proposition AA. He told 7NEWS that if the proposition were to fail, the fees for businesses to become retail marijuana establishments could increase based on the need to fund marijuana enforcement.