DENVER — Denver voters will be asked to weigh in on two different questions aimed at raising the sales taxes on recreational marijuana in November.
One of the questions is a statewide ballot initiative that asks to raise the sales tax by 5% to fund after-school programs. The other is a local ballot question that would only affect consumers in the city and county of Denver.
Initiated Ordinance 300
Initiated Ordinance 300 asks voters to raise the marijuana sales tax by 1.5% starting in January 2022, or about 15 cents on every $10 purchase.
The tax increase is projected to bring in $7 million annually to support a pandemic research fund run through the University of Colorado at Denver’s CityCenter program.
Currently, Denver’s sales tax on recreational marijuana is 5.5% not including the current 15% statewide sales tax.
Who’s behind the proposal?
The proposed ordinance was crafted and funded in its entirety by a Delaware-based social welfare nonprofit known as Guarding Against Pandemics.
The nonprofit is also behind a big ad blitz and push on a federal level for Congress to pass a $30 billion pandemic package supported by President Biden.
“There are very few limits of who can put issues on the ballot as long as they follow the rules,” said Andy Szekeres, the campaign finance administrator for the City and County of Denver.
So far, the organization has spent roughly $540,000 on this ballot question alone to pay for polling, consulting fees, research and running the campaign itself.
“We’ve never seen an out-of-state entity fully fund a local ballot measure,” Szekeres said.
Because Guarding Against Pandemics is a 501(c)(4) nonprofit, federal election law does not require the group to disclose who its donors are or where its funding comes from.
“We really don’t know a lot about them. It’s a completely legal structure but it’s a way that they shield their donors from individually reporting,” Szekeres said.
The founder of the group, however, is Gabe Bankman-Fried, a former Capitol Hill staffer, and a major donor is Sam Bankman-Fried, a billionaire who co-founded the crypto-currency exchange FTX.
Where the money would go
The initiative specifies that 75% of the funding raised from the sales tax increase would need to go to research of personal protective equipment, disinfection and sterilization technologies as well as design features of physical spaces.
However, after 20 years those research areas could be expanded to include other pandemic areas of focus.
The other 25% would be dedicated to researching public policy and planning. The ballot question also specifies that no more than 8% of the overall funding could be used for administrative expenses.
All of the money would be given to the CU Denver’s CityCenter program. However, the university never requested the funding and has no part in the campaign efforts.
Meanwhile, the CityCenter program itself has worked on things like urban planning, affordable housing, transportation and tourism but not infectious diseases.
“They’re not a health research-based organization, they’re actually a business incubator,” said Truman Bradley, the executive director of the Marijuana Industry Group, which opposes the measure. “Funding future pandemic research is a worthy objective but that needs to be solved at the national or even global level.”
Bradley is concerned that this latest tax increase attempt will turn more people to the marijuana black market in an attempt to find cheaper cannabis products.
He says marijuana consumers are willing to and have stepped up to fund things like affordable housing and homelessness with its Denver taxes but he does not see Initiative 300 as a good use of a tax increase.
CU Denver has taken a neutral stance on the initiative. Communications director Ryan Huff tells Denver7 the university was made aware of the proposed initiative in the summer of 2020.
It has not participated in any of the campaign efforts.
“However, we are excited about the opportunities this presents, if the ordinance passes, to serve the world with research about how to respond to COVID-19 and other pandemics. As Colorado’s only public urban research university, we are well-suited to administer and conduct the types of research outlined,” Huff said in a statement to Denver7.
Nevertheless, Mayor Michael Hancock opposes the issue, writing on his Facebook that putting this cost burden on only Denver voters seems unfair and saying that we should rely on national research institutions to do this work.
Otherwise, Hancock said the financial responsibility for funding this type of research should be spread more broadly.
Denver7 reached out to Guarding Against Pandemics multiple times via its website, email and phone calls and did not receive a response.