CARBONDALE — Town voters here will likely be asked in November to place an extra 5 percent sales tax on retail marijuana purchases, on top of the proposed state recreational marijuana taxes that will also be on the fall ballot.
The Carbondale town council agreed at a Tuesday work session to formally consider referring the sales tax question to the Nov. 5 general election ballot at its next regular meeting, on July 23.
Colorado voters will also be asked to approve a 15 percent excise tax on growers, suppliers and wholesale products, plus a 10 percent statewide sales tax on all retail pot purchases.
The proposed marijuana-specific taxes would be in addition to existing local and state retail sales taxes.
If approved, the taxes would take effect in January 2014, when marijuana businesses will be allowed to open in Colorado under Amendment 64, which was approved by state voters last fall.
While acknowledging a need to generate the necessary revenues to enforce marijuana rules and regulations, one Carbondale trustee also cautioned against over-taxing the newly legalized substance.
“I can see it creating a black market” if the tax is too high, Trustee Allyn Harvey said during the Tuesday discussion about the town’s regulatory intentions. A handful of the town’s medical marijuana dispensary operators who were in the room nodded in agreement.
But, “Somewhere, we need to have some revenue in order to really enforce the regulations that the state will require us to enforce, and whatever we decide to enforce,” Harvey said.
Amendment 64 made it legal for those over age 21 to grow and possess limited amounts of marijuana for recreational use. It also opened the door for marijuana stores and clubs and related businesses to begin operating in 2014.
The state recently outlined its own regulations around the new pot industry.
Local governments can either ban marijuana-related businesses within their jurisdictions, or write their own zoning and licensing rules and pass taxes on the sale of marijuana in retail stores or clubs.
Some jurisdictions are taking the prohibition route, including Garfield County, which is proposing a ban on recreational marijuana businesses in the unincorporated areas of the county between Carbondale and Parachute.
Next month, county commissioners will consider an ordinance that would ban all recreational marijuana businesses, including cultivation, which is allowed in the rural county areas for medical marijuana.
A possible county ban on growing operations for recreational marijuana is cause for concern for the Carbondale trustees.
“I don’t want to see us become the only place to grow it, if the county bans it,” Trustee Pam Zentmyer said.
If that happens, Carbondale Trustee Frosty Merriott said the town may want to consider an additional wholesale tax rate.
“I’d like to see us get away from Carbondale being a grow center,” he said. “But, if it does we should be able to make a little more money on it.”
There’s also concern that, if the state tax measures fail in November, the town’s tax alone may not be enough to cover the administrative and enforcement costs of regulating the industry.
“If the state question fails, even more of that enforcement falls on our lap,” Town Manager Jay Harrington said. “If that’s the case, we will want to come back in April [at a followup election] and adjust for that.”
On the regulatory side of things, Carbondale is also looking to limit commercial marijuana cultivation, manufacturing and testing facilities to the town’s rather limited industrial zone districts.
A majority of trustees were inclined to establish a 500-foot boundary between retail marijuana businesses, and away from schools, churches and drug and alcohol rehabilitation centers, same as the rule for liquor stores. Such businesses will also likely be limited to commercial zone districts.
In addition, some town trustees would like to see a cap on the number of marijuana stores in Carbondale. The town board will continue the discussion about marijuana business regulations at its Aug. 20 work session meeting. Municipalities and counties have until Oct. 1 to put any local regulations in place.