Rifle medical pot businesses are going strong
July 28, 2014
RIFLE — Recreational, or retail, sales of marijuana in other municipalities have not had an obvious negative impact on at least two Rifle medical marijuana dispensaries.
Owners of both said the much-higher price for recreational marijuana products compared with medical marijuana is the biggest reason. Officials with two other Rifle dispensaries could not be reached for comment.
Recreational sales of marijuana began on the first of the year in Colorado, but Rifle City Council banned such outlets under provisions of Amendment 66, the 2012 measure approved by state voters to allow adults to buy and use small amounts of marijuana.
Dena Clouse owns Western Slope Caregivers, 120 W. Fourth St., and said she believes her customer base has been loyal because of the much lower cost.
“In fact, we’ve had more people get their medical marijuana cards,” Clouse said.
She estimated her business has between 250 to 300 regular customers, some coming from places as far as Dinosaur, Rangely, Grand Junction, Montrose, Fruita and Meeker and a few from Denver.
“We have a very good grow operation in Denver, so we like to think our product is among the best,” Clouse said. “We’re pretty strict on what we put on the shelves, and we try to keep our prices affordable in relation to the economy.”
Dan Meskin co-owns Green Cross Dispensary and Wellness Center, 120 E. Third St., and said his customer base has remained steady, “largely due to the much lower tax structure on retail marijuana” that causes much-higher prices for customers of those outlets.
The state heavily taxes recreational sales, and various local municipal taxes are collected where sales are allowed.
Meskin said he would estimate average medical marijuana prices are one-third cheaper than recreational prices “even a lot more than that the further upvalley you go,” where Glenwood Springs, Carbondale and Aspen all allow recreational sales.
However, Meskin said it was hard to say what the difference might be dollarwise, since the products at medical and recreational outlets vary widely.
Rifle Finance Director Charles Kelty said the city does track medical marijuana sales tax, which is collected by the state, but it is included with several other business sectors in the general retail category. Until the city has at least five medical marijuana vendors, Kelty said, state law prevents him from reporting those figures as a separate category. Rifle has four medical marijuana providers.
As more recreational marijuana “grow” operations get established, Meskin said, the price difference will likely drop.
“I also think the medical shops cater more to the connoisseur customer, if you will,” he added. “It’s the seasoned veterans, the more experienced customer we see for medical. Retail shops are more volume driven and medical shops are more personable.”
Excise tax would affect one grow operation
Meanwhile, Rifle voters will likely be asked to approve a 5 percent excise tax on marijuana-related products made in Rifle when they vote in November.
City Council gave informal backing to putting the issue before voters during a July 16 workshop meeting and will consider initial approval at their Aug. 6 meeting.
Rifle allows up to four cultivation operations, said City Attorney Jim Neu. Four have been licensed or are in the process of getting state licensing, he noted, with only one in operation.
According to the Colorado Department of Revenue, retail marijuana is subject to a 15 percent state excise tax on the average market price of retail marijuana. The excise tax is imposed on the first sale or transfer from a retail marijuana cultivation facility to a retail marijuana store, retail marijuana product manufacturing facility or to another retail marijuana cultivation facility.
Neu said the first $40 million of revenue from state excise taxes goes toward new school construction in Colorado. What Rifle’s revenue would fund would be decided by City Council during the city budget process in the fall.
Unlike sales tax revenue, the state will not collect local marijuana excise tax revenue, Neu added, so the city finance department will be tasked with that process.
“I’d say that if the question is passed, we wait until the end of the year to implement it” and start collecting the tax in 2015, he said.
Neu also noted the question should likely receive strong support from voters.
“No Rifle taxpayer will be affected, so I’m not sure why it wouldn’t pass,” he said.
The town of Carbondale has a 5 percent excise tax on marijuana, Neu added, and he planned to discuss details with officials in that town.
Neu also pondered how much revenue might be generated from an excise tax on one grow operation in Rifle.
“If we go too high, I’m not sure what impact it might have on that operation,” he said. “The industry has shown a remarkable willingness to work with municipalities.”
City Councilman Jonathan Rice said he was “significantly conflicted” on the issue, since marijuana is still illegal under federal law.
“I get the purpose of a tax,” Rice said. “It seems these excise taxes are imposed partly to mitigate the impacts of a product. Since we don’t allow sales, there’s really none in Rifle. So why tax them, if it’s not costing us anything?”
Others pointed out Rice and all other council members will only vote to place the issue before city voters, not endorse the tax.
“I just have a hard time voting on a tax on what I know is so dreadfully harmful and illegal,” he continued. “I think it would be giving it the legitimacy it shouldn’t have.”