Parachute counts on pot despite ballot fight
PARACHUTE — The approaching budget year for Parachute looks slightly brighter than previously thought, a fact town officials attribute to opening the door to recreational marijuana businesses. However, with a ballot issue to ban the businesses slated for November 2016, it’s unclear if the projected financial relief from the industry will be felt in 2017.
Town officials previously hinted at the possibility of grandfathering in businesses already operating if the ban passes. Speaking after a meeting Dec. 10, during which trustees approved the 2016 budget, Stuart McArthur, town manager, said there is no legal precedent on the matter.
“We don’t know,” McArthur said.
In a presentation to trustees prior to the passage of the 2016 budget, McArthur painted a grim financial picture for the town, which has historically relied on energy exploration and development.
The number of natural gas well starts has slumped from 1,689 in 2008 to 138 in 2015, and the number of operating rigs has fallen from nearly 80 in 2008 to a current three. With that roller-coaster ride taking a steep and continued drop starting in the past year, the town’s sales tax revenue has dropped from $1.08 million in 2013 to a projected $860,031 for 2015.
Further, technological advances in the gas industry mean once the energy sector does turn around, operators will rely on fewer employees — the employees the town has relied on for bolstering sales tax revenue.
In addition to the drop in sales tax, assessed property values are expected to decrease by approximately $1 million, and the town is anticipating a decrease of $100,000 from severance tax and federal mineral leases.
The town has anticipated the decline in revenue due to the industry slowdown as best it could, McArthur said. Aside from various cost saving initiatives, that anticipation led, in part, to the proposal to repeal the marijuana ban.
To gain a better understanding of the financial impact of the marijuana industry, the town commissioned a study by BBC Research Consulting. A revised draft of that study released Thursday states the industry “will generate between $90,000 and $225,000 in annual sales tax revenue” depending on market capture rate of regional and Interstate 70 customers.
The study also predicts a strong potential for job growth related to the industry.
Cultivation facilities likely would employ 15 to 18 full-time workers, according to the study, and “retail dispensaries in Parachute are estimated to employ a total of 17 to 43 full-time employees (aggregated town-level), with actual employment depending upon number of retail dispensaries in operation, overall market activity and annual retail sales.”
Some of those jobs are becoming reality, as the Green Joint marijuana store opened Thursday. The town has approved four retail licenses and one manufacturing license since repealing the ban and other businesses are expected to open their doors in the coming weeks.
Should the ban pass in 2016 and marijuana businesses be shuttered, McArthur said there would be a significant impact on the 2017 budget. That would include a projected $600,000 decrease in general fund revenues, a possible 25 percent reduction in staff and a pause on most capital projects.
The timing of the events in Parachute is unusual, due in part to a provision in Amendment 64 — the 2012 ballot initiative legalizing marijuana in the state — that requires any citizen-initiated or referred measure prohibiting the operation of marijuana facilities must appear on a general election ballot in an even-numbered year.
After trustees repealed Parachute’s ban over the summer, a citizen’s group called Let the People Vote successfully collected enough signatures to put the issue on the ballot in November 2016.
Those familiar with Colorado’s marijuana laws are unaware of a similar situation elsewhere, including Michael Elliott, executive director of the Marijuana Industry Group, an organization that “protect and promote all regulatory framework within the marijuana industry in Colorado,” according to its website.
Kevin Bommer, deputy director of the Colorado Municipal League, called the provision dealing with the timing of citizen initiatives a “weird quirk” in Amendment 64.
Like Elliott with the Marijuana Industry Group, Bommer is unaware of a similar situation playing out elsewhere.
“This is certainly one of the unique circumstances created by Amendment 64,” Bommer said.
To those who say it would be unfair if a ban is instituted after the fact, Bommer said if the writers of Amendment 64 wanted to protect businesses in such a situation, they should have included that within the text of the amendment.
“It’s not in there, so it can happen,” he said.
The town is going forward in a conservative manner, McArthur said, but that uncertainty could manifest as the 2016 election approaches. For now, Parachute is not pulling back on the marijuana industry.
In November, voters approved a 5 percent excise tax on unprocessed marijuana sold or transferred from a cultivation facility to a retail establishment, and this past Thursday, trustees unanimously approved a revision to the town’s code allowing cultivation facilities in sections of town zoned service commercial.
Cultivation facilities previously were permitted only in light industrial or general industrial zones and required a special review from the town’s planning and zoning board and the board of trustees, which ultimately decides on whether or not to approve the license. The special review requirement remains in place, so if trustees disagree with the location in a service commercial zone they can deny the application.
McArthur said he has been approached by several landowners in service commercial zones who are interested in pursuing a marijuana cultivation facility.
Prior to the vote, Mayor Roy McClung repeated a remark made throughout the discussion on the marijuana issue. As trustees, the board is required to do what is best for the town, he said, and at the moment there are not other businesses interested in opening in Parachute.
“As we’ve seen in the last 20 years, what we’ve wanted to show up hasn’t,” McClung said. “There’s a lot of stuff I’ve wanted to see downtown that hasn’t shown up and we as the town and the board can’t dictate we will put ‘x business’ here. We have to do what the people are willing to put the money into and right now the only people that are willing to put money in are these individuals.”
McClung is one of four town officials who will face a recall vote in April due to their vote on the marijuana issue. Others include trustees Tim Olk, Tom Rugaard and John Loschke. Mayor Pro-Tem Juanita Williams is up for re-election in April.
Parachute resident Pam Jarrett, who has led much of the opposition including the recall effort, said people have expressed interest in running for the positions on the town’s board
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