Pot excise tax could be placed on Rifle ballot
Citizen Telegram Editor
Rifle voters will likely be asked to approve a five 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 does not allow the retail sale of marijuana products, but does allow 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 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 approval 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 five percent excise tax on marijuana, Neu added, and he planned to discuss the details with officials in that town.
“But this is all new ground for everybody,” he said, since the sale and possession of small amounts of marijuana in Colorado only became legal this year. State voters approved a constitutional amendment to that affect in 2012.
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 Hans Parkinson said he is “100 percent opposed to this, because I didn’t vote for [the amendment] and don’t think it should be sold anywhere. So I’ll just shut up and listen.”
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?”
Police Chief John Dyer said his officers do not respond to a high number of calls related to the medical marijuana stores in Rifle.
“But as this grows, I anticipate some impact with more burglary alarms,” he added.
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.”
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Rifle and New Castle are seeing decent increases in tax revenue, according to financial administrators.