By Veronica Morgan
With tax revenues exceeding expectations, the State of Colorado had to offer a tax-free day for marijuana dispensaries. The Colorado Taxpayer Bill of Rights (TABOR) places a limit on the amount of taxes the state can collect. With sales of recreational marijuana soaring, the state has accumulated a $58 million overage, beyond their anticipated revenues.
Wednesday, Sept. 16, was the day. Growers and buyers benefited from the tax holiday, which brought big crowds out early in the day, to take advantage of the price reduction. Denver area shops anticipated sales to exceed those earned on Black Friday or 4/20, but were surprised by the numbers that actually showed up.
Deep lines awaited shop owners as they opened for business, but by midday, the lines had thinned considerably. A Denver man, Tim Persoff, said this,” I didn’t know what to expect, but this isn’t bad.” He said there was virtually no waiting at the dispensary he visited.
Consumers saved 10%, the sales tax on pot, while growers of marijuana seeds got a 15% break. These numbers may not sound high, but Tim Cullen, from the Colorado Harvest Company reportedly save more than $45,000 before mid morning. Cullen reports he “transferred a month’s worth of inventory, or about 150 pounds of marijuana,” before 10 am.
The state law and TABOR require the state to refund any excess tax revenue, which is what led to the one-day holiday. In November, voters will decide the future of cannabis tax revenue. A proposal on the ballot would, if approved by voters, send excess tax revenue to the schools, or substance abuse treatment centers within the state.
“The idea of having to issue a refund or going back to voters hat in hand is disappointing,” said Sen. Pat Steadman, D-Denver, the vice-chair of the Joint Budget Committee. “However, under TABOR there is $133 million difference. This would necessitate a refund of the revenues received from the pot taxes, of about $54 million.”
Natalie Mullis, the chief economist for the Colorado Legislative Council, is concerned that the projections for marijuana related tax income might not be accurate, creating a tax nightmare. “It’s a moving target, one with lots of interpretations,” said Mullis. The first estimates were $133 million low, but as the novelty wears off, and future sales level the estimates will change. Mullis said, “A preliminary estimate of what the actual spending is won’t come until September, with the final numbers arriving in late December or January.”
House Speaker Mark Ferrandino is still deliberating the facts. “There’s still time to figure out what the right policy decision is,” he said. “Wholesale changes aren’t likely for the next couple of years, there’s a chance that some tweaking may occur.”
Severe flooding in the state earlier this year created controversy over how TABOR funds could be distributed. The way the law is written, the state was not able to use the resources from the excess taxes to help rebuild, angering many Coloradans.
Citing the flood, Ferrandino explained, “As issues like the flood come up, there could be conversations across the aisle. There would be bipartisan support on some of the smaller issues to make changes that would avoid some of these unintended consequences.”
Whatever voters decide in November, the tax holiday allowed retailers to stock up at reduced prices. A customer who was rewarded for waiting in line with a 50% discount card, Benjamin DelCarpio of Centennial says, “Lower prices are always better.”