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A Dilemma
In “Colorado May Have to Refund As Much As $30 Million In Pot Taxes,” Kristen Wyatt addresses an unusual problem facing state legislators in the Centennial State. When voters legalized the use of marijuana in 2012, they anticipated that the pot taxes would support state schools. However, a provision in the state constitution triggers a refund when overall taxes exceed a certain amount.
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The situation raises the specter of taxpayer refunds stemming from a vigorous marijuana industry.”It’s just absurd” notes State Senator Pat Steadman, a Democrat.
One of his Republican colleagues agrees:”This is a little bit of a different animal,” State Senator Kevin Grantham observes. “There’s a struggle on this one.”
Refund Mechanisms
Legislators from both of the major political parties generally concur that funds derived by the State from the recreational use of marijuana should not go back into taxpayer pockets. The situation arouses strong emotions.
In the past, on at least six occasions, Colorado furnished a combined total in excess of $3.3 billion in refunds to taxpayers. Refund mechanisms could involve either a direct reduction in individual income taxes or reduced motor vehicle fees, or even a lower sales tax on trucks.
Voters approved the controversial marijuana initiative in 2012. Then at a later date, they approved a 15% excise tax on marijuana for school use, plus an additional 10% tax on marijuana comprising a special fund at the disposal of lawmakers. Initial projections of $70 million generated in pot revenues subsequently faced downward revision to $50 million, still a considerable sum.
The governor’s budget writers’ estimates now predict that marijuana refunds could total some $30.5 million. This figure would return $7.63 cents to every adult in the state.
Voter Dissension
What should Colorado legislators do with the funds? Voters express different opinions about the issue.
For example, 50-year old David Huff, a carpenter in Aurora, Colorado, feels strongly that taxes which increase the price of weed by as much as 30% represent too big a burden on the part of state government. “I don’t care if they write me a check, or refund it in my taxes, or just give me a free joint the next time I come in. The taxes are too high, and they should give it back,” he asserts.
Yet 25-year old Maddy Beaumier disagrees. “I have no problem paying taxes if they’re going to schools.”
The debate reflects the fact that Colorado voters in 2012 approved sweeping changes to the marijuana laws under the impression that taxes generated by the new measure would support schools in the state. That referendum, however, did not consider the impact of an earlier 1992 constitutional amendment called the “Taxpayers Bill of Rights,” legislation which used a formula based on inflation and population growth to determine the extent of refunds due back to taxpayers. The Taxpayer Bill of Rights specifies that all n
ew taxes must obtain voter approval.
Colorado Lawmakers Agree
The public debate finds Democratic and Republican legislators in Colorado in agreement. They recently sought a third public vote on the issue of whether or not marijuana tax proceeds should be exempted from the refund requirement.
Republican Senate President Bill Cadman expressed the views of many lawmakers when he observed “I think it’s appropriate that we keep the money for marijuana that the voters said that we should.” Many Republicans favor distributing other refunds due to taxpayers. But they hope to place the disposition of pot taxes before voters on a special ballot question.
Many lawmakers believe voters will approve marijuana taxes a third time, if asked to do so. State Senator Pat Steadman explains:”This is what the voters want, and if we’re going to have (pot), and the constitution says it’s legal, we damn well better tax it.”
Neutral Industry Groups
Some marijuana industry groups in Colorado advocated taxes on pot at the time of the initial 2012 referendum. Many have not taken a public position concerning the refund issue.
For example, Mike Elliott of the Marijuana Industry Group in Denver indicated recently that his organization is not seeking lower taxes, although he notes that Colorado lawmakers do possess the power to cut taxes without placing the issue before voters.
Conclusion
The final estimates on the marijuana tax fell due in March, 2015. Thereafter, legislators planned to debate the topics of marijuana refunds and a separate issue of refunding taxpayers some $137 million. Voter approval of marijuana taxes a third time would make their task easier.
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