Our View: Voters should approve Proposition AA
Proposition AA is the follow-up to Amendment 64, which Colorado voters approved last November, legalizing the use of recreational marijuana. With the passage of Amendment 64, the state of Colorado was required to establish a system for regulating the retail marijuana industry and to enact an excise tax on the product to fund public school construction through the state’s Building Excellent Schools Today program.
Proposition AA, the new ballot issue voters will be deciding in November, addresses both mandates set forth in Amendment 64 and asks voters to approve the imposition of a 15 percent state excise tax on wholesale marijuana and a 10 percent state sales tax on retail marijuana and retail marijuana products.
If voters approve the measure, public school construction will receive the revenue from the 15 percent excise tax, which the state estimates will produce about $27.5 million per year. Revenue from the 10 percent sales tax, which is expected to generate $39.5 million annually, will be used to fund the state’s new system for regulating recreational marijuana. Of the total sales tax revenue collected by the state, 15 percent, or approximately $6 million, will be directed to cities and counties where retail marijuana sales occur.
Now that we’ve reviewed the basics of the law, we’ll get to the point. Proposition AA deserves the support of local voters because it will provide the state, and in turn local government entities, with the revenue they need to regulate a brand-new industry. And as a caveat, it also will produce important funding for school construction.
A bill to impose the excise tax and sales tax already was approved by the state Legislature and signed into law by the governor. So now it’s up to the voters to approve the new taxes. The taxes do not apply to medical marijuana, and only those who purchase and sell recreational marijuana will be subject to them.
According to information provided by the state, the revenue generated by the 10 percent sales tax will be used to develop a computer system and hire a staff to collect, monitor and enforce collection of the new excise and sales taxes on retail marijuana. The taxes also would fund the Colorado Department of Revenue’s Marijuana Enforcement Division that is tasked with regulating retail marijuana — among the division’s responsibilities are testing, tracking and labeling retail marijuana to prevent the sale of pot to those age 21 and older and across state borders.
As the state navigates the creation and oversight of a new recreational marijuana industry, all eyes will be on Colorado. Properly funding regulation is an important step of the process and, if done right, could discourage federal intervention and create a model system for other states to follow. If voters do not approve Proposition AA, the state still will have to enforce the new marijuana regulations, which means state resources could be diverted from other vital state funding priorities such as health care, public safety and education to fund regulation.
Those who oppose Proposition AA say the state taxes are too high and could create a black market for recreational marijuana, which brings with it criminal elements that the legalization of pot was supposed to eliminate. Supporters of the amendment contend that the tax on marijuana in Colorado is not high enough to create an underground market for the drug. In the state of Washington, taxes will be twice as high as the ones proposed for Colorado, which will add about 22 percent to the retail cost of marijuana as compared to 35 to 40 percent in Washington.
It is important to note that the state Legislature would have the authority to reduce the sales tax on marijuana if it generates more revenue then is needed for enforcement. If Proposition AA wins voter approval, it will be important for Colorado citizens to hold the state government accountable for adjusting the tax downward in the future if warranted.
More than 55 percent of Colorado voters approved Amendment 64, and in Routt County, the measure was approved by 63 percent of voters. The Steamboat Today encourages voters to follow up that vote by approving Proposition AA — a tax that puts the cost of regulation squarely on the shoulders of marijuana users and the marijuana industry rather than everyday taxpayers. It’s a proposal that will help ensure that the retail marijuana industry is regulated strictly and responsibly.
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