Oct 21, 2021 - News

Denver pot taxes are high. Two ballot measures would increase them.

Recreational marijuana taxes for select U.S. cities
Data: Axios research; Chart: Danielle Alberti/Axios

Recreational marijuana users in Denver pay some of the highest taxes in the nation — and it's only going to get more expensive if voters approve two November ballot measures.

By the numbers: Denver's marijuana taxes would become the highest in the country among the largest cities where retail pot sales are legal.

  • The combined tax rate would spike to 33% and stay the third-highest in the nation.

What they're saying: "We are passed this being a 'sin' tax, and we're starting to be looked at as a piggy bank for pet projects," said Nico Pento, a vice president at Terrapin Care Station, a Colorado-based cannabis company.

State of play: The big money behind both ballot measures — and the prospect that they could pass — is jolting Colorado's cannabis industry to action in the final weeks before the Nov. 2 election.

The industry is not mounting a major opposition campaign, but it's becoming more vocal in its objections as voting gets underway.

  • Cannabis advocacy organizations also are focusing on targeting customers to make them aware of the tax hike proposals.

The ballot campaigns are led by outside interests that see marijuana taxes as a politically palatable way to generate cash for projects that state and local lawmakers won't otherwise approve.

Proposition 119 is a statewide measure that asks voters for a 5% tax hike on retail marijuana sales by 2024 to fund private school tutoring for students. The rate would go to 20% by 2024.

  • The measure is backed by the Gary Community Investments, a nonprofit named for a former oil executive that is focused on boosting reading proficiency, and Ready Colorado, a conservative organization that backs school choice policies.

Initiative 300 in Denver asks for a 1.5% increase to generate money to research pandemic preparedness, putting the new rate at 12.91%.

  • The campaign is driven by Guarding Against Pandemics, an out-of-state entity whose largest donor is a 29-year-old cryptocurrency billionaire and major contributor to President Biden's campaign.

The big picture: The current combined state and local tax rate in Denver is 26.4%.

  • Right now, only Los Angeles has higher local taxes than us among the nation's most populous cities where marijuana is legal, according to an Axios Denver analysis. LA's rate is 12%, while most others are below 4%.

What they're saying: The cannabis industry fears increased taxes will lead consumers to look to the illegal market if prices on the street are cheaper. Moreover, it feels singled out for taxes that are higher than alcohol and other retail goods.

  • "They are definitely causes that are valuable, but we think it's inappropriate to ask the cannabis industry to be shouldering those burdens," said Shannon Fender at Native Roots, a Colorado marijuana retailer.

The other side: Supporters of the measures argue that the tax hikes are minimal and address serious issues.

  • "We think this is a viable and reasonable approach to addressing this problem," said Curtis Hubbard, a spokesman for the Prop. 119 campaign.
  • He dismissed concerns about more illicit marijuana sales as a "scare tactic" and suggested Washington state's high taxes haven't hurt its industry.

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