Story Originally appeared on KRDO by Angelica Lombardi
COLORADO SPRINGS, Colo. – A group called Citizens for Safer Neighborhoods which is made up of Colorado Springs business professionals, released an economic study Thursday about the city and marijuana tax revenue.
According to the author of the study, “Colorado Springs would solve many of its economic woes if it allowed licensed adult-use marijuana establishments. If Colorado Springs chooses to allow licensed retail marijuana establishments, next year it would generate tax revenue and licensing fees of approximately $25.4 million. This would increase the total City budget by approximately 10%,” said University of Denver Economics Professor Jack Strauss.
Currently, Colorado Springs allows only licensed medical marijuana establishments.
“Banning licensed adult-use marijuana businesses only benefits the black market and organized criminal enterprises. Let’s take the money away from criminals in the black market, and invest the new tax revenue in the police, parks, potholes, and storm water,” said Michael Elliott, a spokesperson for Citizens for Safer Neighborhoods.
The study revealed the following about the economic impact of allowing retail marijuana establishments in Colorado Springs:
2017 Tax Revenue: Would have generated approximately $13.0 million in tax revenue in 2017:
4.6 million from Colorado Springs local 3.12% sales tax
3.3 million from the 15% shareback of the 15% special state sales tax
5.1 million from additional economic activity
2018 Tax Revenue: Will generate approximately $17 million in tax revenue in 2018:
5.5 million from Colorado Springs local 3.12% sales tax
5.4 million from the 15% shareback of the 15% special state sales tax
6.1 million from additional economic activity
Additional 3.5% Sales Tax: If Colorado Springs passed an additional local marijuana sales tax of 3.5% (Denver’s rate), it would generate the following:
5.1 million in additional tax revenue in 2017
6.1 million in additional tax revenue in 2018
Jobs: Will create 1,320 to 1,762 jobs in 2018
Licensing Fees: 2.3 million in additional licensing fees could be collected by Colorado Springs if all 356 licensed medical marijuana establishments were to pay a licensing fee of $7500
$18.1 million would have been generated in 2017 between the local sales tax, the 15% shareback, the additional economic activity, an additional 3.5% local marijuana sales tax, and licensing fees
$25.4 million would be generated in 2018 between the local sales tax, the 15% shareback, the additional economic activity, an additional 3.5% local marijuana sales tax, and licensing fees
KRDO contacted Mayor John Suthers to get his thoughts. He disagrees with much of the study and sent us the following statement:
“The notion that Colorado Springs should fund essential government services with proceeds from drug sales in violation of federal law is irresponsible. You don’t fund government on such an unreliable source.
On a state level, marijuana revenue has been inadequate to fix our schools or fix our roads and there’s no indication it would do it on a municipal level.
This is a study performed by the marijuana industry and payed for by people hoping to profit greatly from it. Its estimates are widely optimistic and it doesn’t even consider the social and economic costs from highly accessible marijuana.
We are already losing too many young Coloradans to drug abuse. I hope Colorado Springs will not be complicit in this tragedy.”
Meanwhile, following this study the Colorado Springs City Clerk told KRDO, “The study released today by a pro-marijuana interest group contains numbers that are inaccurate, as they are not based on Colorado Springs’ actual license and tax structure.”
Officials with the city sent us the following information:
2017/18 Tax Revenue
Current Sales tax on marijuana as well as licensing fee revenue is subject to TABOR, and would be counted under the TABOR cap.
It’s also unclear whether the “shareback’ would be permissible under our city’s double-TABOR structure.
We are unclear what “additional economic activity” means.
The City’s Medical Marijuana facility annual licensing renewal fee was just increased by Council to $2,600 annually (effective Aug.1).
The release suggests an assumption that we would triple that fee to $7,500. (I also can’t get the numbers to work out to the $2.3M they suggest. (7500-2600*356 doesn’t equal 2.3M)
Further, the numbers seem to be predicated on the assumption that all 356 medical marijuana licenses would transition to retail marijuana and all sales would be retail. If so, any projected revenue increase would only be the difference between total collections and existing collections State Excise tax calculations are predicated on all of them changing their model to sell only recreational (because there is no state excise tax on medical marijuana).
“3.5% Special Tax”
The is no special city tax on medical marijuana (it’s subject only to regular city sales tax of 3.12%).
To add any tax under TABOR, the city is required to go to a vote of the people.