Pot could mean huge windfall
June 20, 2014
On Tuesday, the Aspen City Council will begin discussions on a potential local tax for recreational marijuana.
This tax — which is estimated to produce anywhere from $250,000 to $550,00 in city revenue annually — would be in addition to the 2.1 percent Aspen sales tax collected by the city on both medical and recreational marijuana sales. The state also imposes a 10 percent sales tax on recreational marijuana sales in addition to a 2.9 percent state sales tax on general consumption. Any additional local taxation would not apply to medical sales.
Based partly on data from Breckenridge, Telluride and Idaho Springs, city officials estimate $100,000 in sales tax revenue for every 1 percent of sales tax in Aspen, meaning a 3 percent tax would equate to around $300,000 and a 5 percent tax would equate to around $500,000. Because Aspen only has two recreational marijuana shops — Silverpeak Apothecary and Aspen Green Dragon — the city is withholding sales tax information on recreational sales. According to the Finance Department, confidentiality would be compromised if sales tax information were disclosed.
"If I were to release the information, obviously the other business would immediately know what the other business was doing, and that's proprietary information for those businesses," Alice Hackney, accounting manager for the Finance Department said earlier this month, adding that it will be at the city's discretion to decide when there are enough recreational pot shops for tax records to be divulged.
While the issue ultimately would be up to Aspen's voters in November, the council is asked to offer input on the potential tax rate. The council also is asked what the potential revenue should fund. A memorandum to the council lists four potential beneficiaries: early-childhood education; drug treatment and prevention; local drug- and alcohol-program facilities; and administration of marijuana laws and regulations, enforcement, training and outreach.
Tuesday's discussion will take place during a work session, meaning no formal action will be taken. It will be the council's first look at the potential tax.