Eagle County may ask voters for marijuana tax to fund housing, police and more

Scott N. Miller
Vail Daily
Native Roots budtender Taylor Sultzbaugh, left, waits on a customer at Native Roots in Eagle-Vail in 2015. Eagle County Commissioners have started work on the idea of imposing a county tax on marijuana sales.
Chelsea Roberson | Daily file photo |

By the numbers

• 1 percent: State-imposed tax on medical marijuana sales.

• 10 percent: State-imposed tax on recreational marijuana sales.

• $22.9 million: State marijuana sales tax collected in March.

• $160,000: Eagle County’s 2016 share of the state-collected tax.

EAGLE COUNTY — Voters last year rejected a sales tax increase to pay for housing. Voters this year may be asked to increase the county’s sales tax, but on a specific product: marijuana.

It’s very early, which means there’s still a lot of discussion to come, but Eagle County commissioners have started working on the idea of imposing some sort of county tax on marijuana sales.

If a proposal is put on the November ballot, Eagle County will be in the first wave of Colorado counties asking for additional revenue from the industry. The Colorado Legislature just this year gave counties the authority to impose sales taxes on businesses in unincorporated areas. Eagle County Commissioner Kathy Chandler-Henry wrote in an email that the commissioners are starting to talk about taking advantage of that new authority.

Towns have been able to impose marijuana-specific sales taxes since the state established rules and regulations for retail marijuana sales following legalization in 2012. Counties have been able to impose excise taxes since legalization. But a court battle between Adams County and three of its cities — Northglenn, Commerce City and Aurora — invalidated a voter-approved county sales tax that included both unincorporated areas and the towns. A county-only tax required action from the Legislature.

In the Vail Valley, only one town — Eagle — allows marijuana sales, and there’s only one shop — Sweet Leaf Pioneer.

Eagle charges a transaction fee for recreational sales, and proceeds go into the town’s general fund. Town Clerk Jenny Rakow said that fee is $1 on sales up to $19.99, and $5 on sales of $20 or more. Since there’s only one business in Eagle, the town doesn’t report the fees it collects from the dispensary, since that would make private business information public.

What others charge

Other towns charge straight sales taxes on retail sales. In Breckenridge, the tax is 5 percent above the sales tax rate for other products. Denver adds 3.5 percent to the existing sales tax rate for recreational sales.

The amount of money raised by the current state tax is impressive: $22.9 million in March alone. Some of that money goes toward a school construction fund, and some, based on total sales, is returned to counties.

While the shops in the county are busy, there are relatively few of them. In 2016, the state returned $160,000 to Eagle County.

While the process of creating a tax question has barely begun, whatever form a ballot measure takes will be very specific, according to Eagle County Attorney Bryan Treu, who’s currently serving as the interim county manager.

Treu said voters could be asked to approve new revenue, with the total probably split between housing, law enforcement and public health.

Treu noted that surveys last year showed that more than 90 percent of county residents called housing a serious problem in the county. Still, nearly 63 percent of voters last year rejected a housing-only sales tax increase.

More money for law enforcement could allow the Eagle County Sheriff’s Office to hire enough new officers to open up a jail addition finished in 2008 but rarely used due to either the prisoner population or lack of officers to staff the facility.

Money from retail marijuana sales, much of which comes from valley visitors, could help fund both of those needs, Treu said.

If voters are asked for a county retail marijuana sales tax, Treu said people in the industry would be among those asked to support the proposal before it goes on the ballot.

Treu crafted the county’s existing retail marijuana business regulations, and said he and the commissioners first considered an excise tax on retail marijuana. Such taxes are levied on the amount of marijuana grown, not individual sales.

Treu said the commissioners ultimately decided to forgo any county taxes at first, in order to give the business an opportunity to establish itself.

“We wanted to make sure the industry survived first,” Treu said.

Growing revenue

If voters ultimately approve a county-specific tax on retail marijuana, it will add to the growing revenue from retail sales.

Statewide, retail marijuana sales — and tax collections — have set new records for the past 10 months. In March, the last month for which data are available, the state collected $22.9 million in taxes. That money is spread among dozens of state departments and funds.

Roughly $40 million per year goes into a fund called Building Excellent Schools Today. That money pays for school construction, but not personnel or equipment. The money is apportioned based on a competitive grant process. But those tax funds may take some time to have a broad impact.

From a conference in Denver, Eagle County Finance Director John Lewis said he’s been talking to county and school district finance officials from around the state.

“It takes about $40 million to build a school, and there’s 178 school districts in Colorado,” Lewis said. “That means it could take 178 years for every district to get a school.”