Your Choice Colorado Springs spearheaded the local rec cannabis ballot movement.
Proponents of legalizing recreational marijuana in Colorado Springs submitted petitions in favor of two ordinances permitting retail sales on June 17. Anthony Carlson, campaign manager for Your Choice Colorado Springs, says the group turned in more than 2.5 times the number of signatures required to place the ordinances on the ballot for the Nov. 8 general election.
“We needed to collect 19,245 signatures for each,” says Carlson. “We’re submitting more than 98,000 signatures between both of those efforts.”
The city opted out of the sale of recreational marijuana, also called retail marijuana, after the state’s voters approved Amendment 64 in 2012. Now, 10 years post-legalization, both Carlson and Jason Warf, executive director of the Southern Colorado Cannabis Council, think recreational marijuana in the city is a product whose time has come.
Most medical marijuana store owners he’s talked to are in favor of recreational marijuana, and consumers are as well, says Warf.
“Folks are either driving to Pueblo or Denver to get reasonably priced product, or they’re paying two to three times the market rate and going to the Manitou stores,” he says. “I think the tide has shifted, and this is a great opportunity to pursue this and get it through.”
The prospect of recreational marijuana stores in Colorado Springs is one that has Manitou Springs Mayor John Graham very concerned.
Manitou’s two stores, which sell both recreational and medical marijuana, are an important source of revenue for the city, which levies a 10 percent sales tax on recreational pot. That revenue has allowed Manitou to boost its capital improvement budget and complete projects such as flood control and repair of aging water and sewer pipes, says Graham.
While he thinks Manitou’s two stores primarily serve visitors to the city, “we would expect to see a significant dent in the marijuana money” if the Colorado Springs initiatives pass.
Amendment 64 gave local jurisdictions the option of determining whether to allow recreational marijuana sales. In September 2014, Colorado Springs City Council voted against putting a retail marijuana question on the ballot. And in 2017, a petition effort by Citizens for Safer Neighborhoods failed.
The latest effort is spearheaded by a group called Your Choice Colorado Springs, which filed a petition initiative in February. The proposed language was approved by the Colorado Springs title board in March. The initiative subsequently was split in two, separating a tax measure from the enabling ordinance.
The enabling initiative would repeal the city’s prohibition against recreational marijuana establishments and authorize medical marijuana stores to be licensed as retail stores.
The initiative would retain the city’s current cap on the number of locations, including medical marijuana centers, cultivation facilities and cannabis-infused product manufacturers. Since May 25, 2017, the city has capped that number at 212.
Thus, the initiative would not create any new marijuana stores, but the city’s 118 existing medical marijuana stores could switch to recreational marijuana, remain medical marijuana centers or offer both products, Carlson says.
The second initiative would authorize a 5 percent tax on retail marijuana sales that would be imposed in addition to any other retail sales taxes required by the city and state. (Colorado levies a 15 percent sales tax on retail marijuana sales and a 15 percent excise tax on wholesale sales. Medical marijuana is exempt from the special sales tax but is subject to the state’s 2.9 percent general sales tax.)
Revenue from the sales tax would be used for post-traumatic stress disorder treatment programs for veterans, public safety programs and mental health services.
Proponents of the initiative estimate that Colorado Springs is losing $10 million to $15 million a year in sales tax revenue to neighboring communities that allow retail marijuana, Carlson says.
“Those are dollars that are being spent by people who live and work and play in Colorado Springs, who have to travel to Pueblo or Denver to purchase their product,” he says. “Fifteen million a year is a substantial amount that can be put to work, whether it’s with our homeless issues or helping to take on the mental health crisis,” notably El Paso County’s high suicide rate.
Because Colorado Springs dispensaries would be remodeling their premises to accommodate retail marijuana sales if the initiative passes, “whether you’re an electrician or a plumber or a contractor, most folks are going to have a decent supply of work to get these businesses ready,” he says.
Once the petitions were submitted, the Colorado Springs City Clerk had 30 days to certify that they contain at least the minimum required number of signatures, Carlson says. The initiatives would then be referred to the ballot.
“We have worked hard with the ballot language to make sure that city leaders can’t overwhelmingly harm the industry because they’re disappointed that this was successful in November,” Carlson says. For example, if City Council wanted to reduce the number of hours that a store can be open, they would have to go to the voters and ask if that was OK.
“Essentially, what this initiative does is put the control over making decisions for regulating the industry in the hands of the voters,” he says. “It’s democracy at its finest.”
What Colorado Springs would gain in tax revenue could be Manitou’s loss.
Manitou City Council raised the retail marijuana special tax to the maximum allowed by law — 10 percent — in January. That was done, Graham says, to catch up on some capital projects in anticipation of competition, sooner or later, from Colorado Springs. But it caused prices in Manitou to be among the highest in the state.
“I think the bottom falls out of the Manitou market” if the Colorado Springs initiatives pass, Warf says. “We’re already seeing a leveling out of tourism, as other states come online, and that’s only going to continue. We have a huge market in Colorado Springs, and we can assume that the prices will be more in line with Pueblo or Denver. So I think that essentially none of the locals are going to shop in Manitou if the prices were to remain the same.”
Warf says he expected the Pueblo and Denver markets would be affected to some extent as well.
A third marijuana store in Manitou perhaps could have resulted in lower prices, Warf says, but Manitou voters rejected a ballot question seeking approval for a third store in a special election Jan. 18. That initiative also would have required more transparency in reporting marijuana revenue.
It’s difficult to quantify the impact recreational marijuana in Colorado Springs might have on Manitou, because Manitou’s sales tax revenue reports do not break out specific amounts paid by the two recreational stores. That’s true within any vendor category where there are fewer than three businesses in an industry sector.
Manitou Springs Deputy Finance Director Nicole Ortega says marijuana sales tax collections are reported in the “Other In City” category, which also includes nonretail businesses that don’t fit into other vendor categories. Examples are the sales at the American Legion Eber Duclo Post 39 and through the school system.
But the significance of the stores’ contribution to Manitou’s economy can be inferred from looking at the sales tax figures, because the greatest share of revenue reported in the Other In City category is from the cannabis stores, Ortega says.
According to the January 2022 sales tax report — the latest available at press time, the city collected $645,407 in sales taxes from all vendors. Collections from the Other In City category, which included 13 businesses, amounted to $414,531, or 64 percent of the total collections that month.
Manitou’s leaders have long struggled with how to diversify the city’s economy, Graham says.
“At present, there is not an alternative” to make up for revenue that might be lost to Colorado Springs, he says. “We’ve basically always been a tourist economy, and now we’re a tourist and marijuana economy. We’re pretty limited.”
Graham says Manitou’s city council has been discussing economic development.
“One thought is to try and go for a higher-dollar clientele,” he says. “We’ve seen a little bit of that, but our bread-and-butter business is middle-class tourism.”
The city’s efforts to alleviate traffic congestion and parking was an attempt “to do some things more intelligently,” he says. “I think we could integrate some of our services.”
In 2018, the city’s economic development team created Manitou Made, a website that makes it easy for people to order merchandise and services from Manitou’s makers, artists and entrepreneurs.
“That really benefits small artisans and businesses, and I think it’s a good idea,” says Graham. “But you have to sell a lot of coffee mugs or widgets to come up with enough tax money to compensate for any significant loss.”
Graham says councilors recently had a special strategy meeting on planning and budgeting. “Our general thinking is that we want to be conservative and … very defensive in anticipation that we could see a significant reduction in revenue,” he says. “We want to be careful to focus the money where we get results and set priorities.”
Councilors will be faced with “different sets of proponents wanting things to be done” in the 2023 budget, he says.
Those projects include remodeling the Manitou Springs Community Library and the historic structure at Hiawatha Gardens as well as work on City Hall, the fire station, the aquatic center’s pool and continuing infrastructure upgrades.
“We won’t be able to do everything for everybody,” says Graham.
One bright spot is that federal funds from the Infrastructure Investment and Jobs Act, passed last year, could provide some help for Manitou, he says.
If the Colorado Springs initiatives fail, it would buy a couple of years’ worth of breathing space for Manitou, he says, but if they do pass, “it’s a difficult problem.”
“I’d like to say that we have some better options,” he says, “but unfortunately, I don’t have a miracle waiting in the wings.”
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