If organizers gather enough valid signatures, two ballot initiatives that would reduce marijuana taxes in the city of Pueblo could be on local ballots in November.
Dr. Malik Hasan, a local neurologist who founded NuVue Pharma, has said high taxes within Pueblo are impeding the growth of the local marijuana industry. He is behind the two initiatives, which each need 1,109 valid signatures by Aug. 8 to make it to November’s ballots.
Unlike petitions for candidates, Pueblo residents can sign both of the petitions, City Clerk Marisa Stoller said. These are the only two municipal ballot initiatives in the works for November’s election, she said — another proposal to return to a city manager form of government was withdrawn.
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One of the proposed initiatives would effectively omit the excise tax that the city collects on retail marijuana grown within the city, which is currently at 8%. Pueblo County collects 5% excise tax on cannabis grown in its jurisdiction.
The proposal language states that the city’s excise tax would be capped at the “average” of Denver, Fort Collins and Colorado Springs, but representatives from all three municipalities confirmed that none of them impose any excise taxes on cannabis.
Hasan and his team originally submitted ballot language that said that the excise tax should be reset to zero, but submitted a revised version “to convince voters to think that we’re not asking for anything outrageous.”
Pueblo collects some of the highest municipal taxes on retail marijuana compared to other cities around the state, according to the Colorado Municipal League. Many towns collect a 5 percent excise on marijuana cultivations, but others do not collect any excise tax at all.
Stoller said that if the ballot initiative is passed and Denver, Fort Collins or Colorado Springs ever raise excise taxes, then the rate in the City of Pueblo would also be adjusted to average the three cities.
The state already imposes a 15% excise tax on the first sale of retail marijuana from a cultivator to a store or product manufacturer.
Counties are allowed to impose up to 5% excise tax on marijuana and cities can collect up to 15%, according to a presentation from Assistant City Attorney Trevor Gloss to Pueblo City Council last month. Pueblo County phased up to the maximum rate in 2020.
In 2021, the city of Pueblo collected nearly $800,000 in municipal excise taxes and gathered approximately $385,000 from a portion of the state’s excise tax fund.
There are six recreational cultivators within city limits and two medical growers, according to the city clerk’s office.
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Proposed sales tax change
The other proposed initiative would reduce the rate of sales tax on retail marijuana in the city of Pueblo from 6% to 4.5%, negating the county’s ability to collect a special sales tax.
Pueblo County collects the 6% special sales tax and redistributes approximately half of it to the city of Pueblo. That amounted to $652,403 for the city last year and $676,277 in 2020.
According to Gloss’ presentation, if the city imposed its own special sales tax on retail marijuana — with voter approval — it means that the county would no longer be able to collect the taxes within city.
The ballot initiative states that 56% of the proposed new tax of 4.5% would be distributed back to the county, which amounts to 2.5%: according to Gloss’s presentation, that’s the same amount that the county is already collecting. However, the county would no longer receive the 15% administrative fee taken from the 58% of special taxes redistributed to the city.
So the city would be collecting the sales tax on retail marijuana and distributing a portion to the county, instead of the current system where the county collects the taxes then distributes a cut to the city.
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