Across Colorado, the rollout of recreational marijuana sales five years ago has raised tens of millions of dollars annually to tackle a litany of local concerns — from main street makeovers in cash-strapped small towns to addressing Denver’s housing affordability crunch.
While the public’s attention has focused on the roughly quarter-billion dollars a year in marijuana-related revenue that flows into state coffers, the burgeoning marijuana business also has brought a bonanza in tax revenue for dozens of municipal and county governments.
Nobody comprehensively tracks the local figures, but as Colorado marks the five-year anniversary of legalization a Denver Post analysis fleshed out a large part of the picture based on available data: In 2017, at least $71 million was collected from recreational marijuana via local taxes and the “share-backs” provided by the state, which now returns a tenth of the total raised by its own 15 percent special marijuana sales tax.
The total flowing to local governments will approach $80 million in 2018, according to The Post’s calculations.
Zoom in, and it’s the smaller places that have realized the greatest relative windfalls. In some, including Parachute on the Western Slope, marijuana has provided new lifeblood for a town on the economic brink. (Scroll down to the map read stories about Parachute, Denver and several other cities and towns.)
Adams County has used its cannabis sales taxes to award $1.5 million in four-year college scholarships to 114 low-income students. Examples abound elsewhere.
The biggest players, Denver and Aurora, have pocketed big amounts from recreational marijuana taxes — projected in 2018 at $36 million and nearly $10 million, respectively — but that money hasn’t proved earth-shaking for their gargantuan city budgets.
“What has been fascinating to me are some of the local discussions … on whether or not to opt-in, whether or not to have additional taxes, and deciding how many licenses to allow and where they can be located,” said Kevin Bommer, who as the deputy director of the Colorado Municipal League has tracked the recreational rollout.
“It all supports the narrative that was used to promote Amendment 64: Local control is important, and it is a cornerstone of every state bill and local discussion that has occurred since.”
For its calculations, The Post used the amount each municipality or county received in state share-backs to approximate the amounts raised by regular sales taxes and any special sales or excise taxes, based on the various local rates. Data was lacking for three dozen communities with a single store, however, because a state tax confidentiality law bars the release of information specific to a single taxpayer.
Another point to note: Many of the local governments also receive regular sales taxes from medical marijuana — money that wasn’t included in calculations.
The CML counts 74 cities and towns as allowing retail marijuana sales or planning to soon, from rural outposts in the west and east to glitzy mountain towns to urban centers. About two-thirds of those communities have sought and won voter approval for special marijuana taxes on top of regular sales taxes, for excise taxes on wholesale transactions, or for both.
Besides Denver, 15 counties have allowed recreational sales within their borders, while a handful more allow only existing medical centers to convert, according to tracking by Colorado Counties Inc. A few permit marijuana cultivation, but not sales.
Still, nearly three-quarters of Colorado’s 271 municipalities and more than half of its 64 counties ban retail marijuana sales, though some have medical dispensaries. The Denver metro area remains a patchwork of legalization.
Some of the most interesting legalization examples come from small places that border larger recreational holdouts. That has resulted in big business, and tax collections, at shops in Manitou Springs, outside Colorado Springs (the state’s second-largest city); Log Lane Village, outside Fort Morgan; Garden City, outside Greeley; and several towns within spitting distance of Colorado’s bordering states, none of which allow recreational sales — yet.
But therein lies the financial risk.
“We will be having serious conversations with the (City Council) about weaning ourselves off this dispensary money,” Cortez City Manager John Dougherty said, with an eye on potential competition just outside southwest Colorado. His city is taking in $850,000 a year from taxes on marijuana.
If Arizona and New Mexico follow Colorado’s lead in the next five years, as he predicts, “a vast majority of the dispensaries here in Cortez will go out of business as fewer visitors come to Colorado to purchase it.”
Falling wholesale prices are also on the radar of local officials and budget minders as they plan for future tax revenue.
Not many of the recreational marijuana holdouts are having second thoughts, including Lakewood, where 54 percent of voters approved a ban on recreational sales in 2014.
Mayor Adam Paul noted that sales at the city’s few medical counters have been on the decline, and restrictions under the Taxpayer’s Bill of Rights would have limited the city’s ability to keep any additional revenue from recreational sales — though voters recently lifted TABOR limits.
In the opt-in communities, The Post’s reporting found a broad range of local uses for the marijuana tax money. Some officials seized on it to address social and economic challenges, while others caught up on long-deferred maintenance and improvements. Road fixes and other public projects — such as a new city hall in metro Denver’s Edgewater and new recreation centers in Aurora — have been common beneficiaries.
Few cities, however, specify their uses of marijuana revenue comprehensively, resulting in limited transparency. Often, they roll the money into their general funds.
Edgewater, a small city of about 5,000 on the northwest edge of Denver that was an eager adopter of retail sales, has brought in $1.2 million a year or more from marijuana in recent years from its regular sales tax and the state’s sharing. City leaders never sought more by floating a special tax.
“Council didn’t legalize pot here expecting to get a lot of money out of it — they just thought it was the right thing to do,” City Manager HJ Stalf said. “It probably would’ve passed, but no one really ever wanted to do it.”
Staff writer John Aguilar contributed to this story.
