Colorado Proposition AA, Taxes on the Sale of Marijuana (2013)
|Type:||legislatively-referred state statute|
|State code:||Title 39, Article 28.8|
- 1 Election results
- 2 Background
- 3 Text of measure
- 4 Support
- 5 Opposition
- 6 Media endorsements
- 7 Polls
- 8 Path to the ballot
- 9 Similar measures
- 10 See also
- 11 External links
- 12 Additional reading
- 13 References
Beginning on January 1, 2014, it will impose two different taxes on the sale of recreational marijuana:
- A 15% excise tax on all recreational marijuana sales in the state. The revenue from this tax was earmarked to fund the construction of schools.
- A 10% sales tax. This is in addition to Colorado's standard 2.9% state sales tax and any local sales taxes that may apply. Any revenues that result from the sales tax part of Proposition AA were designed to be used to fund the state bureaucracy that regulates and monitors the marijuana retail business.
Lawmakers in the state estimated that Proposition AA would result in approximately $70 million a year in additional revenue to the state government with $40 million of that going into a fund for public school capital construction. This financial prediction was based on an estimate that 2 million ounces of recreational marijuana would be sold annually by retail marijuana stores. The Proposition AA taxes do not apply to the sale of medical marijuana.
The recreational use of marijuana was approved in Colorado in 2012 with the enactment of Amendment 64, which passed with 55.32% of the vote. However, the use and sale of marijuana remains a felony under federal legislation.
In 2012, Washington voters also approved the legalization of recreational marijuana in Initiative 502, which included clauses requiring a 25% excise tax on wholesale producer to processor sales, a 25% excise tax on wholesale sales to retailers and a third 25% excise tax on retail sales. This resulted in a likely combined tax rate of 75% passed down to legal recreational marijuana users.
Below are the official election results:
- These results are from the The Colorado Secretary of State.
In 2012, 55% of Coloradans approved Amendment 64, legalizing recreational marijuana in the state. A similar measure was on the 2006 ballot in the state, where it was defeated. Amendment 64 included in its ballot language clauses "requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp." Proposition AA was the proposed fulfillment of the Amendment 64 tax and regulation requirements.
Text of measure
The official ballot text read as follows:
|“||Shall state taxes be increased by $70,000,000 annually in the first full fiscal year and by such amounts as are raised annually thereafter by imposing an excise tax of 15% when unprocessed retail marijuana is first sold or transferred by a retail marijuana cultivation facility with the first $40,000,000 of tax revenues being used for public school capital construction as required by the state constitution, and by imposing an additional sales tax of 10% on the sale of retail marijuana and retail marijuana products with the tax revenues being used to fund the enforcement of regulations on the retail marijuana industry and other costs related to the implementation of the use and regulation of retail marijuana as approved by the voters, with the rate of either or both taxes being allowed to be decreased or increased without further voter approval so long as the rate of either tax does not exceed 15%, and with the resulting tax revenue being allowed to be collected and spent notwithstanding any limitations provided by law?||”|
The full text of House Bill 13-1318 is available here
- Proposition AA was sponsored in the Colorado State Legislature as HB 1318 by Rep. Jonathan Singer (D-11).
- The formal campaign in favor of the measure was called Yes on Prop AA and was run by the Committee For Responsible Regulation.
- The Denver Post editorial board wrote endorsing Proposition AA and reprimanding the National Organization for the Reform of Marijuana Laws (NORML) for opposing it.
- Sensible Colorado
- The Medical Marijuana Industry Group
HB 13-1318 "Yes" Votes
- Note: A yes vote on HB 13-1318 merely referred the question to voters and did not necessarily mean these legislators approved of the Prop AA tax.
- Jonathan Singer (D-11)
- Mary Hodge (D-25)
- John Kefalas (D-14)
- Linda Newell (D-26)
- Bill Cadman (R-12)
- Mark Scheffel (R-4)
- Matt Jones (D-17)
- Evie Hudak (D-19)
- Irene Aguilar (D-32)
- Jeanne Nicholson (D-16)
- Rollie Heath (D-18)
- Ellen Roberts (R-6)
- Larry Crowder (R-35)
- Lois Tochtrop (D-24)
- Pat Steadman (D-31)
- Michael Johnston (D-33)
- Angela Giron (D-3)
- Jessie Ulibarri (D-21)
- Gail Schwartz (D-5)
- Morgan Carroll (D-29)
- Lucia Guzman (D-34)
- Randy Baumgardner (R-8)
- Nancy Todd (D-28)
- Cheri Jahn (D-20)
- Lois Court (D-6)
- Millie Hamner (D-61)
- Diane Mitsch Bush (D-26)
- Max Tyler (D-23)
- Cherylin Peniston (D-35)
- Steve Lebsock (D-34)
- Daniel Kagan (D-3)
- Thomas Exum, Sr. (D-17)
- Tracy Kraft-Tharp (D-29)
- Angela Williams (D-7)
- Claire Levy (D-13)
- Randolph Fischer (D-53)
- Joann Ginal (D-52)
- Sanford E "Pete" Lee (D-18)
- Jenise May (D-30)
- Jeanne Labuda (D-1)
- Elizabeth "Beth" McCann (D-8)
- Brittany Pettersen (D-28)
- Edward Vigil (D-62)
- Dianne Primavera (D-33)
- Daniel Pabon (D-4)
- Jonathan Singer (D-4)
- Rhonda Fields (D-42)
- Dave Young (D-50)
- Leroy Garcia (D-46)
- Dickey Lee Hullinghorst (D-10)
- Dominick Moreno (D-32)
- Crisanta Duran (D-5)
- Joseph A. Salazar (D-31)
- Paul Rosenthal (D-9)
- Sue Schafer (D-24)
- John Buckner (D-40)
- Mike McLachlan (D-59)
- Su Ryden (D-36)
- Mike Foote (D-12)
- Jovan Melton (D-41)
"Yes on Prop. AA" video update
When the bill was being discussed in the legislature, Democrats argued that citizens wanted marijuana taxed steeply. They also argued that the high tax rate set by the measure would be in line with other so-called "sin taxes" such as taxes on tobacco and gambling.
According to Joe Megyesy, who was the communications director for the Committee for Responsible Regulation, "Most experts and those of us on the campaign -- a diverse group that's been working on marijuana issues for a long time -- feel the rate is at a level that will allow marijuana to become legitimate and emerge from the black market."
Megyesy went on to say, "The convenience of buying marijuana, and paying this amount of tax on marijuana, will still outweigh any benefits consumers might think there would be in trying to get it from the black market." He pointed to the "hassle factor," and "the comfort in knowing exactly the potency and the quality" as important aspects that would keep customers away from the black market. "You're going to be able to buy with confidence that there won't be any contaminants, and that you're getting exactly what you're paying for."
Brian Vicente, head of Sensible Colorado, said that the tax rate proposed by Proposition AA was "fairly reasonable for consumers. It allows people to buy marijuana from regulated storefronts for, really, the first time in history. So I don't think folks are going to be scared away from doing so by a 30 percent tax." He went on to say, "Every researcher, think tank and report that's looked into this in an unbiased way concludes that Amendment 64 will produce tens of millions of dollars for the state. It's probably going to be close to $50 to $60 million for the state coming out of the pockets of cartels and going into state coffers. This is going to provide a tremendous amount of funding for schools -- and we think the funding will be there."
Joe Megyesy, referring to the free joint rallys held as a protest against Proposition AA, said this about the contrast between the "Yes on Prop AA" campaign and the "No on Prop AA" campaign: "I think it shows that the contrast between our two campaigns is stark. We're engaged in responsibly regulating marijuana in Colorado and fulfilling the promise made to 55 percent of Colorado voters who passed Amendment 64 with the notion that it would pay for its own regulation. And we think we should focus on policy, not on political or media stunts."
| Total campaign cash |
as of October 28, 2013
Below are the official blue book arguments that were presented in favor of Proposition AA:
1) A majority of Colorado voters approved Amendment 64 to allow the sale of retail marijuana within a regulated and taxed market, and passage of this measure is expected to generate the revenue necessary to support the robust regulation of this market. In addition, an effective regulatory system may discourage federal interference with the industry, as the sale of marijuana remains illegal under federal law. Adoption of the additional 10 percent state sales tax is important because the current funding structure for the regulatory system may not be adequate and may require funds to be diverted from other state priorities such as education, public safety, and health care. Without revenue from the 10 percent sales tax, studies that address public safety concerns and educational efforts aimed at preventing the use of marijuana by children may not be adequately funded. As recent audits of the medical marijuana regulatory system have demonstrated, current fees and sales tax revenue may not be adequate to ensure a safe and effective regulatory structure.
2) Colorado schools have a projected $17.9 billion in school construction needs through 2018, and the proposed state excise tax will make more funding available for these needs, as intended by Amendment 64. This additional funding will help modernize older schools, build new schools, and alleviate health and safety concerns. Also, by increasing the number of projects funded, the school construction industry may see an increase in jobs.
The data for the Yes on Prop AA campaign was obtained from the Colorado Secretary of State's elections division and was current as of the election on November 5, 2013. The following committees were registered in support of Proposition AA:
|PAC||Amount raised||Amount spent||Non-monetary gifts|
|Committee for Responsible Regulation||$65,635||$52,034||$1,285|
- The largest single donor was the United Food & Commercial Workers Local No. 7, with a donation of $10,000.
- No Over Taxation
- Colorado 420 Coalition
- Rob Corry, one of the most prominent marijuana attorneys in the state and the organizer of the Free-joint Protests
- Colorado chapter of National Organization for the Reform of Marijuana Laws (NORML)
- The No on Prop AA campaign released a statement announcing that gubernatorial candidate Sen. Greg Brophy (R-1) officially endorsed a "No" vote on Proposition AA.
- Campaign Treasurer Rob Corry said: "Senator Greg Brophy has taken a principled stand against over-taxation of Coloradans. Although Senator Greg Brophy will never be mistaken for a pro-marijuana activist, he knows that Proposition AA's excessive tax is not in the interest of our State and the safety of all Coloradans."
HB 13-1318 "No" Votes
- Greg Brophy (R-1)
- Ted Harvey (R-30)
- Owen Hill (R-10)
- Scott Renfroe (R-13)
- Kevin Lundberg (R-15)
- Kevin Grantham (R-2)
- Kent Lambert (R-9)
- Steve King (R-7)
- Vicki Marble (R-23)
- David Balmer (R-27)
- Brian DelGrosso (R-51)
- Kevin Priola (R-56)
- Cheri Gerou (R-25)
- Lois Landgraf (R-21)
- Mark Waller (R-15)
- James "Jim" D. Wilson (R-60)
- Spencer Swalm (R-37)
- Jared Wright (R-54)
- Polly Lawrence (R-39)
- Justin Everett (R-22)
- Lori Saine (R-63)
- Bob Rankin (R-57)
- Bob Gardner (R-20)
- Timothy Dore (R-64)
- Janak Joshi (R-16)
- Perry Buck (R-49)
- Don Coram (R-58)
- Kathleen Conti (R-38)
- Clarice Navarro (R-47)
- Stephen Humphrey (R-48)
- Jerry Sonnenberg (R-65)
- Chris Holbert (R-44)
- Libby Szabo (R-27)
- Dan Nordberg (R-14)
- Amy Stephens (R-19)
- Carole Murray (R-45)
- Ray Scott (R-55)
Opponents of Proposition AA argued that a 25% tax with the possibility of an increase to 30% was too high and would force buyers back to the black market. They were also concerned that the regulation imposed on the state revenue from Proposition AA would keep marijuana from being used freely and would make it even more difficult for both recreational and medicinal users.
NORML released these complaints against Proposition AA in a press release:
1. Measure AA is excessive taxation on marijuana consumers that does not uphold the promise of Amendment 64 to treat marijuana like alcohol. The proposed marijuana taxes could amount to an effective tax rate of 30-40% ultimately passed on to marijuana consumers in Colorado. This rate is more than twice the equivalent taxes on alcohol. While we can support the 15% excise tax portion of Measure AA, included in the language of Amendment 64, we feel that the addition by the Colorado Legislature of a 10% "Special Sales Tax" on marijuana was unreasonable and unnecessary.
2. We believe that if Measure AA fails, there will still be adequate funds to effectively regulate recreational marijuana. We believe our state and local regulators can and should meet the challenge of marijuana regulation through the efficient management of their budgeted funds.
3. Excessive taxation under Measure AA, along with the decision of many local jurisdictions to "opt-out" of Amendment 64's business licensing provisions, has the potential effect to keep a black market for marijuana alive in Colorado. In addition to rejecting excessive taxation, Colorado NORML calls on local governments to reconsider their decision to ban the regulated retail sale of marijuana in their community. We believe that banning retail sales at the local level only denies the safe access to marijuana by consumers in their communities, and only serves to support the operation of unregulated local black markets for marijuana.
No on Proposition AA released this argument in a press release:
Amendment 64 was sold as the "Alcohol Marijuana Equalization Initiative." Marijuana taxes should be fair and equivalent to Colorado alcohol taxes, which are less than 1%. Passage of Proposition AA creates public safety problems. A bloated and greedy government does not serve the Public Interest. The joint handout is a real-time demonstration of basic economics: Proposition AA's extreme taxes will undercut the Regulated Marijuana Market, and illegal Black Market and legal Gray Market (which is legal, but untaxed and unregulated) will both expand when the Government parasite kills the Industry host.
Below are the official blue book arguments that were presented against Proposition AA:
1) The new state taxes created by the measure may be so high that they undercut one of the intended purposes of Amendment 64, which is to encourage consumers to purchase marijuana from licensed stores rather than from the underground market. When marijuana is purchased from licensed stores, sales are taxed and limited to consumers 21 years of age or older. By overtaxing a product that is readily available in the underground market, the measure may limit sales from licensed stores and keep consumers in the underground market.
Free Pot Give-away in Boulder
2) Amendment 64 requires the establishment of an excise tax, but does not require the sales tax created by this measure. This second tax was not anticipated by supporters of Amendment 64 and is an unfair tax burden on consumers of marijuana. The state legislature's plan for implementing Amendment 64 includes measures that exceed what is essential to regulate the industry. Revenue from application and licensing fees, as well as the existing 2.9 percent state sales tax on marijuana, can adequately satisfy the regulatory requirements of Amendment 64.
Opponents of Proposition AA staged protest events in which marijuana was given freely to attendees. The first was held in Civic Center Park, at which 600 pre-rolled joints were given away. The next event was held on September 9, 2013, at the Pearl Street Mall in the city of Boulder. Another event, which planned to have 100 attendees, was scheduled for October 2 in a Fort Collins park, but was canceled when organizers balked at a possible $350 fee for use of the park.
Rob Corry, co-organizer of the No on Proposition AA campaign, said this about the free-joint giveaways and the difference between the "Yes" and "No" campaigns: "The free joint giveaway was a resounding success; people are now talking about the largest tax increase in Colorado history, when before this was a "stealth" campaign from the pro-tax side. The contrast between our campaign kickoffs says it all: ours was a people-centric, positive, energetic event, where the thousands of people present all had smiles on their faces. Theirs was a handful of politicians in the shadow of the Bastille. We peddled happiness (for free), they peddled fear (with a price)."
Rob Corry is one of the most prominent marijuana lawyers and has a reputation for pushing the boundaries of the law with regard to the marijuana industry and marijuana use. He was behind the free-joint giveaway protests staged in Boulder, Colorado, and in Civic Center Park. He also helped write some of the Amendment 64 language. Corry was recently arrested for "public use". The police officer who cited him, reported that Corry was smoking at a Colorado Rockies game and when he was asked to hand over the joint, he refused saying, "No, I don't have to, it's legal."
Public consumption of marijuana in Colorado is punishable by a $100 fine or up to 15 days in jail.
The data for the No on Prop AA campaign was obtained from the Colorado Secretary of State's elections division. The following committees were registered in opposition to Proposition AA:, and the report was current as of the election on November 5, 2013.
|PAC||Amount raised||Amount spent||Non-monetary gifts|
|No Over Taxation||$2,147||$2,347||$1,650|
- The Denver Post editorial board wrote endorsing Proposition AA and reprimanding the National Organization for the Reform of Marijuana Laws (NORML) for opposing it:
- "We were disappointed to see that one of the most established organizations in support of marijuana legalization opposes Proposition AA, which would enact state excise and sales taxes on recreational pot.
- Two things are abundantly clear, though. First, it is imperative the state properly regulate the sale of recreational marijuana, which is still illegal under federal law and which other states will closely watch. Second, the state has done a horrible job of regulating medical marijuana precisely because of underfunding.
- The Medical Marijuana Industry Group, which we've previously praised, is responsibly supporting Proposition AA. But NORML's stance puts the group in the same boat on taxes with activists who were handing out free joints last week in Civic Center. In other words, not the image most Coloradans would consider normal."
- The Pueblo Chieftain: The editorial board of the Pueblo Chieftain wrote the following endorsement of Proposition AA: "We appreciate both sides of the argument. In the end, we endorse Prop AA as a predictable consequence of voters’ decision to legalize small amounts of marijuana for adults."
- The Boulder Weekly staff endorsed a "yes" vote on Proposition AA saying:
- "The taxes and the regulatory structure are important steps in propping up the marijuana industry and erasing the damage done by prohibition. The fights worth fighting will come down the road as we can observe how much revenue is collected and how effectively the state can regulate the industry. The industry should absolutely push for lowered taxes a few years down the road, but for now, it recognizes the symbolic importance of these taxes. And we are inclined to agree with the industry. Vote yes on Proposition AA, and Colorado can continue to lead the nation’s slow trudge towards sanity on marijuana issues."
- The Gazette: The editorial board of the Gazette wrote:
- "Cigarette sales continue to flourish and the high taxes - which dwarf anything proposed for marijuana - have not caused consumers to find underground alternatives. Most people obey the law and will pay a high price before transacting with criminals.
- Coloradans can respectfully disagree regarding the choice of voters to legalize a traditionally illicit drug for the sake of recreation. Regardless, all should get something in return. That's what voters demanded when they legalized pot.
- Vote yes on Proposition AA."
- The Vail Daily editorial board suggested a yes vote on Proposition AA saying, "That said, if we’re going to have legal marijuana, we might as well tax the stuff."
- The Daily Sentinel: An editorial entitled "Proposed pot tax is reasonable, necessary" was released by the editorial board of the Daily Sentinel and endorsed a "yes" vote on Proposition AA.
- See also: Polls, 2013 ballot measures
|Proposition AA - Support v. Opposition|
|Public Policy Polling on voter approval of 15% excise tax and 10% sales tax on marijuna|
|Note: The polls above may not reflect all polls that have been conducted in this race. Those displayed are a random sampling chosen by Ballotpedia staff. If you would like to nominate another poll for inclusion in the table, send an email to email@example.com|
Joe Megyesy, spokesman for the Committee for Responsible Regulation, proposed that polling was so high for Proposition AA because electors realized the need to regulate marijuana since its legalization. He said, “Regardless of how you feel about marijuana — good or bad — Colorado citizens have a legal marijuana right now, and it’s just a matter of if we’re going to pay for the enforcement or not."
Path to the ballot
- See also: Legislatively-referred state statute
|Votes in legislature to refer to ballot|
- See also: Marijuana on the ballot
Colorado Proposition AA, Taxes on the Sale of Marijuana (2013)
Colorado Marijuana Legalization Initiative, Amendment 64 (2012)
- See also: Local marijuana tax on the ballot
City of Denver Additional Marijuana Sales Tax, Question 2A (November 2013)
Town of Eagle Marijuana Occupation Tax, Question 2F (November 2013)
Ballot Issue 2E: City of Littleton Marijuana Sales Tax
Ballot Issue 1B: Pueblo County Marijuana Sales Tax
Ballot Issue 2A: Town of Frisco Marijuana Excise Tax
Ballot Issue 2F: Town of Silverthorne Marijuana Excise Tax
Ballot Issue 2C: Town of Breckenridge Marijuana Excise Tax
Town of Carbondale Marijuana Sales Tax Ballot Measure (November 2013)
Measure 2C: Town of Fraser Marijuana Sales Tax
Question 2A: City of Manitou Springs Marijuana Sales Tax
Question 2G: Town of Red Cliff Marijuana Sales Tax
- Colorado 2013 ballot measures
- 2013 ballot measures
- List of Colorado ballot measures
- Colorado Legislature
- House Bill 1318 (text)
- Colorado State Measure Blue Book/Voter Guide for November 5, 2013
- Cannabis Policy Blog website
- Coloradan.com, "Soapbox: Proposition AA would create dysfunctional market for marijuana," October 21, 2013
- The Post Independent, "Guest Column: No on Proposition AA, marijuana taxes too high and unfair," October 21, 2013
- ABC NEWS 7, "7NEWS breaks down Proposition AA and finds out how much is needed to enforce retail marijuana laws," October 30, 2013
- Colorado Secretary of State, "Amendments and Propositions on the Ballot 2013," accessed September 16, 2013
- TheDenverChannel.com, "Colorado Lawmakers approve House Bill 1318's 25 percent marijuana tax," May 8, 2013
- Initiative 502 text
- Colorado Daily, "Colo. pot advocates plan 2012 legalization push", June 11, 2010
- 9 News, "Marijuana advocates use Kush Con II as legalization springboard", December 17, 2010
- Colorado Secretary of State, "Proposition AA," accessed September 16, 2013
- DenverPost.com, "Colorado lawmakers discussing marijuana-legalization repeal effort," April 26, 2013
- Yes on Prop AA
- Committee For Responsible Regulation
- Senator Pat Steadman's website
- The Denver Post, "NORML needs to get on board on Colorado pot taxes", September 18, 2013
- Openstates.org, "Roll call vote on HB 13-1318 in the Senate
- Openstates.org, "Roll call vote for HB 13-1318 in the House
- Denver Westword Blog, "Marijuana taxes: The campaign's case in favor of Proposition AA," September 25, 2013
- Denver Westword Blog, "Marijuana: 30 percent pot tax is reasonable and voters will pass it, activist says," May 21, 2013
- Denver Westword Blogs, "Free "dab buses" featured at latest pot-tax protest and joint giveway," October 2, 2013
- Colorado State Measure Blue Book/Voter Guide for November 5, 2013
- Campaign finance report for "Committee for Responsible Regulation"
- Colorado 420 Coalition website
- Denver Westword Blogs, "Marijuana: Colorado NORML board opposes recreational pot tax measure," September 13, 2013
- NO on Prop. AA Press Release about Greg Brophy's endorsement
- Huffington Post, "Marijuana Activists Give Out Free Joints In Denver In Protest Of Legal Weed Taxes," September 9, 2013
- Denver Westword Blogs, "Photos: Anti-pot-tax rally attracts big crowd for free joints," September 9, 2013
- Coloradoan.com, "Fort Collins marijuana giveaway canceled," October 2, 2013
- Denver Westword Blogs, "Marijuana: Attorney Rob Corry on today's free-joint rally in Boulder," September 23, 2013
- The Denver Post, "Robert Corry arrested: Colorado marijuana attorney taken in for public pot use," September 27, 2013
- The Republic, "Colorado marijuana activist who organized joint giveaways arrested for public use of pot," September 27, 2013
- Campaign finance report for "Yes on Prop AA"
- Campaign finance reporters for "No Over Taxation"
- Local15, "Marijuana as Campaign Contribution," October 17, 2013
- The Pueblo Chieftain, "Editorial: Marijuana Tax," October 2, 2013
- The Boulder Weekly, "Election Guide 2013: Yes on Colorado Amendment 66 and Proposition AA," October 17, 2013
- The Gazette, "ENDORSEMENT: Vote 'yes' on Proposition AA," October 24, 2013
- The Vail Daily, "Local ballot issues: A ‘yes’ kind of year," November 3, 2013
- "Proposed pot tax is reasonable, necessary," October 6, 2013
- OpenStates.org, "HB 13-1318 Colorado House Bill: Retail Marijuana Taxes," retrieved May 20, 2013