Proposition AA is couched in the arcane language of ballots and taxation, but its meaning is simple: If approved by the voters, it would impose a 15 percent excise tax on recreational marijuana sold wholesale to retailers, a 10 percent sales tax on retail sales (in addition to regular sales tax) and grant the Legislature the authority to raise or lower both taxes as long as neither exceeds 15 percent.
Voters should approve it. The idea all along has been to treat marijuana like alcohol – legalize it, regulate it and tax it. As such, this fits right in with what the voters understood to be the plan last year when they decided to legalize recreational marijuana. (This would not apply to medical marijuana.)
And it makes sense from a legislative point of view. Proposition AA was referred to the voters by the Legislature, and it is a statutory measure – not an amendment to the state Constitution. If needed, our elected lawmakers can amend it or repeal it.
The flexibility Proposition AA affords lawmakers is important for other reasons, as well. Nobody really knows much about the market for legal marijuana, but basic economics suggests that at some level of taxation, would-be purchasers will shy away from retail stores and go back to buying black-market pot. And while Colorado is hardly in the business of encouraging drug use, if people are going to use pot, we all prefer they buy the taxed kind. If the tax imposed by Proposition AA is found to be driving marijuana buyers out of the legal market, the Legislature has the explicit authority to change it.
Proposition AA stipulates that the first $40 million raised by the tax on marijuana must go to “public school capital construction.” That most likely was included as a deliberate selling point – a way to legitimize support from folks who otherwise might not be eager to endorse anything to do with marijuana.
But it is hardly a bad thing. Schools always can use the money, and spending on education is an ongoing issue. In addition, 15 percent of the revenue generated will go to cities and counties where the sales take place.
It will be interesting to see how all that works out. Even presuming no markup from wholesaler to retailer, $40 million in tax money would require more than $160 million in marijuana sales. Whether that is realistic is unclear.
(A call to a local medical marijuana dispensary suggests prices range from about $150 per ounce to as much as $300 per ounce, depending on quality. Recreational pot most likely will be similarly priced.)
The support for Proposition AA from many marijuana advocates is easy to explain: Taxing something is a form of recognition. When something is taxed, it becomes not merely legal, but mainstream, even respectable. And once the state becomes accustomed to the revenue stream from taxing legal marijuana – regardless of whether it lives up to the more-than-$40 million estimate of its backers – Colorado itself will become a constituent for keeping pot legal.
Whether marijuana should be legal is not at issue. The voters decided that last year. The question now is simply whether to tax it and by how much. And given the tax rate set by Proposition AA can be adjusted by the Legislature, voters face a simple question with a one-word answer.
Vote “yes” on Proposition AA to tax recreational marijuana.