Proposition AA: Cities eye uses for marijuana sales tax revenue

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Could drug money fund a safe house for abused children in Northglenn, or pay for much-needed road projects in Wheat Ridge?

If Proposition AA passes next week, a chunk of the state revenue that will be generated by marijuana sales next year will go to the cities that allow retail pot businesses to operate.

That has some city officials dreaming up ways that the money could be spent in their municipalities.

But whether that revenue results in a windfall or merely a drop in the bucket remains to be seen.

Prop AA will ask voters to support a 25 percent tax on retail pot sales that were made legal across the state, as a result of last year’s passage of Amendment 64. The taxes — which will only affect those who actually purchase the drug — will be a 15 percent excise tax and a 10 percent retail tax on each transaction.

The first $40 million collected through the Prop AA excise tax will go toward public school construction, while much of the retail taxes will fund regulation of the new industry.

Cities that allow retail pot sales will see some revenue, as well. That’s because the ballot measure ensures that 15 percent of the retail pot taxes that are collected by the state will be funneled to those municipalities. The revenue will be based on each city’s percentage of pot sales.

The prospect of “found money” coming into those cities has led to some discussion on how the potential revenue could end up being spent.

During a study session earlier this month, members of the Northglenn City Council — which voted in September to allow retail pot sales, becoming the first city in Adams County to do so — discussed ways that it could end up spending the money. Council members talked about using the revenue to fund road projects, as well as possibly stashing the money away for now, without earmarking the dollars.

The council decided to table the discussion until the city has a better grip on how much money they’ll actually end up getting.

Northglenn Mayor Joyce Downing said one option would be to use the funds to renovate a building that would serve as a new facility for Ralston House, which provides services for abused children and families.

Downing said this could be a way for the community to come together on pot sales, a contentious subject.

“I’m really trying to be very positive because it’s such an issue for a lot of folks,” Downing said. “It would be great to, in a positive manner, say to the community that we can use the money for Ralston House, or to pave additional streets or build a new recreation center.”

Windfall or minimal impact?

Wheat Ridge City Council also voted to allow retail pot stores. Mayor Jerry DiTullio said that he doesn’t expect a “windfall” for the city, simply because zoning is structured in a way that won’t allow more than five retail stores to operate.

Still, the mayor does see the potential for green in marijuana sales, especially since Wheat Ridge and Edgewater are the only Jefferson County cities that have voted to allow stores to operate, so far.

“If we’re the only Jeffco city besides Edgewater allowing that, then we may see a large amount of sales at those locations,” DiTullio said. “If we’re the convenient place for Jeffco, then those five stores should get a lot of business.”

And Wheat Ridge could use whatever money it gets. Next year’s proposed city budget includes capital project spending that will require the city to dip into savings. And DiTullio recently vetoed an ordinance that would have put a sales and use tax hike on the ballot, which would have pumped more money into the city’s general fund.

But Wheat Ridge City Manager Patrick Goff isn’t optimistic.

“It’d only be a guess at this time, but I think it’s going to be fairly minimal to the city,” Goff said of potential marijuana revenue. “Any increase in revenue sources is a positive for the city, but I can’t imagine it’s going to be in the millions.”

Meanwhile, Lakewood officials are still trying to figure out whether they’re going to allow retail marijuana stores. Earlier this week, the city council voted to extend its moratorium on pot sales through February 2015.

“There are questions that need sorted out,” said Lakewood City Manager Kathy Hodgson. “Do we impose a local tax on it too? We haven’t even deliberated that yet. From our perspective, there are too many unknowns. So let’s pause for a moment and proceed cautiously.”

Still, Hodgson acknowledges that the majority of voters in all five of the city’s wards voted for Amendment 64.

“So, the question is, how does the council reconcile that?” she said.

But Councilman Dave Wiechman, who is running for reelection, is flatly opposed to allowing retail pot sales in the city and insisted that any revenue the city might end up collecting would be minimal.

“Probably a few million dollars,” Wiechman said. “We have a budget of over 100 million, so I don’t see it as being a major impact, and I weigh it against the regulation cost and health impact.”

Wiechman also said that allowing pot sales in Lakewood “kind of reminds me of gambling in Central City.”

“Everybody thought it would be the greatest thing,” he said. “Instead, we have a mini Las Vegas. It’s no longer a historic town; it’s kind of like a bastardization.”

“We’re too busy getting the money and not focusing on potential adverse impacts.”

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