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Too Many Taxes?


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DENVER — In the State Capitol, they are calling it Refund Madness.

A year after Colorado became the first state to allow recreational marijuana sales, millions of tax dollars are rolling in, dedicated to funding school construction, marijuana education campaigns and armies of marijuana inspectors and regulators. But a legal snarl may force the state to hand that money back to marijuana consumers, growers and the public — and lawmakers do not want to.

The problem is a strict anti-spending provision in the state Constitution that touches every corner of public life, like school funding, state health care, local libraries and road repairs. Technical tripwires in that voter-approved provision, known as the Taxpayer’s Bill of Rights, may require Colorado to refund nearly $60 million in marijuana taxes.

Lawmakers are scrambling to figure out a way to keep that money, and they are hoping Colorado voters — usually stingy when it comes to taxes and spending — will let them. In rare bipartisan agreement on taxes, legislators are piecing together a bill that would seek voters’ permission to hold on to the marijuana money.


Money to be set aside for sales tax at a marijuana dispensary in Boulder, Colo. Voters dedicated $40 million of marijuana revenue to school construction and repairs. Other marijuana revenue goes toward paying for the inspectors, enforcement agents and other costs of running the offices that regulate the substance.CreditBenjamin Rasmussen for The New York Times

“Despite our anti-tax feelings in the state, there’s an exception being made when it comes to marijuana,” said Michael Elliott, the executive director of the Denver-based Marijuana Industry Group, a trade organization that has not taken a position on the refund issue. “The industry is making a huge economic impact.”

But anti-tax feelings run deep here, and some anti-tax groups said they would fight any effort to deprive the public of a refund, even if it amounts to only $11 or less a person.

“It should go back to the taxpayers,” said Gregory Golyansky, the president of the Colorado Union of Taxpayers. “When government tries to keep the money that rightfully belongs to the taxpayers of Colorado, it is an enormous issue. There should be a tax refund.”

Selling, taxing and regulating a federally outlawed drug were never going to be easy for states at the forefront of marijuana legalization. And as Colorado, the first state to legalize recreational use, enters its second year of retail marijuana sales, it is confronting a range of unpredictable problems. Among them, two neighboring states and several sheriffs have sued to strike down Colorado’s law, saying that marijuana is flowing out and that the state’s law enforcement officers are looking the other way regarding violations of federal law.

But few people in Colorado are pushing to repeal the state law or shut down marijuana dispensaries. Instead, lawmakers are mostly making incremental tweaks, like ensuring that food stamps cannot be used to buy marijuana, debating changes to the appearance of edible marijuana and pondering what warnings – if any — to offer pregnant purchasers.

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