Craig City Council, other local officials hold marijuana tax workshop
For Craig Press
Marijuana was the topic of discussion last week for a number of city officials.
City councilors, Mayor Jarrod Ogden, and a number of other officials met Tuesday, April 13 to discuss implementing the incremental marijuana sales tax and the revenue split of the tax between the city’s museum and library.
This discussion technically started in late February, when City Manager Peter Brixius told the council that the state and local taxes being generated from the three dispensaries in town would soon total over $220,000 a year, exceeding the city’s targets.
Brixius discussed Ordinance 1098, which gives the city the option of implementing a sales tax increase to help fund the museum and the library. A 1% increase in the sales tax would generate $40,000 per year, with the full 4% bringing in $160,000 per year.
“Originally, we didn’t add the additional tax because we only had one store, but now it’s obviously up and running,” Mayor Jarrod Ogden said during the workshop. “My initial assumption when we spoke to this additional tax…the way we talked about it, I assumed it would be a 50/50 split.”
Ogden noted that an offhand comment made by Brixius at the Feb. 23 meeting showed that the split didn’t necessarily have to be 50/50, but could be any division, even 100% going to the museum and 0% going to the library, although that wouldn’t be the case.
He encouraged the council during the workshop to look at the purpose of the sales tax and try to help both the museum and library as much as possible, regardless of whether they were a city-owned service or not.
“They’re both here for the public and they serve good purposes in different ways,” Ogden said.
Brixius noted that he has spoken with the dispensary owners in town and they expressed concern about a sales tax increase, as this could lead customers to drive elsewhere for cheaper marijuana.
Currently, the purchase of retail marijuana is subject to the 2.9% state sales tax, plus local sales taxes and an additional 15% excise tax, the latter of which is not implemented for medical sales, according to Colorado National Organization for the Reformation of Marijuana Laws.
Councilor Paul James noted that while the sales tax increase wouldn’t affect tourists coming through Craig, it would definitely have an impact on the local customer base, which is about 50% of the dispensaries’ business.
“They’re going to be the ones we’re especially squeezing,” James said.
He added that when the city approved having dispensaries in town, the projected goal was to make $100,000 in the first year from marijuana sales taxes, but in the first eight months, the city has more than doubled that.
James noted that the state will also continue to raise taxes on marijuana whenever it needs money, meaning prices could continue to rise, affecting local customers.
Ogden countered that cigarette prices continue to increase, but people are still smoking.
“There’s also not a huge black market for cigarettes,” Councilor Ryan Hess said.
Some council members expressed concern that by using some of the sales tax for the library, Moffat County would stop providing a certain amount of funding. However, it was explained that if the taxes went to Friends of Moffat County Library, that would stay out of the general fund.
No action was taken during the workshop, but the council proposed slightly increasing the sales tax to no more than 2%, giving most of the revenue to the library through some type of intergovernmental agreement or even letting the voters decide on the sales tax increase.
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