Craig Council considering adding Marijuana sales tax
First reading for 2% collection heard Tuesday night
The Museum of Northwest Colorado and Craig library might be seeing a critical funding windfall soon, paid for by customers at local pot shops.
Craig City Council is considering taking advantage of a privilege given it by Craig voters in November, 2019, when the latter elected to approve both recreational Marijuana sales in town and the city’s ability to tax it.
The city had chosen to defer that taxing ability, which voters approved up to 4% in 2019, until now. Now the council is considering an ordinance that, if it passes are written upon first reading Tuesday, would collect half of its maximum, 2%, on future sales.
“We had evaluated based on what we’d seen some of our neighbors doing,” said city manager Peter Brixius of the decision not to tax at the time sales were approved. “Steamboat Springs I don’t believe has an additional tax on marijuana, for example. We wanted to be competitive in the market. It was a big stride for Craig to allow the sale of cannabis in our community. If we were going to do it we wanted to be reasonably competitive.”
The original 2019 ballot measure dedicated any potential sales tax collected to two sources: The museum; and the Craig branch of the Moffat County Library.
“In 2019, the museum was having some serious funding concerns,” Brixius said. “The county was experiencing a shortfall in revenues based on changes to their revenue streams over the past several years. It was impacting both the library and the museum.”
The timing of that concern coincided with the ballot measure, and the popular cause, Brixius said, brought about the decision by those running the ballot measure to suggest dedicating any potential tax intake from cannabis sales toward the two institutions. Meanwhile, the city took over control of the museum, but the funding need didn’t go away.
“Many people consider the museum to be really vital to our economic activity, and it’s a core feature of our downtown,” Brixius said. “Many others consider the library a key function of the community, too.”
Brixius said that, if Council approves an added sales tax, the impact on the respective budgets could be significant.
Assuming the tax — or anything else — doesn’t dramatically impact sales numbers, Brixius said the estimate based on the first year of sales would bring in between $40,000 and $50,000 for each percentage point approved. That means, if 2% is approved, $80,000 to $100,000 total in municipal collections would be anticipated annually, split evenly between the two institutions.
That’s not insubstantial — the budget for the museum is close to $325,000 annually, Brixius said. As estimated, $50,000 would make up about 15% of the yearly operations.
The decision is not a slam dunk, though. There is opposition coming from a predictable source: the local marijuana industry. And that group isn’t without voice on the council, either. Councilman Paul James manages one of the three operating stores in town.
“I don’t think he necessarily speaks for the other stores,” Brixius said of James, “but they are consistently against the additional tax. Councilman James has been pretty vocal about it during the last couple of meetings.”
The argument from the industry is simple. It’s an extremely heavily taxed industry already.
“The additional maximum of 4% takes their total tax burden to 27.9%,” Brixius said. “If you add four percentage points to the current 23.9%, that’s where you end up.”
Council can move the ordinance forward from first reading without adjustment and leave the number at 2%, or it can request a change in the language from as low as 0% to as high as 4%. Second reading would be June 22.
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