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Denver Will Vote On Increasing Marijuana Taxes To Fund Pandemic-Related Research This Year

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Denver voters will soon decide whether to increase the local marijuana tax to fund pandemic-related research.

Activists behind the initiative—which would impose an additional 1.5 percent tax on cannabis sales—were cleared for the November 2021 ballot in mid-July. That’s in addition to a separate statewide initiative voters will see on their November ballots that would raise marijuana taxes to fund programs that are meant to reduce the education gap for low-income students.

The extra local funds raised by the Denver measure would be used for research into “advanced technologies to protect the public from the spread of pandemic pathogens, including at schools, businesses, and hospitals.” The studies will also look into “pandemic preparedness and recovery, including urban, economic, and school planning.”

Those studies would be facilitated by the the University of Colorado at Denver. But activists working on the Denver Pandemic Fund campaign stressed in a statement to Westword that they have “no financial connection” to the college, and they “will not financially benefit from any funding in the ballot measure.” It’s a “purely philanthropic” effort.

The university will be required to “equitably allocate the funds” so that 75 percent must be dedicated to studies on “personal proactive equipment, disinfection and sterilization technology and design features of physical spaces,” according to the text of the initiative. The remaining 25 percent will support research into “public policy and planning.”

“Global health experts warned of a pandemic threat for years before COVID-19,” the campaign’s website says. “Yet, when the virus hit, there was little planning in place. Elected leaders and government officials scrambled for policy solutions, health treatments and even basic protections. Many lives—and livelihoods—were lost.”

“The Denver Pandemic Fund will provide research into practical solutions for everyday effects of a pandemic,” it says. “Solutions that will address impacts on our daily lives: in our schools, small businesses and neighborhoods.”

In Denver, cannabis sales currently see local taxes of 10.31 percent—the city’s standard 4.81 percent sales tax plus a special tax of 5.5 percent.

The secretary of state confirmed late last month that the campaign behind the separate statewide cannabis tax increase initiative collected more than the required 124,632 valid signatures to make the ballot. The Colorado Learning Enrichment and Academic Progress (LEAP) measure would give low- and middle-income families a $1,500 stipend to have school-aged children participate in after-school programs, tutoring and summer learning activities.

If Initiative 25 is approved, the state excise tax on sales adult-use cannabis products would be gradually increased from 15 percent to 20 percent to fund the effort. Starting January 1, there would be a three percent increase in the current excise tax. That would increase to a five percent increase beginning in January 2024.

Colorado would collect an additional $138 million per year to fund the measure once the final tax rate is set, according to a fiscal analysis.

Supporters have argued that the education expansion policy is especially needed as a response to the coronavirus pandemic, which has exacerbated income-related learning gaps for students. But some marijuana industry stakeholders—and even the state’s largest teachers union—have expressed concerns about the proposal.

Beyond imposing the extra five percent tax on cannabis, the initiative also calls for a repurposing of state revenue that it generates from leases and rents for operations held on state land.

Some stakeholders and cannabis advocates have come out strongly against the proposal, arguing that it would detract from social equity efforts.

The measure is being endorsed by a two former governors, about 20 sitting state lawmakers, several former legislative leaders and several other educational organizations. But in June, the Colorado Education Association withdrew its support for the proposal over concerns about how it would be implemented.

Colorado officials recently announced the launch of a new office to provide economic support for the state’s marijuana industry.

The division, which was created as part of a bill signed into law in March, is being funded by cannabis tax revenue. It will focus on creating “new economic development opportunities, local job creation, and community growth for the diverse population across Colorado.”

Gov. Jared Polis (D) had initially asked lawmakers back in January to create a new cannabis advancement program as part of his budget proposal.

Beyond this program, the state has worked to achieve equity and repair the harms of prohibition in other ways.

For example, Polis signed a bill in May to double the marijuana possession limit for adults in the state—and he directed state law enforcement to identify people with prior convictions for the new limit who he may be able to pardon.

The governor signed an executive order last year that granted clemency to almost 3,000 people convicted of possessing one ounce or less of marijuana.

Funding for the new office is made possible by tax revenue from a booming cannabis market in the state. In the first three months of 2021 alone, the state saw more than half a billion dollars in marijuana sales.

The lack of access to federal financial support for marijuana businesses became a pronounced issue amid the coronavirus pandemic, with the Small Business Administration saying it’s unable to offer those companies its services, as well as those that provide ancillary services such as accounting and law firms.

Polis wrote a letter to a member of the Colorado congressional delegation last year seeking a policy change to give the industry the same resources that were made available to other legal markets.

Separately, the governor recently submitted comment on a Senate bill to federally legalize cannabis and urged lawmakers to pass incremental marijuana banking and tax reform first before moving forward with the comprehensive legislation to end prohibition.

The state’s attorney general also recently sent a letter asking congressional leaders to ensure that small marijuana businesses are protected from being overtaken by Big Tobacco and other major industries as federal cannabis reform legislation advances.

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Photo courtesy of Mike Latimer.

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