City Plans to Cut Reefer License Fees and Taxes Dramatically
Rick Langenberg
So much for a pending marijuana jackpot in Cripple Creek and the arrival of a cannabis-related crime spree due to a successful, pro-reefer initiative by local citizens.
In fact, the city of Cripple Creek’s first plunge into rich fields of cannabis green have gone bust—at least based on applicant interest.
The city, following the strong approval of a pro-marijuana voter proposition, spent months enacting guidelines and a schedule of fees and taxes in anticipation of a projected scenario of license and pot store demand far exceeding availability. This came after the city imposed a six month moratorium on issuing any pot licenses, period.
The city also spent considerable amount of funds in preparing for this big “marijuana gold rush day,” when Cripple Creek could take the next official step in diversifying its economy slightly with a few cannabis outlets, similar to what has occurred in a handful of other mountain, tourist-oriented communities in Colorado.
Only one problem with this scenario: hardly any marijuana entrepreneurs stepped forward. The town, since opening the door to pending marijuana licenses, has only received one taker. One of the key culprits, according to officials, could be the town’s escalating fees and taxes. “The staff has received information that our application fees, marijuana retail sales tax and occupation tax are high which will not allow local retail/medical sales of marijuana to compete with area retail/medical sales of marijuana,” stated Special Projects Director Jeff Mosher, when addressing the city council last week.
Mosher didn’t try to twist any arms with stern fee-slicing recommendations, but he indicated that the council may consider making adjustments.
The other factor, which could be playing a role in the lack of interest in entering the Creek reefer arena, is a declining market for recreational marijuana in Colorado, with increasing competition by other states. But it’s hard to assess how this would impact legalizing retail pot in a mountain gaming community.
Regardless of various theories about the overall marijuana market, the council wasted little time last week in following Mosher’s advice, and even went further, agreeing to drastically cut the fees and taxes associated with legal pot significantly. More specifically, they took the first steps in lowering the retail sales tax from 18 to 12 percent and cut the occupational tax by a nearly five-fold amount, which is imposed on individual purchases. In addition, the council sliced the current fees, such as the application, licensing and operating levies in half. The council’s main intent is to make Cripple Creek competitive with Manitou Springs and other towns that offer cannabis shops on a limited basis.
Cannabis Taxes and Fees Out of Reach
With the initial fees imposed by Cripple Creek, a potential marijuana operator would have to foot $28,000 in expenses just to enter the cannabis ballpark.
Councilman Bruce Brown stated that the initial input he has received had indicated that these fees and taxes are way too excessive to attract any marijuana business hitters. “They are concerned about the high tax rate,” said Brown, in describing the input from industry insiders. “We definitely need to be competitive with Manitou Springs.”
Similar sentiments were voiced by several council members during last week’s pro-reefer discussion.
“Some of these numbers are a little high,” said Councilman Tom Litherland. “I am not promoting marijuana, but I think we need to be competitive with the other areas.”
He said the council needs to follow the intent of the voters, who overwhelmingly favored opening the door for legal cannabis shops on a limited basis.
Mayor Pro Tem Melissa Trenary agreed and noted that the city has already taken great strides to restrict where cannabis shops could be located, with their zoning adjustments, and so she doesn’t believe that adding high fees would be helpful in welcoming this industry to town. She noted that prospective marijuana shop operators will face significant capital costs in purchasing appropriately-zoned properties and doing building improvements and changes to meet proper security guidelines.
High Marijuana Planning Costs
On the other side of the coin, Mosher informed the council that the city has incurred some significant expenses in preparing the town for the advent of legal marijuana.
During a staff report, he estimated that the city has spent more than $25,000 in legal fees and other costs in publishing and posting the various marijuana-related ordinances.
Plus, he noted this cost doesn’t include the price of staff time in doing extensive research into how other communities are handling this issue. Initially, the city evaluated the marijuana guidelines of a host of communities, including Manitou Springs, Central City, Alma and Leadville, just to name a few.
That is very true, responded city leaders, who agreed that the town needs to recoup its costs. That was the gist of the message relayed by city attorney Erin Smith, when these high fees and taxes were adopted. At the time, she said the city could make adjustments.
Apparently, that time has already arrived.
Trenary doesn’t believe it is fair to have one or two operators pay for the brunt of these expenses.
To date, the city has only received one application and that comes from Robert and Laura Smith, who have already paid the city the $28,000 start-up costs in fees.
Under the city’s new pending action to cut marijuana taxes and various fees, they will be refunded a good portion of this money.
The city will finalize its actions to adjust its marijuana fees and taxes at a forthcoming meeting.
During last week’s discussion, no one spoke in favor of maintaining the current level of reefer taxes and fees.
