Colorado’s governor says that his state will be the “center” for the global and national marijuana trade when the prohibition is lifted. In the meantime, he proposes new cannabis tax revenue distributions on the state level in order to promote equity and streamline licensing while he pushes federal reform.
Gov. Jared Polis, (D), spoke on Thursday about his recently released budget proposal on VS Strategies’s “Weed Wonks” podcast. He highlighted new ways he is asking the legislature for millions of dollars from marijuana tax dollars to be allocated for workforce development and licensing, as well as industry investment in low-income areas.
Polis’ budget, released on Wednesday, calls for $5 million of marijuana revenue in order to fund the Cannabis Business Office of the Office of Economic Development and International Trade, which is focused on job creation and economic development within the cannabis industry. Polis also wants to allocate $3 million for licensing and a change in policy to allow marijuana companies located in “enterprise zone” that is economically distressed to receive tax credits available to other traditional businesses.
Polis stated that the Cannabis Business Office will receive funding under the proposed proposal “perpetually” rather than depending on the infusion of money it received once in 2021. The governor stated that they wanted to ensure the Cannabis Business Office continued to provide services, such as helping companies to link grants and loans.
The Governor’s Budget document states that the office, in addition to providing funding to sustain the division’s current work, will also expand to provide “entrepreneurial aid to those who are not involved in the cannabis industry, but have been negatively affected by drug war.”
Polis explained on the podcast that he is also proposing to raise $3 million from cannabis taxes to “better allow our units to process licences more quickly and effectively”. Traditionally, this work was funded by license fees.
We don’t want any backlogs. He said, “We want to get these done quickly.” We don’t want any additional fees. We want to be sure we can continue supporting that.”
He stated that the $2 million tax credit offered to marijuana businesses operating in enterprise zone would be a way for them to “participate to the same type of favorable tax considerations that other industries” but he also acknowledged that the state could only do so much for these businesses because of the prohibition, and specifically that marijuana businesses are not allowed to claim federal tax deductions based on the Internal Revenue Service code 280E.
Polis said that to that end he “strongly supports” a federal bill, the Secure and Fair Enforcement Regulation Banking Act (SAFER), which will normalize the marijuana business at the federal level. Polis said that federal legalization is what’s needed to normalize the marijuana industry at the federal level.
Colorado has a kind of ‘first mover’ advantage in this area, as we were the first state to legalize. You can’t get complacent and we want continue to be the leader in the legal marijuana market,” said. “We must continue to innovate, because many other states are now at the same level as us in terms of basic legalization from a commercial and medical standpoint.” It’s not as innovative now as it was when we first did it.
The Governor also praised how the state distributed marijuana tax revenues – which have totaled approximately $2.5 billion since implementation of legalization – for other efforts, such as funding K-12 schooling.
He said that it was a major part of the success of his state. “I think that part of the problem is, of course more national competition.” For example New Mexico, which borders Colorado, has legalized cannabis, so residents in New Mexico no longer have to travel to Colorado to purchase regulated cannabis products.
“That’s natural. The governor said that more states are following suit. He had previously made jokes about refusing to allow other states legalization so that their residents would choose Colorado instead. It’s a question of how to continue being a leader in policy regulations such as safety regulations, preventing minors from using marijuana, expedited licensing processes, and tax structures, like making companies eligible for Enterprise Zones.
Polis noted that despite increased competition, as more states legalize marijuana, there are still advantages for marijuana entrepreneurs who base their business in Colorado. These include the relatively low rate of state tax of 4.3 percent, and the ability to take the equivalent state deduction to the federal tax deduction, which they would otherwise be prohibited from taking under 280E.
He said, “We are very positive from this perspective too.”
The governor of Colorado said that in order to achieve the economic and innovation objectives of Colorado’s cannabis industry, federal law must be changed. “We can’t let perfect be the enemy to the good,” he said. That means supporting steps such as rescheduling of marijuana under the Controlled Substances Act as the Drug Enforcement Administration is currently formally reviewing as part of a review administratively directed by President Joe Biden.
Does any of this solve all the problems related to cannabis? It’s obvious that they don’t. “That’s not the way policy works,” said he. “I was in Congress for ten years. “You never get to eat the entire loaf in one bite.”
He said: “Let’s support these things instead of further dividing things in the community, seeking comprehensive legalization – which, of course, I agree with, and I believe Congress will eventually do,” “But we have to do some of these things first.”
Polis said, “Rather than saying it’s either all or nothing you can’t get anything and end up sitting there for years without getting anything.” “I believe most of the community is on board, but you know a lot people want to see this happen, and we are all in agreement about that.” We have to do what is right in front of us, which includes the SAFE Banking Act and reclassification. “Let’s finish these tasks and then tomorrow we will start again on the next phase.”
Governor said that the fight for federal reform may ultimately allow Colorado to play a leading role in cannabis. We want to be prepared, for example, when Colorado is able export cannabis seeds across the nation and internationally. He wants Colorado to be “the genetics library of the nation.”
He said, “As it becomes a more national and global business, we want to be in the middle of this.” Right now, it cannot be federally prohibited by its very nature. The national and international industries are largely unable to move their products across state borders.
In the budget of the governor, the budget also details additional ways the governor plans to spend the $347.5-million marijuana tax revenue in the fiscal year 2024-2025. This includes funding for public education and affordable housing.
The proposal notes that marijuana tax revenues “fell by 11.2% in FY 2021-22 to $179.2 millions and by another $29.8 to $149.4million in FY 2022/23 as demand dropped from its peak resulting in an oversupply and a depressed price.”
The state’s forecast for revenue and economic growth predicts that revenues will “rebound by 10.3 percent in FY2023-24 to $164.8 millions before increasing an additional 8.4 per cent in FY2024-25 to reach $178.6million.”
The budget document states that “the Governor’s FY2024-25 [marijuana fund] budget, legislative agenda and revenue collection forecasts are aligned directly with the Fund’s intended uses and provide financial stability during uncertain times of revenue collection by funding major priorities on a one-time basis.” The Governor’s budget request is $22.6 million for new priorities and the continuation of programs that have expired funding.
Polis did not mention any of the other “new priorities,” which include: a $6 million one-time allocation to the Department of Health Services to provide free sessions of therapy to youth; $2.7 million to the DHS for its out-of school youth violence prevention programs; $3.5 million to establish a Hemp Center of Excellence within the Agriculture Department; $4.1 million to improve tracking from seed to sale with technology and $1 million to a program that distributes housing vouchers for substance abuse disorders.
The governor’s budget includes $100,000 for potential policy implementation recommendations in relation to the state’s new psychedelics law.
The dollars are specifically reserved for costs “coming directly from the Natural Medicine Advisory Board”, under the Department of Department of Regulatory Agencies, “to support accurate public-health approaches regarding the use, benefits and harms of natural medicine, natural medicine products, and the scope and content of educational campaigns relating to natural medicine.”
It says that the materials will include educational materials and public service announcements. They will also promote and develop training materials for multi-responders including first responders such as law enforcement, emergency medical personnel, social services providers and firefighters.
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In August, the nonpartisan Legislative Council Staff of Colorado (LCS) released an analysis that showed that Colorado had generated more tax revenue than alcohol or cigarettes in the past fiscal year. $280 million dollars in cannabis taxes went to a wide range of government services and programs.
The U.S. Census Bureau has begun tracking state cannabis tax and sales data even though the plant is still federally illegal. A new Census report shows Colorado as one of the five states where cannabis revenue has consistently accounted for at least 1 percent of state income in the last two years.
The governor applauded Biden recently after his top agency for health recommended rescheduling cannabis. But he says that the initial move needs to be followed by more action to address cannabis banking and immigration concerns, criminal justice reform, and federal enforcement concerns.
After he passed legislation in May to implement new regulations on substances such as psilocybin and ayahuasca , he has called for lawmakers to take steps that will allow him to pardon people who have prior convictions for psychedelics.
Polis also signed into law a bill in June that permits online marijuana sales. This reform was implemented in August.
He has also approved legislation to strengthen marijuana-related protections in the state for working professionals, effectively codifying his executive order from last year.
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Photo by Brian Shamblen.
The post Colorado should be at the ‘Center’ of global marijuana market, Governor Says as He Unveils His New Cannabis Budget proposals first appeared on Marijuana Moment.
