SAGUACHE — After granting approval to the various requests from marijuana growers for changes to their plan or expansion of their operation, Saguache commissioners learned Tuesday during a regular meeting the excise tax is bringing in much needed revenue.

County Co-Administrator Wendi Maez announced that so far this year the county has collected $125,387 in fees from growers. This falls short of earlier budget estimates over $200,000 in expected revenue, but the balance is expected to reach or exceed the expected amount by year’s end.

According to the language of the ballot, passed in November 2016, the tax will be used as follows.

“Shall Saguache County increase taxes by $350,000 annually in the first full fiscal year and by such amounts as are raised thereafter as authorized by Colorado Revised Statutes 29-2-114 through the imposition of an excise tax of five percent of the average market rate, as determined by the Colorado Department of Revenue, on the first sale or transfer of unprocessed retail marijuana by a retail marijuana cultivation facility located within Saguache County…

“Such revenues [will] be used as determined by the Board of County Commissioners of Saguache County to fund, among other programs, youth services, land use code enforcement, county infrastructure, marijuana program administration costs, and other general purposes of the county…Such earnings [will] thereon be collected, retained, and expended as a voter-approved revenue change without limitation or condition under Article X, Section 20 of the Colorado Constitution or C.R.S. 29-1-301, as amended, or any other law, all in conformance with [the resolution].

“The pertinent officers and employees of the county are authorized and directed to take all action necessary or appropriate to effectuate the provisions of this resolution.”

Some growers dispute tax
A coalition of marijuana growers in Saguache County sent a letter to Saguache County Commissioners in February questioning the legitimacy and fairness of the excise tax. Coalition Liaison Diane Dunlap of Crestone was the signee on the letter. It was delivered to commissioners shortly before they met in regular session Tuesday.

The letter reminded commissioners of their commitment to economic development and the already existing 10 percent retail marijuana sales tax and 15 percent statewide excise tax on all product grown and transferred.

It also pointed out that the tax effectively encourages the development of black market marijuana operations.

The letter continued: “In addition to receiving one percent of all sales taxes, our local Saguache County marijuana industry has already made substantial contributions to the county’s revenue — marijuana businesses are charged three times as much for a conditional use permit, and pay thousands of dollars for access permits as opposed to the $35 charged to all other entities.”

Growers noted that in a remote rural area like Saguache County, balancing the burden of tax, overhead and expenses — particularly increased transport costs — makes it difficult to stay afloat. “ They asked commissioners, more or less how they can make it worthwhile to continue doing business in the county.

Because the tax did not exist when many set up business here, it was not factored into production costs. The letter pointed to Pueblo County, where the excise tax is charged in one percent increments over a period of several years.

“We were misled by early discussions with county officials into believing that the imposition of this tax would not result in an increase, because the state would reduce its 15 percent tax by a corresponding amount,” growers objected in the letter. “Since the election, it has become clear that the excise tax imposed by Saguache County is in addition to the 15 percent already charged by the state.”

They asked commissioners to help them lobby the state to reduce its excise tax for those counties charging more than the 15 percent.

The growers complained that the county has effectively removed any competitive edge they may have once held in growing their product, and they now are left with the prospect of a glutted market. They warned this would prevent others from locating here and cause those now producing to reconsider renewing their licenses.

The growers originally considered legal action but later decided not to pursue the matter.