Boulder budgeters look to recreational marijuana taxes

Boulder saw an opportunity to stabilize its budget as Colorado became among the first of now 10 states plus Washington, D.C., to permit some form of recreational marijuana use.

Medical marijuana has been legal in Colorado since 2001, and recreational since 2014. But because the drug remains illegal at the federal level, the city has been reluctant to count on tax revenue from recreational sales.

Each year in the past, the money non-medical marijuana brings in has been categorized as one-time revenue, explained Kady Doelling, executive budget officer. Because of the way Boulder does its budgets, one-time dollars can only be used for one-time expenses, not ongoing costs such as funding the fire department or police.

City officials decided to maintain the revenue as one-time because of uncertainty at the national level.

“Last year we were pretty close to moving this to ongoing, but during budget time, there was a lot of rhetoric” from the federal administration about going after states with legalized marijuana,” Doelling said.

During the 2020 budget discussion, which started in early 2019, Boulder decided to pull the trigger. Moving forward, marijuana revenue would be incorporated as ongoing funding.

It’s not a panacea for Boulder’s budget woes: sales tax has been growing at a rate slower than inflation, causing a shortfall — a trend that is expected to continue as the population ages. Marijuana brings in about $3.7 million each year. Much of that goes to enforcement of and education around the industry itself, leaving a small amount for other city needs.

Although the revenue has grown by double-digits in past years — last year brought a 30% increase — the growth is slowing. Doelling is projecting 5% annual increases in the future. That also has to be balanced against the decline in taxes from the shrinking medical marijuana sector; that revenue has been counted among ongoing dollars for several years.

Still, Doelling noted, every dollar helps.

“It doesn’t bring in a whole lot,” Doelling said, “but it does help a little bit.”

by Shay Castle