Select Committee Committee on Amendment 64 Implementation Committee (03/26/2013)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON AMENDMENT 64 IMPLEMENTATION COMMITTEE

Date:	03/26/2013	ATTENDANCE

Time:	07:37 AM to 09:25 AM	Baumgardner	E
		DelGrosso	X
Place:	HCR 0112	Marble	E
		May	X
This Meeting was called to order by		Nordberg	E
	Representative Pabon	Schwartz	X
		Singer	X
This Report was prepared by		Ulibarri	*
	Hillary Smith	Jahn	X
		Pabon	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Overview of Recommendations from the Task Force Public Testimony		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

07:37 AM -- Overview of Recommendations from the Task Force

Representative Pabon, chair, called the meeting to order.

07:39 AM

Mr. David Blake, representing the Office of the Attorney General, discussed recommendations concerning taxing and financing. He spoke about the importance of proper funding for marijuana regulation. Representative DelGrosso responded to Mr. Blake's remarks. He asked whether there are any estimates of marijuana sales. Discussion continued between Mr. Blake and Representative DelGrosso.

07:45 AM

Mr. Blake discussed Recommendation 2.1, concerning a financing plan. He spoke about funding for medical marijuana enforcement and described the problems that arose from funding medical marijuana enforcement almost entirely through fee revenue. He explained how Recommendation 2.1 would attempt to avoid problems faced by the Medical Marijuana Enforcement Division within the Department of Revenue (DOR).

07:50 AM

Senator Schwartz spoke about excise and sales tax revenue. She asked for clarification concerning language in Amendment 64 concerning the excise tax. Mr. Blake responded to her questions. Conversation continued between Senator Schwartz and Mr. Blake concerning the use of excise tax revenue.

07:56 AM

Representative DelGrosso asked for additional detail concerning money in the Medical Marijuana Licensing Cash Fund. Mr. Blake responded to his question. Conversation continued between Representative DelGrosso and Mr. Blake concerning possible litigation concerning the use of Medical Marijuana Licensing Cash Fund moneys.

08:01 AM

Ms. Dorinda Floyd, representing the DOR, referred to Recommendation 1.4, which proposes combining medical marijuana and marijuana enforcement responsibilities into one division within the DOR. Mr. Blake shared further remarks.

08:03 AM

Senator Schwartz asked how the budget for marijuana enforcement will be determined. Ms. Floyd responded to her questions, stating that appropriations for marijuana enforcement would likely be similar to those for medical marijuana enforcement.

08:05 AM

Mr. Blake discussed Recommendation 2.2, concerning application fees. He then explained Recommendation 2.3, concerning licensing fees. He responded to questions from Representative Pabon.

08:11 AM

Mr. Blake explained Recommendation 3.1, concerning tax clarification. He walked the committee through the various points in Recommendation 3.1 concerning the constitutionality of Amendment 64 and its relation to the Taxpayer Bill of Rights (TABOR).

08:13 AM

Mr. Blake described Recommendation 3.2, concerning a sales tax for marijuana sales. He described several assumptions and models related to this recommendation. He responded to questions from Representative Pabon. Representative DelGrosso sought clarification concerning the specific recommendation for a sales tax. Discussion ensued between Mr. Blake and Representative DelGrosso.

08:34 AM

Representative Pabon asked how local governments will be involved in sales tax decisions. Representative DelGrosso asked if municipalities would have the option of increasing the sales tax rate for marijuana over that established by the state. Mr. Blake responded that this option would be available, and discussed concerns about high tax rates. He noted that one assumption was to set the state sales tax rate at a high rate to allow it to be reduced more easily under TABOR restrictions.

08:38 AM

Mr. Jack Finlaw, chief legal counsel to Governor Hickenlooper and co-chair of the Amendment 64 Task Force, spoke about the importance of the excise and sales taxes. He stated that the federal government has indicated that a well-regulated and well-funded marijuana industry is critical. He discussed tax rates approved in Washington state, which also voted to legalize marijuana last year. Mr. Finlaw noted that most of the revenue generated by the excise tax will be earmarked to the Building Excellent Schools Today (BEST) program. He reiterated points made by Mr. Blake about the need to set a tax rate high initially to get voter approval under TABOR, allowing it to be lowered without a vote if necessary later.

08:42 AM

Mr. Henry Sobanet, representing the Governor's Office of State Planning and Budgeting, discussed modeling for excise and sales tax scenarios. He discussed the potential risks of an insufficient tax rate. He spoke about the limited gaming tax as a practice model for a marijuana tax.

08:46 AM

Representative Pabon thanked Mr. Finlaw and Mr. Sobanet for their remarks.

08:48 AM

Mr. Blake spoke about the value of legality and the need to bring people into a legal marijuana market. He spoke about ways to drive people out of the illegal marijuana market. He then described Recommendation 3.3, concerning an excise tax and escalator. Mr. Blake discussed the relationship between an escalator clause and the requirements of TABOR.

08:54 AM

Senator Ulibarri asked about the assessment of the fair-market value of marijuana products. Mr. Blake responded to his questions. Representative Pabon thanked Mr. Blake for his work.

08:59 AM -- Public Testimony

Representative Pabon asked members of the public to stay on topic and stay within the two-minute time limit for testimony.

The following individuals testified:

09:00 AM -- Ms. Elan Nelson, representing the Health Center, asked the committee to consider taxing marijuana at a reasonable rate. She spoke about the importance of adequately funding marijuana enforcement. She discussed the need to pull customers away from the illegal marijuana market. Ms. Nelson then talked about the end of alcohol prohibition. She responded to questions from Representative Singer.

09:03 AM -- Mr. Doug Robinson, representing Smart Colorado, spoke about beliefs concerning Amendment 64. He asked whether it is fair for the state to subsidize the cost of regulating marijuana businesses. He recommended a 100 percent vertically integrated model as the least costly model to enforce. Mr. Robinson referred to a Denver Post article concerning medical marijuana regulation. Mr. Robinson responded to questions from Representative Singer.

09:07 AM -- Mr. Andy Williams, representing Medicine Man of Denver, recommended that the marijuana industry be "unleashed" in order to generate more revenue.

09:09 AM -- Mr. Jason Warf, representing the Colorado Springs Medical Cannabis Council, referred to testimony offered on March 25, 2013. He spoke about opposition to vertical integration. He discussed the campaign concerning Amendment 64. Mr. Warf listed several concerns with vertical integration.

09:11 AM -- Ms. Jessica LeRoux, representing herself, discussed concerns with medical marijuana enforcement.

09:14 AM -- Mr. Mike Elliott, representing the Medical Marijuana Industry Group, distributed two handouts to the committee (Attachments A and B). He stated that funding for enforcement should be a top priority. He said that licensing fees fund enforcement, so a sales tax to fund enforcement is not necessary. He discussed concerns that high tax rates will drive consumers to an illegal marijuana market.

130326 AttachA.pdf

130326 AttachB.pdf

09:16 AM -- Ms. Cheri Hackett, representing herself, expressed concerns with high tax rates.

09:17 AM -- Mr. Phillip Barton, representing himself, spoke about the illegal market for marijuana. He expressed concerns with high tax rates. He then discussed disadvantages to vertical integration.

09:20 AM -- Mr. Thomas Bowler, representing Rocky Road Remedies, expressed concerns with high tax rates. He referred to the growth rates in economic models discussed by Mr. Blake. He asked the committee to minimize any excise tax.

09:22 AM -- Mr. Robert Corry, Jr., representing himself, said that the marijuana industry needs "new blood" in order to generate adequate revenue. He spoke about bans on out-of-state investment. He said that jobs flow from out-of-state capital. Mr. Corry referred to a recommendation banning convicted felons from the marijuana industry.

09:24 AM

Representative Pabon made several announcements concerning the committee's work.

09:25 AM

The committee adjourned.