Date: 08/12/2014

Final
Overview of the Recreational Marijuana Market, Revenue Collection, and Regulation

MARIJUANA SALES TAX REVENUES

Votes: View--> Action Taken:
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10:34 AM -- Overview of the Recreational Marijuana Market, Revenue Collection, and Regulation

Ron Kamerzell, Deputy Senior Director of Enforcement, and Lewis Koski, Director of the Marijuana Enforcement Division (MED), from the Department of Revenue (DOR) came to the table to present to the committee. A copy of the department's presentation was distributed to the committee (Attachment A). Mr. Koski summarized the four MED offices that had been opened throughout the state. He also explained the staffing allocations of the MED and its focus on the licensing of medical and retail marijuana businesses and rulemaking surrounding marijuana in Colorado. Mr. Kamerzell stated that the MED had recently been busy with rulemaking for marijuana products, focusing on such issues as over-consumption of marijuana edibles, the labeling of THC content in marijuana edibles, and serving sizes for different edibles such as liquid concentrates. Mr. Kamerzell outlined the different working groups that have been formed by the MED to study the numerous requirements for rulemaking, which include a responsible vendor program and increased regulation of medical marijuana card holders. Mr. Kamerzell responded to questions on "doctor shopping" and what was being done to counteract patients who elect to go to multiple doctors to receive the most preferential medical marijuana recommendations.

14Marijuana0812AttachA.pdf14Marijuana0812AttachA.pdf

10:50 AM

Mr. Kamerzell responded to a question on why medical marijuana patients are only allowed to register at one medical marijuana center in the state. Mr. Kamerzell explained the Marijuana Inventory Tracking System (MITS) and how this allows the MED to regulate medical marijuana consumption in Colorado. Mr. Kamerzell responded to questions on extended plant counts for medical marijuana users and how many medical marijuana centers are relying on these extended plant counts as a way of making a profit, whether MITS tracks if a medical marijuana patient registers with a caregiver, who is responsible if a patient registers with multiple medical marijuana centers, and from where registered patients may purchase medical marijuana. Committee discussion of medical marijuana patient registration ensued.


11:02 AM

Mr. Kamerzell told the committee that the MED had also been focusing on the rulemaking surrounding tamper-proof packaging as laid out under House Bill 14-1122, retail occupational licensing, and the assurance of voluntary compliance.


11:03 AM

Dorinda Floyd, Chief Financial Officer, and Steven Paine, Budget Analyst, from the DOR came to the table. Ms. Floyd presented to the committee on the tax and fee revenue collections by the DOR for medical and retail marijuana in FY 2013-14. Ms. Floyd explained the various assumptions made by the DOR in its Market Size and Demand for Marijuana in Colorado Study, and responded to a question on the assumptions made by the DOR on marijuana-infused product consumption.


11:09 AM

Ms. Floyd summarized the retail and medical marijuana fee setting model laid out by the department and the current license counts for medical marijuana businesses and retail marijuana business. Mr. Koski returned to the table to respond to questions on the number of retail license applications that DOR had received since vertical integration and medical marijuana limitations for licenses had been lifted. Ms. Floyd described the retail marijuana fee revenue that had been collected by DOR and the tax revenue and average market price assumptions used in its study. Mr. Kamerzell responded to questions on the 15 percent excise tax and the first-time transfer of marijuana inventory from a medical business to a retail business owned by the same company, how MITS will operate post-vertical integration, whether the first-time transfer of marijuana provision will exist into perpetuity, and how the statutes might need to be amended to change this provision.


11:22 AM

Ms. Floyd explained the 10 percent special sales tax and 2.9 percent sales tax on retail marijuana, 2.9 percent sales tax on medical marijuana, the variables impacting the DOR's tax revenue projections, and how Senate Bill 14-215 impacted the DOR's regulation of marijuana. Ms. Floyd responded to questions on funds that are deposited into the Marijuana Cash Fund, license fees that are currently levied on marijuana businesses, the necessary appropriation of funds to the DOR over time to fund marijuana regulation, whether the DOR had made assumptions surrounding the sunsetting of retail marijuana business vertical integration in its study, and the difference in revenue collections between the medical and retail markets.


11:30 AM

Mr. Kamerzell responded to questions on the Marijuana Policy Group, the promulgation of emergency regulations enacted by DOR, cost disparities between retail and medical marijuana edibles, the clear marking of marijuana edibles as containing THC, the increase in the medical marijuana market since retail marijuana was legalized, whether Colorado has less medical marijuana patients today than it did previously, and the current balance of resources within the DOR to regulate marijuana effectively.


11:43 AM

The committee went into a brief recess.