Pueblo to nix excise taxes on retail marijuana following 4-2 vote by city council

The city of Pueblo is eliminating retail marijuana excise taxes for the next three years following a 4-2 vote by Pueblo City Council on Tuesday.

An 8% excise tax on retail marijuana cultivated within city limits has been collected by the city since 2016. Proponents of suspending the excise tax argued that doing so would attract new business to Pueblo, bring new jobs and assist the struggling local marijuana industry.

"I think we do have a responsibility to make sure that we don't lose some of these businesses and have any job loss," councilman Dennis Flores said Tuesday. "I think the environment has changed tremendously. I was surprised at how very little we collect in excise tax within the city."

In 2021, the city collected almost $800,000 in marijuana excise tax revenue. However, that revenue fell to $159,601 in 2022 and will likely be below $200,000 again in 2023.

While the ordinance approved Tuesday night eliminates the excise tax for three years beginning Jan. 1, 2024, and ending Jan. 1, 2027, the tax is slated to return to 8% at the start of 2027 unless otherwise amended, repealed, or rescinded, according to the ordinance.

Graham, Maestri vote no on ordinance

Flores, Larry Atencio, Sarah Martinez and Vicente Martinez Ortega were the four council members to approve suspending the marijuana excise tax. Councilors Heather Graham and Regina Maestri voted against the ordinance and Councilor Lori Winner did not attend Tuesday's council meeting.

Prior to voting no, Maestri said that revenue generated from the marijuana excise tax should not be taken away from the city's general fund. Instead, she argued that excise tax funds should go toward projects like community cleanups and serve the needs of entities like the Pueblo Police Department.

Graham also voiced opposition to the ordinance before voting, saying the tax was "put in place for a reason" and that changes to the marijuana excise tax rate should be determined by a "vote of the people."

The 8% marijuana excise tax rate was approved by voters in November 2015. Ordinance language for the 2015 ballot question allows city council to change the rate without voter approval, given the rate is not increased above 15%.

However, Graham referenced a failed attempt to gather signatures for a 2022 ballot question effectively removing marijuana excise taxes to support her claim that voters don't want the tax to be suspended.

Local advocates speak in favor of removing excise tax

Sal Pace, a marijuana advocate and former legislator who represented Pueblo in the Colorado House of Representatives and on the board of county commissioners, was one of two individuals to speak in support of suspending the excise tax during a public hearing Tuesday night.

"As we all do throughout our lives, I've made some mistakes," Pace said. "One of the mistakes I have made was advocating for marijuana excise tax, because it is bad policy."

As marijuana continues to be legalized in more states throughout the country, excise taxes put Colorado at a "competitive disadvantage," Pace said. He also said that the presence of an 8% excise tax in Pueblo has "essentially driven off" local marijuana cultivation jobs.

David Lemon, another local marijuana advocate, said the 8% excise tax has created a significant regional difference between the city of Pueblo and Pueblo County. The county currently collects a marijuana excise tax of 5%.

"Over the last 10 to 12 years that I've been working around legal cannabis, I've helped 10 to 15 businesses grow in the county, but zero in the city," Lemon said.

More on marijuana excise taxes: Pueblo City Council considers slashing excise taxes on retail marijuana for 3 years

Pueblo Chieftain reporter James Bartolo can be reached at JBartolo@gannett.com. Support local news, subscribe to The Pueblo Chieftain at subscribe.chieftain.com.

This article originally appeared on The Pueblo Chieftain: Here's why Pueblo is suspending marijuana excise taxes for three years