Colorado Refund Madness: A Taxing Issue

s expected, Colorado’s tax
revenue from its first year of recreational cannabis sales was through the roof.
The state raked in almost roughly $60 million extra in tax revenue, and now has
found itself at a crossroads of what to do with it. The impressive amount of money collected through
taxation was originally promised to schools and other local projects, but now the voters have
the choice between two fairly attractive options: Letting the state use the
money for public services or returning it to the people of Colorado as a
refund. Colorado law requires the state to return excess tax revenue to the
people during the first year of a new tax, and in regards to the new
recreational cannabis era, this was a hefty 28 percent tax. But, legislators
are drafting a proposal that will ask voters will allow them to put the money
back into the state, according to Denver’s KGMH-TV.

The legal reasoning behind this is a
measure in the Taxpayer’s Bill of Rights within the state constitution,
originally passed in 1992, which explicitly reads that if the state collects
more revenue than it originally anticipated, it would have to give a tax
refund, just like the one individuals get if they are overtaxed throughout the
year on paychecks. In the case of recreational cannabis, this would mean giving
$60 million back to taxpayers.

This may seem like splitting-hairs, but in
the spirit of legalizing something that has been darkly criminalized for so
long, it is important to do everything by the book, and the technicalities in
this case call for a voter refund. Of course, local lawmakers really want to
keep this money, and are putting together a bipartisan bill that can bypass the
Taxpayer’s Bill of Rights. It seems that Colorado’s Democrats and Republicans
are willing to put aside differences in order to find any sort of
constitutional solution to this glaring issue.

Many people seem in favor of letting the
state government keep the money and allocate it the way it was originally
planned, but there are those who oppose this and feel a refund is in order.
After all, it is in the wording of the constitution, and the state’s voters are
the ones who made this historic legalization happen, and who made it work for a
whole year.

“It should go back to the taxpayers,”
Gregory Golyansky, the current president of the Colorado Union of Taxpayers,
told The New York Times. “When
government tries to keep the money that rightfully belongs to the taxpayers of
Colorado, it is an enormous issue. There should be a tax refund.”

Upon closer inspection, this issue goes
even deeper. Colorado has a history of being very anti-tax, and all about the
idea of hard working people keeping their money. But one of the concepts behind
full legalization in Colorado was always that the tax money would go to schools
and other state projects, thereby giving back to the community instead of
taking from it in the form of gang activity or cartel violence. This was one of
the sticking points that convinced those who weren’t totally on board with
cannabis in the first place, and to give a tax refund instead of money to
schools would essentially be going back on that promise. Originally, $40
million was meant to go to local schools, and this is a considerable amount of
money to suddenly cut and count out of the budget entirely.

So what would happen if this money is
returned by the state? More than likely it would manifest as an individual
refund, probably around $11 per eligible person. But the Bill of Rights is not
very specific here—no one can really agree if this entails a refund for the
businesses and growers that were taxed, those who purchased cannabis, or the
public in general. This adds yet another issue that needs to be settled before
a final decision can be made.

This conundrum calls for the voters to decide—at the time of this
writing, the state government is working out the finer points of the original
clause and the new bill meant to repeal it in light of the final tax numbers
being counted. In some ways, this seems to be a win-win—either local schools
get money, or every taxpayer gets a little extra money in the mail. Whatever
the vote, this will surely set the precedent for future cannabis taxing in the
state, and possibly on a federal level in the fu