December 2, 2022 | OPINION | By George Downs and AJ Rothenberg
The legalization of recreational marijuana failed to pass in El Paso County during the most recent November election.
Proposition 300 would have allowed the existing medical marijuana dispensaries to sell recreational marijuana, and Proposition 301 would have added a five percent tax to support public safety programs, mental health services, and health programs for veterans.
Proposition 300 was defeated by a nine percent margin, far from what the previous polling data predicted. The poll confidently predicted the proposition passing at 73 percent approval, according to Daniel Cole, the opposition’s campaign strategist. 83,926 El Paso County residents voted in favor of Proposition 300, which was 15,000 votes fewer than the number of signatures collected during the petition initiative phase.
Another point of interest lies in the number of abstentions between proposition 122 and proposition 300. Proposition 122 was a successful statewide ballot measure to decriminalize five natural psychedelic plants and fungi for persons over 21, redefine the plants as natural medicine, and legalize clinical administration for qualified patients, including veterans.
While the proposition failed in El Paso County, it passed statewide. There were 276,464 total votes cast on proposition 122, while only 184,176 total votes were cast on proposition 300 in El Paso County. The abstentions between the two propositions are likely attributed to military and emergency services voters since it directly benefits them with clinical psychedelic therapy. While Proposition 300 failed during this election, it will almost certainly appear on every future ballot. The 99,000 collected signatures far surpassed the 19,254 signatures required for ballot initiatives, which presumes the city council maintains its moratorium on recreational marijuana.
Colorado Springs is home to the largest medical cannabis market in the state of Colorado. In October 2022, Colorado Public Radio reported 114 existing medical cannabis dispensary licenses citywide.
Colorado Springs is the second most populous city statewide, and the largest city based on square mileage. Colorado Springs is home to a remarkably unique cannabis market, unlike any other in the country, due to the presence of both “mom and pop shops,” who operate one location, and operators with 3+ locations statewide.
KOAA NEWS5 Colorado Springs interviewed medical cannabis operators and found multiple shops reporting losses of 30% in 2022 compared to 2021 profits. They largely attribute this decrease to the passage of House Bill 1317, which Governor Polis signed and took effect on January 1, 2022. Across the state, patients without an extended plant count had their buying limit from 40 grams of concentrate daily to eight grams—the same as the recreational buying limit.
In only a few years prior, the state had decreased the buying limit to 40 grams from 56 grams of concentrate. To clarify, an extended plant count is when a doctor specifies a higher buying and growing limit to the state than statutorily standardized for a specific patient’s needs.
The state also began tracking how much medicine patients bought daily, so they would not exceed statutory limits. For reference, this does not exist for recreational cannabis buyers, where “store hopping” is commonplace to skirt statutory buying limits. Those two factors are the primary reasons medical cannabis sales have decreased dramatically statewide.
Sadly, many medical cannabis license holders held onto their licenses in 2022, even when sales were predicted to plummet and did, in the hopes that recreational sales would pass. Their license would multiply in value, as well as sales. This house bill became law because parents testified their kids were suffering from psychiatric symptoms and had even died due to actions taken while suffering from mental health instability.
These symptoms were all attributed to significant concentrated cannabis use derived from the medical market. While we do not deny the impact concentrated cannabis can have on adolescent mental health, we disagree that the regulated market is solely to blame. Dramatically lowering buying limits for all patients of all ages was not an appropriate response. For example, requiring mental health evaluations for adolescent patients throughout their treatment and prior to treatment could have a far greater positive impact.
The municipal opposition to Proposition 300 included TV campaign ads asking voters to reject the proposal by Mayor John Suthers and El Paso County District Attorney Michael Allen. They cited increased homeless, crime, and damaging Colorado Springs’ relationship with the military as reasons for voting no on Proposition 300.
The city council also issued a resolution against recreational marijuana in a 6-3 vote, again citing increased crime and a negative impact on economic growth as consequences of legalization. District 1 Rep. Dave Donelson said, “Citizens deserve to know where their city council stands on the issue.” Mayor John Suthers and three city council seats expire in April and will be up for election.
The concerns of homelessness, crime and negative economic impact are a point of contention debate between the legalization campaign, YourChoiceCos, and the municipal and organized opposition. The Mayor estimates the tax revenue from recreational marijuana sales to be $7 million. In contrast, YourChoiceColorado estimates sales revenue at $15 million, a stark discrepancy.
Manitou Springs has been selling recreational marijuana at two storefronts, Emerald Fields and Maggie’s Farm, since 2014. According to Colorado Public Radio, each dispensary charges roughly double typical market rates since the alternative is a much further drive to Pueblo or Denver.
Manitou does not release a specific breakdown of recreational marijuana tax revenue. The Colorado Department of Revenue prevents releasing sales tax records when there are fewer than three stores since each store could derive the others’ sales.
Citywide sales tax revenue, which includes recreational marijuana, totaled $8 million in 2021; Manitou has 5,000 residents. Although specific figures are not released, there are observable trends, such as Manitou’s general fund doubling to ten million in four years from 2013-2017.
According to the Colorado Springs Gazette, the budget for its Urban Renewal Authority also grew at an average rate of $34,000 annually before legalization to $1.2 million in 2016. In 2022 the city council raised the recreational marijuana tax from six percent to ten percent, likely in an attempt to garner profits before the previously anticipated El Paso legalization. With the failure of proposition 300, Manitou just expanded its tax revenue margins.
Pueblo has eight recreational marijuana dispensaries for its 112,000 residents. The county tax has been set at six percent since 2020, when it was raised from three and a half percent. The extra 2.5 percent is exclusively earmarked for public safety projects. Additionally, a five percent excise tax is leveraged after harvest and built into the final retail price before sales tax is applied.
Half of the excise tax is for scholarships for county residents, and a public vote determines the other half. The county sales tax generated nearly $3 million in 2020, the most up-to-date report. The excise tax in Pueblo generated nearly $7 million in 2020. Colorado Springs residents drive a large portion of the ten million in tax revenue; the same holds true for Manitou.
Across the state of Colorado, medical marijuana sales in July 2022 reached their lowest point since sales began in Colorado in January 2014. This past July, statewide sales of both recreational and medical cannabis were $154 million, down from nearly $203 million achieved only one year prior. Tiffany Goldman, board chair of the Marijuana Industry Group, reported to the Denver Post that both medical and recreational cannabis markets in Colorado are: “on the brink.” Goldman notes that smaller-sized cannabis businesses feel the industry’s downward spiral the most.
As more states legalize recreational cannabis sales, the tourism industry surrounding Colorado’s early market loses its appeal. The federal legalization of “hemp-derived cannabinoids” has resulted in a booming online market. A market in which anyone nationwide, regardless of age, can order any quantity of THC-infused products to their doorstep.
The Colorado Department of Revenue cites a 44 percent decrease in medical cannabis sales statewide from June 2021 to June 2022 alone. The significant decline in the medicinal market can be attributed to House Bill 1317, as detailed above.
Ultimately, recreational cannabis sales do not exist in Colorado Springs because of our city council. They ignore that Manitou Springs is not even 10 minutes away from many parts of the city. People are not using less cannabis simply because it is not sold in Colorado Springs. Customers buy it elsewhere, and the potential tax revenue is lost to other counties.
The only way this can change outside the city council is through ballot initiatives, which is why they have been pursued this year and years prior. But accomplishing this goal will require the next generation, who came of age after the War on Drugs, to act and bring Colorado Springs marijuana policy into the 21st century.