Aurora gives first OK to voter request for new retail marijuana taxes

AURORA | Aurora voters could see a measure on the November ballot to approve a special sales tax for retail marijuana that could generate an additional $2.4 million a year on top of the $2.8 million the city is already expecting to receive from retail marijuana and grow sales with no special tax.

That would generate $5.2 million a year, said Aurora City Finance Director Jason Batchelor, when counting the 1.5 percent the city will also receive from the state’s special sales tax of 10 percent.

City Council gave unanimous initial approval at a study session Monday to move the referendum question to the agenda. It would ask voters whether they want a 5 percent excise tax on retail marijuana cultivation in Aurora, and an additional sales and use tax of 2 percent on top of the city’s standard tax rate of 3.75 percent for retail stores.

Councilwoman Renie Peterson asked whether it would be beneficial for Aurora to provide a scalable sales tax on recreational marijuana like Denver does, where the current sales tax rate is 3.5 percent, but can be increased to 10 percent without going back to voters.

“We should do that so we don’t have to go back to the ballot,” she said. “This way, we can always stay under the tax amount Denver has. We could start at 2 percent, and if they raise it to 4 percent, we can go to 3 percent.” 

Peterson added that the $750,000 allotted for Aurora’s new 7-person inter departmental retail marijuana licensing division may not be able to cover public safety issues that arise as the majority of that money is going toward paying salaries. Batchelor confirmed that most of the enforcement money is serving that purpose.

“We intend to cover our enforcement costs. That is primarily salaries, and it is direct enforcement costs for code (enforcement) and for police,” he said. 

Council members Bob LeGare and Bob Broom said the choice should be left to voters.

“Im not interested in doing a tax we can raise whenever we want to,” LeGare said.

Batchelor said before the meeting the revenue estimate is based on Aurora having the maximum-allowed 24 stores operating in the city selling 30 ounces of product a day for $200 per ounce, as well as cultivators growing 262,000 ounces a year in the city at a wholesale price of $94 per ounce.

The revenue estimates are based on what’s sold in Aurora also being grown in Aurora, which is something Batchelor said could prove variable once shops open after July. “There’s no requirement that marijuana sold in Aurora has to be grown in Aurora,” he said. “If we were to have large cultivation operations, there’s a possibility those operations could provide product to Denver and other areas.”

He said during the meeting that excise tax would be a way to ensure revenue if Aurora becomes a cultivator’s rather than retailer’s market. Without the excise tax, Aurora would get no tax revenue from growers located in the city.

“We’ve had a lot of interest from cultivation operations,” Batchelor said. 

If Aurora voters approve the special taxes, they will be a hybrid of what has been passed in Boulder and Denver. Both have approved a special sales tax of 3.5 percent for retail marijuana, and Boulder has also added a 5 percent excise tax.

So far, none of the revenue has been earmarked for special projects.

Aurora’s Interim City Attorney Mike Hyman said the measure will likely go before a council study session June 2. Council will have to adopt a resolution by August 25th to move the question to the November ballot.

Mayor Steve Hogan and council members Barb Cleland and Debi Hunter Holen were absent.