HB 1045: Give Counties Small Toke on GOP Marijuana Tax
Representative Ernie Otten (R-6/Tea) is co-sponsoring Senate Bill 25, the component of the Legislature’s glut of marijuana bills that would impose a 15% excise tax on all marijuana. But apparently not satisfied with SB 25’s mere collection of that tax and assignment of the proceeds to a new state marijuana fund with no specified use, Rep. Otten has filed his own tax bill, House Bill 1045, which would tax marijuana and allocate the proceeds to specific uses.
HB 1045 would impose a 15% sales tax in lieu of the standard 4.5% state sales tax on marijuana and marijuana products. HB 1045 then specifies who gets what cut of that pot revenue:
- The first cut goes to the Department of Revenue to cover whatever costs it incurs in collecting the pot tax.
- The next $10 million goes straight to the state general fund, where the state may use the money for whatever it feels like.
- After collection expenses and the first $10M tranche to the general fund, the state splits any remaining revenue 50-50 with the counties. The state still puts its half in the general fund. The counties must use their half either to build, repair, or renovate their courthouses, jails, county roads, or bridges or reduce the county property tax levy.
The Legislative Research Council has estimated that a 15% tax on marijuana could generate $21.4 million. To my knowledge, the LRC has not issued a breakdown of the cost of administering a 15% sales tax on one set of products separate from the standard state sales tax. But let’s assume the Department of Revenue would need four full-time-equivalents’ worth of labor and some software and paper clips to manage this separate tax category. Give Revenue the $0.4 million from LRC’s estimate, and the state has $21 million a year to divvy up. The state would get $15.5 million—the first $10 million, plus half of the remaining $11 million. Our 66 counties would get slices of the remaining $5.5 million, and average of $83.3K per county.
Whether the pot-happy Legislature chooses a partially dedicated 15% sales tax or an all-mad-money 15% excise tax, keep in mind that even as they move toward liberating marijuana users, Republicans are looking to impose new taxes and make government bigger.