The Colorado Supreme Court this week declined to hear an appeal by Adams County over the validity of its recreational marijuana tax in three of its cities, raising questions about the fate of the nearly $2 million the county has brought in over the last two years from the levy.
The high court’s decision keeps in place a ruling by the Colorado Court of Appeals last year, which concluded that Adams County had been improperly collecting a 3 percent tax on recreational pot in Commerce City, Aurora and Northglenn, stands.
Adams County has used hundreds of thousands of dollars of its pot tax revenues to fund college scholarships for underprivileged students. A spokesman for the county on Tuesday said the county had stopped collecting the tax several weeks ago, but it’s not clear what the Supreme Court decision means for the more than $1.8 million that Adams County has since the tax went into effect on July 1, 2015.
Northglenn city manager James Hayes said in a statement that the Colorado Supreme Court’s decision “is in support of municipal government and local businesses.”
“We were confident from the beginning that Adams County didn’t have the authority under state law to impose a special sales tax only on marijuana,” he said.
The cities initially sued in district court, claiming Adams County didn’t have the authority under state law to tax a single product. Coupled with their own taxes on pot, the cities argued, the county levy put retail cannabis retailers in their jurisdictions at a competitive disadvantage.
Adams County countered that because voters approved the tax during the 2014 election — including the residents inside the cities that eventually sued over the matter — it had the authority to impose the tax.
An Adams County District Court judge in 2015 backed the county, but that decision was overruled by the Colorado Court of Appeals in December, when it said that the county’s special tax violated the constitutional structure created by Amendment 64, which legalized the sale, possession and consumption of marijuana for recreational uses.
The court also rejected the county’s claim that since the tax was approved by voters, the court did not have the authority to overturn the results.
“We reject this argument because whether the county held a valid election is irrelevant to whether it had the legislative power to impose a special sales tax,” the order said. “Unless the General Assembly or Colorado Constitution authorized the county to impose such a tax, the county simply does not have the power to enact such a tax, irrespective of a valid election.”
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