Colorado May Be First City To Tax Medical Marijuana

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FRUITA, Colo. — A small western Colorado town that doesn't have a medical marijuana dispensary has become the first in Colorado to levy a city tax on pot.

Voters in Fruita, a town of about 11,000, decided Tuesday to impose a 5 percent sales tax on marijuana.

The town, however, has no dispensaries that sell marijuana, though one application is pending. City leaders said they wanted to be ready with a tax source in case the dispensary opens and requires city resources such as additional police patrol. The tax passed 1,533 to 936. Already dispensaries pay a 2.9 percent state sales tax, though Colorado officials aren't sure exactly how much comes from the sale of pot.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

FRUITA, Colo. (AP) – Voters were deciding Tuesday whether to make this rural western Colorado town the first in the state to tax medical marijuana.
The City Council decided to ask voters whether to impose a 5 percent sales tax on medical marijuana to help Fruita – home to about 11,000 residents – cover the costs of regulating potential dispensaries.

City Manager Clint Kinney has said the town estimates the most it could possibly generate from the tax is $100,000, although even that may be lofty since only one application to open a dispensary is pending.

Colorado pot dispensaries already pay a state sales tax of 2.9 percent, though the state's Department of Revenue can't say how much money they get from medical marijuana or other products sold by the dispensaries.

A voter-approved amendment to the Colorado constitution allows limited marijuana use for certain medical conditions but doesn't regulate dispensaries. Fruita's rules include background checks for dispensary owners.

Last year, Oakland, Calif., became the first city in the country to create a special tax on marijuana sales. Voters approved a measure requiring dispensaries to pay $18 for every $1,000 in gross sales; the rate for other retailers is $1.20 for every $1,000 in gross sales.
The ballot question in Fruita is among dozens of questions posed to voters in at least 134 Colorado cities and towns Tuesday, according to the Colorado Municipal League.
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