City reaps $209K in medical marijuana tax

Whether That Covers Cost of Regulation Is Unknown

Fort Collins has scored a new source of revenue through medical
marijuana sales.

Through October, the city had collected more than $209,000 in tax
revenue from sales at medical marijuana businesses, according to city
records. The total is likely to top $250,000 by the end of the year.

The sales tax collected thus far represents nearly $7 million in
product sales. The biggest month so far was April, which brought in
$29,352 in sales-tax revenue on $888,454 in reported sales, according
to the city.

The medical marijuana revenue is "real money" and a boost to Fort
Collins' coffers, said Mike Freeman, chief financial officer for the
city. But it represents only 0.5 percent of the city's total sales-tax
revenue for the year.

"I wouldn't say it's a windfall for the city," Freeman
said.

About 75 percent of the sales-tax revenue has gone into the city's
general fund, which pays for a variety of services, with the rest
going toward areas funded by dedicated sales taxes - natural areas,
capital improvements and pavement management.

The sales-tax figures are significant, said Dave Schwaab, co-owner of
Abundant Healing, 351 Linden St.

"It means people want medical marijuana," he said. "I've heard people
say they would rather pay the tax and be able to buy in a safe,
comfortable setting than on the black market, like they used to do to
meet their medical needs."

Other Front Range cities also have experienced revenue spikes tied to
medical marijuana sales. Colorado Springs is bringing in about $50,000
a month, according to published reports. Boulder expects to receive
more than $400,000 in sales-tax revenue from marijuana sales this year.

The state of Colorado received about $2.2 million in tax revenue from
marijuana sales in the fiscal year that ended June 30, said Mark
Couch, spokes-man for the Department of Revenue.

The department also received $8.5 million in fees from medical
marijuana businesses seeking state licenses to operate. The money will
be used to fund the state's licensing program, which is still being
developed.

Whether the sales-tax revenue Fort Collins has received covers the
city's administrative costs for dealing with medical marijuana
dispensaries and cultivation operations is not clear, Freeman said.

The program has been funded by fees from medical marijuana businesses.
So far, the city has collected $18,000 in applications fees, said
Ginny Sawyer, administrator with neighborhood services.

Businesses are charged $500 to apply for a license and an additional
$700 when a license is issued. A business would have to pay a $700
annual inspection fee to keep its license. So far, the city has issued
eight provisional licenses.

The program requires significant staff time in several city offices,
Sawyer said. The clerk's office processes applications, in-cluding
mandatory background checks, and zoning officials determine whether
the proposed location of a business meets city regulations.

The police department and building office inspects potential
businesses to ensure they meet security requirements and adhere to
building codes. Some facilities have required more than one building
inspection, Sawyer said.

Officials are getting a better handle on the cost of the program and
might recommend higher fees, she said.

"I could see that changing in the future to make sure we are covering
our costs," she said.