[BoulderCouncilHotline] Re: Seating a Marijuana Advisory Board

[Doelling, Kady]

Council Member Young –
Thank you for your inquiry into revenue received by retail marijuana business owners. There are two pieces to marijuana revenue that the city receives. First, the city directly receives revenue for medical and recreational marijuana through sales/use tax, excise taxes, license fees, and state share back revenue. The other source, the Energy Impact Offset Fee, is currently collected by the county and transferred in to the city. The two sources have different intents on use and are broken out as such below.


  1.  What is the total revenue that the city receives from these businesses? Please breakdown by excise, sales and EIOF (Energy Impact Offset Fund).


2017 Ongoing Revenue
Medical Marijuana 3.86% Base Sales/Use Tax               621,660
Recreational Marijuana 3.86% Base Sales/Use Tax      1,748,454
Total Ongoing Marijuana Revenue $  2,370,114

2017 One Time
Recreation Marijuana 3.5% Additional Sales/Use Tax           1,525,906
Rec Marijuana 5% Excise Tax              922,447
State Shared Marijuana Revenue           643,562
Recreational Marijuana License           398,191
Total Onetime Marijuana Revenue $  3,490,106

2017/2018 County Revenue Collected for the City
Energy Impact Offset Fee (EIOF)          524,572
Total EIOF Revenue      $     524,572



  1.  What is the language in the ordinance that specifies the acceptable uses of those funds?

City Collected Excise Taxes
3-14-1. - Legislative Intent.
The city council intends that an additional excise tax be imposed on the first sale or transfer of recreational marijuana by a retail cultivation facility within the city and an additional sales tax imposed on every retail sale of recreational marijuana or recreational marijuana-infused product. The purpose of this tax is to increase the revenue base for the city to provide municipal improvements and services related to the introduction of a new marijuana industry to the city. Revenues from the tax shall be deposited in the general fund and shall be available to pay for the general expenses of government. However, although the city council recognizes that it cannot bind future city councils, it nonetheless declares its intention that sufficient revenues generated by this tax be appropriated by future city councils for public safety, enforcement and administrative purposes and for comprehensive substance abuse programs including, without limitation, prevention, treatment, education, responsible use, intervention, and monitoring, with an emphasis on youth with the remainder used to fund other governmental expenses including police, fire, libraries, transportation, and general government. Each council shall decide what constitutes sufficient funds. As used here, sufficient shall mean an amount determined by council to balance the revenue received with the established need in the community for programs to address the subjects identified above.
Ordinance No. 7916 (2013)

County Collected Energy Impact Offset Fee
6-14-8(i) and 6-16-8(i) state "Renewable Energy Requirements. A marijuana business shall directly offset one hundred percent of its electricity consumption through a verified subscription in a Community Solar Garden, or renewable energy generated onsite, or an equivalent that is subject to approval by the city…"

As the EIOF is a fee, rather than a tax, use of revenues collected is restricted legally to those expenses directly associated with the basis for that fee.  In this case, the basis of the fee is offsetting the greenhouse gas emissions impact of the marijuana business as dictated by the renewable energy requirement in the ordinance.  Thus, the fees collected will only be used for costs associated with achieving the offset.  This would include the actual costs of implementing projects, as well as city administrative costs associated with managing the fund and managing offset projects.

Further guidance for use of the funds stems from:
- May 12, 2015 Study Session<https://documents.bouldercolorado.gov/weblink/0/doc/129025/Electronic.aspx>: Overall Climate/energy memo that highlights the formation of the EIOF
- March 7, 2017 Meeting<https://documents.bouldercolorado.gov/WebLink/0/edoc/141309/3K_City-County%20Energy%20Impact%20IGA.pdf?_ga=2.47914919.1833930406.1540221564-454690168.1539988513>: Council approval of the IGA between the city and county, for the county to invoice and collect the city’s EIOF payments
- Sept 11, 2018 Study Session<https://documents.bouldercolorado.gov/WebLink/0/edoc/166621/Agenda_2018_9_11_Meeting.pdf>: As part of the Budget study session, staff provided an update on the EIOF, including a consultant report outlining preliminary options for use of the funds
- Additionally, use of the fees will be further discussed on a council meeting on February 5, 2018.


3. What do each of these taxes currently fund and by how much?

City Collected Marijuana Revenue
All city collected marijuana revenue is deposited into the General Fund. The portion of ongoing revenues received cover any ongoing costs within the General Fund.
Since it is in the General Fund, the budget by type of revenue is not broken out.

One time marijuana dollars support:

  *   1.70 FTE for Licensing - $145,486
  *   FTE Police Officer - $112,161
  *   FTE Fire Inspector - $128,881
  *   FTE Human Services Program Manager - $100,794
  *   0.5 FTE Code Compliance Inspector - $29,737
  *   0.2 FTE Business Sustainability Coordinator - $21,411
  *   $250,000 for Educational Programming

Total = $788,470

Most of recreational marijuana is considered one time revenue and therefore, funds other one-time expenses after covering administrative costs of enforcement/education listed above.

Energy Impact Offset Fund
There have been no expenditures to date other than $50,256 to Boulder County for their cost for administering the fund. $350,000 from the fund was appropriated for the 2019 city budget. As noted in the study session memo "For the 2019 budget, the city has appropriated $350,000 of the EIOF revenue from Boulder County to support the development and initial implementation of the chosen options. The balance of the EIOF revenues will be appropriated as needed in future budget requests for the EIOF project(s) identified in the business plan."

Staff are in the process of developing a business plan for use of the funds.  A stakeholder engagement process is part of the development effort, as are some limited scope pilots.  The entire business plan development effort is funded through CAP Tax, not the EIOF.  Once the business plan is completed, this will be presented to Council at the time the city seeks to appropriate the balance of the fees collected to date.

Please let me know if you have further questions.

Kady

Kady Doelling
Executive Budget Officer
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-----Original Message-----
From: Young, Mary <YoungM at bouldercolorado.gov>
Sent: Thursday, January 17, 2019 2:20 PM
To: HOTLINE <HOTLINE at bouldercolorado.gov>
Subject: Seating a Marijuana Advisory Board

Dear Colleagues, Community and Staff,

Yesterday, I met with a retail marijuana business owner. The conversation brought the need for several ordinance clarifications/potential changes to my attention.

While these items need to be addressed, the changes should not occur in isolation, lest we regress to our previous non-optimal approach. I bring this up because one item that that came up at our pre-retreat study session was that of seating a Marijuana Advisory Board (MAB). I support this suggestion for the reason stated above, changes should be considered holistically. Also, the industry continues to evolve and some business owners have now held on to their the businesses long enough that they wish to sell and their ability to do so at a fair value is affected by policies that could be updated. In short, businesses are not receiving fair treatment as per the intent of Amendment 64, that is that they be regulated in a manner similar to alcohol.

In preparation for a discussion on seating a MAB, I have the following questions:
1. What is the total revenue that the city receives from these businesses? Please breakdown by excise, sales and EIOF (Energy Impact Offset Fund).

2. What is the language in the ordinance that specifies the acceptable uses of those funds?

3. What do each of these taxes currently fund and by how much?

Thank you. I look forward to our discussion.

Mary Dolores Young
Boulder City Council
303-501-2439

“We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” ~Martin Luther King Jr.

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