Hayden Council cuts metropolis’s marijuana excise tax to three%

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Hayden Council cuts city's marijuana excise tax to 3%

Hayden Town Hall is located on US 40 in the heart of downtown Hayden. (Photo John F. Russell)

Hayden City Council voted not to change one regulation on marijuana and signaled a future change to another at the council meeting on Thursday.

The council decided not to amend a local ordinance that would restrict where another pharmacy can be opened in the city. Councilor Bob Reese had urged changes that would keep business off the US Highway 40 corridor, an area often referred to as Main Street by the council.

Reese said many residents he speaks to are not happy with the pharmacy they already have and want to narrow down where another might be in the future, but other council members said they haven’t received much public comment on the matter.

“When there are so many who are upset … I’m a bit surprised that we don’t hear from them here,” said Mayor Pro-Tem Tammi Engel, pointing out other local problems that have received a lot of feedback from the public during council meetings.

After more than a month of discussion in multiple meetings, only Reese voted to amend the regulation, which means the current restrictions remain in place. The council has signaled a willingness to amend another marijuana regulation to lower the local excise tax on city-grown pots.

Hayden-based Rodney McGowen, who runs a marijuana plant in Oak Creek, said community growing isn’t as rosy as it was in 2016. Then McGowen had no problem with the 7.5% excise duty that is on growing houses was raised as an opportunity to give something back to the community in which he lives.

But now, he says, it prevents him from running a profitable business, and while he’s started opening another grow house in Hayden, he wants the council to cut the excise duty to 3%.

“It’s an extremely challenging business where you’re always fighting something,” said McGowen, citing insects, equipment failures and a volatile market.

An excise tax isn’t a sales tax, but closer to an income tax, and McGowen said it only applies to cultivation. The state is already charging a 15% excise tax, and Hayden is adding 7.5%. For McGowen, that means he makes $ 77.50 for every $ 100 of marijuana he sells.

The 3% figure isn’t exactly scientific, McGowen said, but it’s the lowest figure he thought the council would accept. Other communities like Oak Creek and Steamboat Springs don’t impose an excise tax, and ideally, McGowen believes Hayden shouldn’t either, but sees his 3% request as a compromise.

“Three percent of something is much more than 7.5 percent of nothing,” McGowen repeated twice. “If you do, there is a good chance ours will grow. If you want more businesses like this, I would suggest you bring it down to zero. “

McGowen argues that lowering the tax will bring more benefits to the city as it will generate more local taxes and employ people in Hayden. The growth he is proposing at Hayden would have five rooms to grow plants and could generate up to $ 1 million in annual sales, meaning that his proposed 3% excise tax would make Hayden about $ 30,000.

McGowen also predicted that having multiple grows in Hayden would not be a problem, as much of the marijuana currently grown in Routt County is often shipped elsewhere in the state and the crops would not compete with one another.

“I’m ready to admit that 7.5% is too high, but I’m not ready to go to 0%,” said Councilor Trevor Gann.

Councilor Janet Hollifield agreed, adding that the city should be more competitive with other municipalities that do not impose excise taxes.

“I know we don’t just want to open the floodgates and be a marijuana town, and I don’t recommend that,” said Hollifield. “But if we want to build more businesses in the city without a pun intended, invite them for businesses to come.”

Reese suggested that the council cut the excise tax now on condition that the change be reviewed in a few years. But he and other councilors also wondered if this might deter companies who would be wary if the city raised the tax again after opening a business.

The council finally instructed city officials to work out an amendment to the ordinance reflecting a 3% cut in excise duty and present it to council meetings over the next few weeks. City Administrator Mathew Mendisco said if approved, the new ordinance would likely go into effect in May.