‘Feeding frenzy’ over $20 million in pot cash could sharply cut youth prevention

By Katie Kerwin McCrimmon

The promise of a flood of pot cash to fund youth prevention and treatment programs is in jeopardy after lawmakers decided Tuesday to spend just $20 million and wait until mid-2015 to see how much the state actually nets before handing out any additional marijuana revenues.

That decision to pare spending  buys Colorado officials more time to determine if they will have to refund millions in pot revenues because of the Taxpayer Bill of Rights, a 1992 voter-approved measure that requires government entities to return excess cash unless voters specifically allow them to keep it. (Click here to read Colorado may have to return millions in pot cash.)

Gov. John Hickenlooper in February predicted the state would rake in as much as $134 million in marijuana taxes by mid-2015 and wanted to spend about $100 million on prevention, public health and treatment programs right away, while devoting the rest to law enforcement. The governor’s budget chief this week cut his forecast for anticipated revenues to about $114 million, but members of the powerful Joint Budget Committee (JBC) said forecasts have been wildly variable and voted not to spend anticipated revenues until the state has collected them.

Students smoke pot during their lunch break outside East High School in Denver. Joe Mahoney - I-News at Rocky Mountain PBS.

Students smoke pot during their lunch break outside East High School in Denver. Joe Mahoney – I-News at Rocky Mountain PBS.

Now, a fierce fight is expected over how to spend the $20 million that JBC analysts predict the state will collect by the end of July 1, when a new fiscal year starts.

Unless the six members of the JBC can agree unanimously on exactly how to split that money, they will have to send a marijuana tax spending bill to the House and Senate where lobbyists are salivating over grabbing shares of the new pot funds.

“Let the feeding frenzy begin,” said Rep. Cheri Gerou, R-Evergreen.

Gerou wants an immediate focus on youth prevention, but worries colleagues will instead fund pet projects that could be unrelated to marijuana use.

February pot tax revenues

Excise revenues for recreational marijuana were half the expected levels, but licensing fees related to medical marijuana — which is taxed at a much lower rate — exploded.

Revenue department analysts had expected $739,330 in excise taxes for recreational pot and instead received $339,615. Meanwhile, licensing fees for medical marijuana generated $754,165, far more than the $383,490 that officials had expected.

Overall, pot revenues from all sources came in at nearly $4.1 million, just $9,000 short of the projected total.

“What kind of public health risks are we providing for our kids? Adults are on their own. They can do what they please, but I’m worried about the kids,” she said. “We know we saw an uptick in kids using (medical marijuana).”

The six lawmakers on the bipartisan JBC indicated they support measures to help state officials regulate the new recreational pot business, but they may veer apart after that.

Most endorsed a program that taps into Boys and Girls Clubs to prevent youth substance abuse. Named after an influential former lawmaker, those grants would come through the Tony Grampsas program.

“It’s a program that does work. It targets our most vulnerable (people). And when it comes to this subject, the youth are the most vulnerable,” Gerou said.

But JBC staffers recommended against spending $5 million on the Tony Grampsas grants and the governor pared his own request to $1.5 million. Even at a lower funding level, it’s not clear if JBC co-chair Rep. Crisanta Duran, D-Denver, would support it.

One of Duran’s priorities is finding a way to support banking services for marijuana businesses. Since marijuana is illegal under the federal government and the feds regulate banks, banks are refusing to provide services for pot businesses.

On the topic of ads discouraging impaired driving, Sen. Steadman, D-Denver, said more ads may not be “the most urgent thing to do.”

“I think we can pick and choose and prioritize,” said Steadman, who co-chairs the JBC.

Rep. Jenise May, R-Aurora, said she wants to find treatment and prevention programs that are proven to work and are already in place.

“I would hope the committee would weigh that first as opposed to starting something new. We’re not going to have $74 million or $50 million. I’m leaning toward small, but effective.”

The lawmakers’ decision to let the cash accrue before spending it could be a blow to Hickenlooper’s concept of immediately “ensuring a robust regulatory environment, preventing youth marijuana use, promoting public health … and providing substance abuse treatment to those in need,” as he wrote in a letter to JBC lawmakers last week.

Hickenlooper reiterated his desire to devote about $113 million to law enforcement, prevention and public health. He said he wanted lawmakers to “remain committed to two principles: 1) programming should have a direct or indirect relationship to marijuana use and 2) we should not create any situation where state or local government has an incentive to promote marijuana use.”

Despite Hickenlooper’s requests, JBC analysts have recommended against funding all but $15 million. (Click here to review the budget committee staff’s marijuana tax analysis.)

The staffers supported:

  • $10 million for youth substance abuse prevention
  • $414,000 so state officials could develop in-house expertise on regulations
  • $1 million for a public awareness campaign
  • $1.8 million for computer programming for the Department of Revenue to handle the influx of pot taxes
  • $1.9 million for a campaign to discourage impaired driving

Lawmakers can scrap both the governor’s proposals and their analysts’ recommendations and could decide on different priorities to fund.

The JBC members plan to discuss marijuana funding again on Thursday, then send a spending bill as soon as next week to the House or Senate.

“This is going to be quite the bill. The sooner we get started, the better,” Steadman said.

Gerou agreed.

“It’s going to be another circus.”


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