In 2014, following the legalization of marijuana across the state, Avon passed an ordinance banning marijuana businesses in town. However, last fall, members of the City Council‘s Planning and Zoning Commission expressed a desire to reevaluate the ban.
At the November 16, 2021 meeting, board members and P&Z members supported the idea of allowing a finite number of recreational marijuana businesses to come into town. However, there was less support for allowing any grow or test facilities for the sake of smell and that the facilities would run counter to the city’s climate action initiatives.
This shift in attitude was based on two main reasons, supporters said. First, time has shown that many of the community’s fears about legalization have not materialized. And second, that the proximity and permitting of marijuana retail at EagleVail — many of which have Avon addresses — will result in no change in perception and usage among visitors and residents if Avon lifts its moratorium.
Ultimately, by allowing retail stores in Avon, the city could pose a tax question to voters, possibly as early as November 2022. Avon City Council is expected to hold a business session on the tax’s potential – as well as other considerations. on business authorization – at its meeting on Tuesday 10 May.
The state of Colorado has three taxes for retail marijuana: a 2.9% retail sales tax, a 15% recreational marijuana retail tax (10% of which is distributed to local governments), and a 15% excise tax ( intended for the construction of Colorado public schools). In addition to these taxes, local municipalities may also impose and collect their own retail marijuana sales and/or excise taxes.
According to a May 10 Avon City Council package report“City staff found that a 5% local marijuana tax was the most common rate for municipalities in the state,” and then compared those taxes between neighboring communities.
The report identified that for retail marijuana purchases – in addition to state taxes – the City of Eagle has a 4.5% sales tax and a 2.5% marijuana tax; Breckenridge has a 2.5% turnover and a 5% marijuana tax; Carbondale has a 3.5% sales tax and a 5% marijuana tax; Silverthorne has 2% sales and 5% marijuana tax and Basalt has 3% sales and 5% marijuana.
On Tuesday, the council is expected to discuss not only what an appropriate tax might be, but also how the tax funds would be used.
If council decides to pursue a ballot issue for the November election, the city has until August 23 to pass a resolution certifying the contents of the ballot to the county clerk for the November 8 general election.
At the November 2021 city council meeting, council members also expressed a desire to educate the public – including with business owners – as part of any process to license vending businesses. marijuana retail in town. This should be part of any voting process, should the board decide to proceed in this direction.
Smooth out the details
Besides the question of a tax, Tuesday’s working session will also include the assessment of some land use controls and licensing regulations. This includes potential location, licensing, and aesthetic requirements.
Federal, state, and county governments all have a number of requirements for permitted locations of marijuana retail businesses. This includes, primarily, buffer zones between potential retail locations and features such as drug treatment centers, community centers, schools, parks, playgrounds, etc.
Given these buffers, the report identifies “there are commercially zoned parcels likely to house marijuana businesses between Avon Road and Chapel Square in ‘East Avon’ and the small area of neighborhood commercial zoned parcels near the Interstate 70” interchange.
The package also plans to limit the number of licenses to two for the city – in response to a request to do so that was made by all council members and commissioners at the November 2021 meeting.
In addition to these types of location requirements, the report includes some possible aesthetic requirements that could be added to the zoning requirements for retail marijuana. These may include certain signage requirements, lighting standards, store names, storefront design and more.
As the council debates all of these details, the package considers three options for the council to proceed with bringing retail marijuana to the city. This includes postponing the action until next year; the introduction of an ordinance with land use controls and tax-free licensing regulations; or continue the voting process to introduce a marijuana tax for voters this fall.
Building Use Tax
Also at its Tuesday meeting, Avon’s board will revisit the possibility of a 4% building use tax, something it had considered introducing to voters in November 2021. Ultimately, this use tax was discarded in favor of a short-term rental tax – which voters approved in the election. Now council members will decide whether or not to present this tax to voters in November.
A tax on the use of building materials would be collected at the time of the issuance of a building permit by the city and would use a predetermined formula to calculate the construction value and therefore the tax. Generally, building use taxes calculate a use tax based on 50% of the value of the building. Once the use tax is collected, a construction would be exempt from paying additional sales taxes on materials related to the permit.
Since council last considered the 4% Building Materials Use Tax, City staff are proposing two main changes. The first is that the funds would no longer be earmarked for community housing as was the case initially. Indeed, the tax on short-term rentals adopted now meets this need.
Second, to limit the impact on local residents, staff recommends allowing an exception for projects requiring a building permit under $50,000.
Avon is the only municipality in Eagle County without such a use tax: Eagle, Minturn and Vail all have a 4% use tax and Gypsum and Red Cliff both have a 3% use tax. According to a May 10 package report, the tax has a number of benefits. This includes reducing the burden of tax collection (compared to sales tax); keeping business at Avon; reduce the tax obligations of subcontractors and more.
Tuesday’s meeting begins around 6:30 p.m. Meetings are held in person at Avon City Hall (100 Mikaela Way) or online via Zoom. To participate online, register at Avon.org.
Journalist Ali Longwell can be reached at [email protected]