Governor Jared Polis appeared on the cannabis podcast Weed Wonks on Nov. 2 outlining the scope of his 2024-2025 budget proposals and sharing his plans to keep Colorado at the very center of the U.S. cannabis industry once prohibition is finally ended.
“As this becomes more of a national and global industry, our goal in Colorado would really be to be at the center of it,” the governor said in the interview. Right now, that’s difficult under the umbrella of the federal prohibition. But Polis plans for the state to keep leading on cannabis policy, and the marijuana proposals he’s included in his budget are a big part of it.
The proposed budget was unveiled on Nov. 1. It asks the legislature to appropriate millions of cannabis tax dollars for workforce development, licensing and industry investment in lower-income areas that have been more directly affected by the war on drugs.
“Colorado has kind of what you call a ‘first-mover advantage’ in this space, where we were one of the first states [to legalize],” Polis said. “But you can never get complacent, and we want to continue to be a leader in the legal cannabis market.”
Polis’ budget asks for $5 million annually “in perpetuity” to support the Office of Economic Development and International Trade’s (OEDIT) Cannabis Business Office (CBO). That division was created in 2021 by SB21-111 (Program To Support Marijuana Entrepreneurs) and received one-time funding from the Marijuana Tax Cash Fund.
OEDIT creates new opportunities for economic development, local job creation and “community growth,” according to its website. Importantly, it also links loans and grants that are not available at the federal level to companies in this sector. In the last two years, it has dispensed social equity grants and loans to dozens of cannabis businesses that are just getting off their feet.
Polis called for another $3 million in his proposed budget for the state’s Marijuana Enforcement Division (MED) to enable faster license processing. The MED has not historically been able to keep up with Colorado’s cannabis business license demand because the process was solely funded with licensing fees. Now the state will have significantly more resources at its disposal to clear up licensing backlogs and start turning them around quickly, according to the governor.
Another $2 million in tax credits would help cannabis businesses operating in Colorado’s 16 economically distressed “enterprise zones.” These zones were designated by OEDIT based on high unemployment rates, low per capita income, and/or slow population growth. The funding would enable cannabis businesses in these zones to access tax credits that are available to businesses in other traditional sectors.
“We’re trying to make sure that cannabis industries can participate in the same kind of favorable tax considerations as other industries,” said Polis.
However, given the continued federal prohibition of cannabis and its status as a Schedule I narcotic, states can only help businesses cover those costs so much. Polis specifically pointed to the IRS code 280E, which prevents cannabis businesses from making legal deductions on their federal taxes. Colorado has its own statute in place that allows cannabis businesses to make state tax deductions. But, as Polis pointed out, federal taxes are usually much higher.
That’s why Polis, along with many senators and representatives, strongly supports the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which is awaiting a Senate vote for the first time in its long history on Capitol Hill (Weed Between the Lines, “Banking on it,” Oct. 12, 2023).
“We’ve got to get what’s right there in front of us,” Polis said. “Let’s get these things done, and then we’ll start fighting again tomorrow on the next phase.”
Until those changes are made at a federal level, the best Colorado and its governor can do is continue the fight at home. Polis intends to stay at the tip of the spear when it comes to cannabis policy in the U.S.
“We need to continue to innovate because obviously, many other states have caught up with where we are from a basic legalization of commercial and medical perspective,” the governor said. “That’s no longer as innovative as it was at the time when we did it.”
