April 21, 2019

Colorado Court of Appeals: County Lacked Authority to Impose Special Tax on Recreational Marijuana

The Colorado Court of Appeals issued its opinion in City of Northglenn v. Board of County Commissioners on Thursday, December 15, 2016.

County Special Sales Tax—Retail Marijuana—Home Rule Cities—Standing.

In 2014, Adams County (County) voters approved a resolution authorizing the County to levy a countywide special sales tax on retail marijuana. Three home rule cities (Cities) in the County challenged the tax, claiming that it was unauthorized by Colorado law. The Cities sued the County, seeking an injunction and declaratory judgment against the tax, and the County moved to dismiss for lack of standing and for failure to state a claim upon which relief could be granted. The district court held that the Cities had standing and concluded that there was sufficient legislative authority to support the countywide special sales tax. The court converted the County’s motion for failure to state a claim upon which relief could be granted into a motion for summary judgment and granted summary judgment to the County.

On appeal, the County argued that the district court erred in determining that the Cities had standing to bring their claims. Here, the County’s special sales tax likely would harm the fiscal interests of the Cities by reducing their tax revenues. In addition, the fiscal integrity of a home rule city is a legally protected interest of the city, and the tax would harm the fiscal integrity of the Cities. Thus, the district court correctly held that the Cities had standing.

The Cities argued that the retail marijuana sales tax did not expressly grant the County authority to impose a special sales tax and, therefore, the tax was invalid. A county has no power to impose a tax unless the General Assembly or the Colorado Constitution directly authorizes it. Here, the County made no claim of authority under the Colorado Constitution, and the retail marijuana sales tax did not grant the County express authority to enact its special sales tax. Because the County did not have either constitutional or statutory authorization to impose a special sales tax on retail marijuana, the Adams County special sales tax is invalid.

The judgment was reversed.

Summary provided courtesy of The Colorado Lawyer.

Print Friendly, PDF & Email

Speak Your Mind

*