Thread by @shayshinecastle

Moving SO FAST. Next item is the vaping tax. Slides: www-static.bouldercolorado.gov/docs/Item_5B_-…

I wrote about how this will impact pot shops, but the clarification is actually so the city can collect the tax from a whole bunch of retailers who sell vaping devices. boulderbeat.news/2021/06/11/bou…

That's because the current language explicitly says "tobacco retailers". But plenty of places sell vapes that's aren't explicitly tobacco retailers: Grocery stores, bars, liquor stores. And, of course, pot shops.

They're not happy about this, bc marijuana was not included. In fact, it was pretty explicitly excluded when this was passed.

But it still will be, the city is arguing. The marijuana itself won't be taxed, staff says — just the device it comes in.

It's a pretty hefty tax: 40% That's because it was meant to lower teen vaping, which is very prevalent 'round these parts.

The ballot title was literally tax on tobacco vaping products: boulderbeat.news/2019/10/18/bal…

The ballot language says the tax should apply to "ALL ELECTRONIC SMOKING DEVICES" (sorry; ballot issues are in all caps) as defined by the code.

How the code defines an ESD: "Any product containing or delivering nicotine … used by an individual to simulate smoking in the delivery of nicotine or any other substance."

Staff is focusing on those last four words: OR ANY OTHER SUBSTANCE, arguing that it should cover ESDs that deliver *any* product, not just tobacco or nicotine.

Pot shops obviously disagree.

I would expect some of them to speak tonight. Idk if they're signed up bc the city isn't posting public hearing speaker lists for some reason. If ya got it, send it to me.

Staff is arguing that the $$ impact of the tax isn't very big anyway, so pot shops should just pay it.

"Based on the gross sales reported by 28 recreational marijuana dispensaries in Boulder, sales of marijuana accessories account for … only 1.3 percent of gross sales.

“ESDs are only a portion of that 1.3 percent so do not account for a significant portion of gross sales.”

“For the eight smoking accessory and tobacco retailers that have been correctly paying the ESD tax since July 2020 through March 2021,” they wrote, “total gross sales have increased 18%."

Young asked about the ballot title, which includes the word tobacco.

That's an unofficial word, assistant city attorney Kathy Haddock says. All the "official" words didn't explicitly specify tobacco.

Here are two city webpages where marijuana is explicitly excluded: bouldercolorado.gov/vaping-and-tob…

And bouldercolorado.gov/tax-license/el…

Haddock: "This is a tax policy issue." Charging it only to tobacco retailers gives a competitive advantage to other places that sell vaping devices.

And not levying it on the device based on what goes into it turns it from a tax on the device to a tax on the substance, she says.

Here's how it will work to tax the device and not the substance: “The retailer would charge the normal 3.86 percent sales and use tax on both the device and the marijuana,” staff wrote in notes to council, “and an additional 40 percent tax on the ESD at the time of sale.”

Joel Wagner, a tax specialist with the city: Prices range from $4 to "hundreds of dollars" depending on the size and quality of the vaping device.

Tonight's ordinance doesn't change anything about the tax, Wagner says. It just clarifies who has to collect it.

I'm sure we'll hear more about it later, but some marijuana industry folks have argued that pot vapes can only be used for pot, bc of the viscosity of the liquid and the type of battery it uses. As a non-vaper, I really can't say.

But The Internet does seem to suggest that you *can* use SOME devices for multiple substances, but it's tricky. There *are* battery and viscosity concerns.

Some are single-use, Wagner says. The "larger, more expensive units" ($600+) are "more durable and flexible — they can be filled with many different materials and substances."

Wagner addressing industry claims about the specificity of devices: "I'm nowhere near expert but I'm learning a lot."

"What we've found is more confusion," Wagner says, because description of products often say they are not for illegal substances (bc pot is still federally illegal).

LOL You love to see stuffy elected officials and bureaucrats discussing vaping and weed products.

One of the companies who was testifying that devices are substance-specific used to market the same device as for tobacco and now markets it as for cannabis.

Kinda shoots holes in their claims.

Yates: The ballot title — official or not — was Tax on Tobacco Vaping Products. How is taxing these devices consistent with what voters saw in 2019?

Haddock: You'd have to read the whole thing to know what it's about. "Five words can't summarize all the words that are there."

The code says any product that simulates smoking of tobacco or any other products, Haddock says.

Yates: The things the money went for refers to nicotine retailer licensing and education. "How does that language square with a desire to expand this beyond nicotine?"

Haddock: Our intention was for it to be beyond nicotine, but "I can't argue with you and say this language was perfectly clear" and exactly as we'd want it to be. That's what we're trying to fix now.

Yates now reading the definition of ESD in the code, the first part of which specifically references nicotine.

"Obviously if we intended this to be cannabis, we would have mentioned that."

Yates: "I learned in law school a long time ago that ambiguities are interpreted against the drafter" — in this case, the city.

Haddock: That applies to contracts. With something like this... I'm not trying to argue with you. If council wants to make a dif decision, that's what we'll do. "You can always limit what the voters approved. You can't expand what the voters approved."

Haddock: It may be impossible to put ESDs in one category or the other for being used for nicotine or marijuana. ... We need to make sure everybody knows what we're taxing. It's not something we're determining at the staff level.

Yates: "I was on that council in 2019. It was my intention it be limited to tobacco. That's why we used the word tobacco and the word nictotine."

Yates: I can't speak for my other council members or the 35,000 ppl who voted for this, but I thought we were taxing tobacco and nicotine devices.

Brockett: Do we have a better understanding of which devices can deliver marijuana and cannot practicably deliver nicotine?

Haddock: Not having used these products, it's hard to say.

Basically, it depends.

Wagner: "It is a very complicated and diverse market. So, yes, there are certainly certain devices that a pod can only be used with a compatible device.'

But we're now allowing pot shops to sell CDB products. ONLY marijuana products are specifically exempt from the tax.

"When manufacturers are saying one thing and retailers another thing, that's a difficult place to build tax policy from," Wagner says.

Brockett: As a member of the council who passed this, our intent was specifically to curb nicotine and tobacco vaping by teens. Not cannabis.

Joseph: Not a fan of this proposed ordinance. It's too broad and sweeping, including things it wasn't intended to.

What's the state's definition of vapes? she asks. Wagner looking that up.

Joseph: The penalties for violations are "too broad and punitive."

Seemed confused that the penalty would be for possession, but it's for selling the device without charging the tax. Haddock clarifying.

It's $5,000 per occurrence, btw. And it would be for selling a device without the special license the city is requiring — except of pot shops, since they already have their own special license.

Weaver has done 30 min of internet research. Watch out.

I mean, so did I, so... No hate.

Sounds like he found what I did: Lots of instructions on how to vape nicotine using pot devices.

You gotta love when a city official says the word shatter.

Wallach: "I am amazed. The methodologies for consuming marijuana have certainly changed since I was in school."

I think he's saying he DID inhale.

Our first Wallach sigh of the night! Two in a row!

"I'm troubled by all of this," Wallach says. The tax clearly was intended for nicotine. "I think if we're going to regulate it, it has to be with the knowing consent" of the voters.

I don't think voters thought this was for anything but nicotine/tobacco, he says. "There's a certain degree of unfairness in trying to stretch the language to cover what it was not intended to cover."

If we want to go back to the voters and ask them if it should cover cannabis devices, Wallach says, we could do that. But it sounds like we're trying to stretch the blanket to cover everyone in the bed.

LMAO at that analogy.

Friend: Under TABOR, what legally can we capture at this point since there's a fair bit of confusion?

"I'm a little bit worried that if we try and tax something that wasn't clearly on the ballot, what's the ramification," Friend asks/says.

Haddock: "The issue about whether something is being taxed beyond what the voters did approve... I think we're really looking at trying to decipher what was meant."

"I'm not worried about losing the litigation."

Friend: "It feels like a little bit like we put a measure on saying we were going to tax shirts and then we're going to tax all clothes. TABOR wouldn't care about that?"

Haddock: I'm not sure that's a TABOR issue. It's a matter of interpretation, which is not really TABOR. (But still a legal issue)

Moving to the public hearing. I don't have a list, so I have no idea who all signed up. Anybody got that list???

Fewer than 15 ppl, Weaver says.

This is Bonnie Dahl from the Fitter on the Hill. She is "very opposed" to this proposals. Stopped carrying nicotine vapes after the city ordinance/tax, and only sells cannabis vapes now.

The city wants to require her to get a specific license to be able to sell cannabis vaporizers, which is costly and onerous. "They're not interchangeable," Dahl says. "The delivery system should not be the focus."

References the VERY LONG discussions on this tax and other vaping ordinances she (and I) sat through. "Marijuana was never part of this."

Elisabeth Zukowski is speaking for a few retailers, including Terrapin Care Station and The Dandelion. "All public-facing information available to voters was around nicotine vaping."

That's what voters understood, Zukowski says. So this is an extension/expansion. "Honor the spirit" of the tax by exempting ESDs that are not for tobacco or nicotine use. Pot shops are legally barred from selling tobacco or nicotine products.

Andrea Meneghal from the Chamber: "Voters were not asked, nor did they approve, nor did the ballot language indicate" that this would apply to cannabis devices.

This would be "a rather egregious TABOR violation," Meneghel says. (correx on the surname spelling in the previous tweet)

Jason Dahl, also of The Fitter: It's hard to believe you'd want to expand this tax when you're not even enforcing the flavor ban.

The word "bong" was just uttered in this Boulder city council meeting, probably not for the first time.

Colt Stander from Pax (a device maker) is clarifying something said earlier: It is NOT the parent company of Juul (anymore — it was).

Stander: We make devices ONLY for cannabis. They are not compatible with nicotine or tobacco, and protect against use of those products. The ad from 6 years ago is not representative of our company today.

The two products you were shown depends on pre-filled pods, available only at dispensaries. Without them, they're just a battery. You can't refill pods or purchase empty ones. They won't work bc of the difference in viscosity.

"To say that these products are separate is an understatement," Stander says.

Getting really in the weeds now. No pun intended.

Also, I know it works in their favor in this case, but boo to companies making products that you can't reuse or refill. That's wasteful, bad for the environment and a total cash-grab move from a company!

Weaver: You claim the temperature range of nicotine vaping devices are different from cannabis vaping devices. What are the temp ranges?

He asked about Juul specifically, but the dude says he doesn't know bc it's proprietary information. It doesn't matter bc Weaver already knew the answer.

LOVE when elected officials ask questions they already know the answer to, to make a point. Several council members do this ALL THE TIME.

More discussion on temperature ranges. Riveting stuff.

Stander: We stop at a certain temp bc it's "not optimal" for cannabis.

That was a lot of what I found on The Interwebs RE: interchanging substances in devices: You can do it, but it's not ideal.

LOLOL Weaver asking a question that ends with "Would it vaporize that?"

Reminded me of this:

This has really gone off the rails.

Stander now explaining what a dab is to the Mayor of Boulder.

The Mayor of Boulder should absolutely know what a dab is.

I am having such a good time right now.

Weaver: "I won't read you all the posts I found where ppl talk about using the Pax 3 to smoke tobacco."

Friend, giggling slightly: "It would appear we're not experts in modern cannabis vaping and use."

This was supposed to be a quick clean-up "and it's no longer feelings like a quick cleanup," she says.

Did this go to CLAB? (the cannabis board) Friend asks.
No, Haddock answers. We didn't think of this as a marijuana issue; it's a taxing issue. What would we be asking them?

Friend: "Are these devices being used in ways that we are missing and should be taxed? It doesn't feel like it's strictly a legal interpretation question at this point."

Brockett: I appreciate the cleanup, but I feel the intent was on tobacco vaping devices. The ballot title includes the word tobacco; it seems like a voter would probably be pretty clear that this was a tax on tobacco.

Likes an industry proposal: Do the cleanup, but the definition of ESD should be amended to say that it doesn't include any device that cannot be used for tobacco.

IDK if it's the lighting or what, but Wagner straight up looks like the ghost of a tax accountant who lived a very boring life and therefore chose to return to earth in a spectral form to experience worldly pleasures.

Anyway, back to the discussion.

Friend has some issued with Brockett's proposal. "Cannot" carries a lot of weight if those devices that cannot be used for tobacco are exempt. Because maybe they can be, but the industry says no...

Which, of course, bc they don't want them to be taxed. But also maybe they can't be... So hard to say as a non-expert.

Yates: It's not perfect, but what other option do we have?
We've heard some really convincing testimony from ppl who make and sell these products. We've heard from staff based on a 2015 website.

I'm not willing to extend this tax, Yates says. "The common understanding was this was a tobacco device tax." We get into some pretty serious TABOR territory if we extend it.

I don't get why they don't just exempt retailers of cannabis, since they're legally barred from selling any tobacco products! Just write that!

Joseph: If it's nicotine and tobacco, just make it nicotine and tobacco. Take out the language in the code that says "any other product" upon which staff's argument hinges.

That was included to capture products marketed as nicotine-free, kinda like you can get "caffeine-free" coffee.

Young: "The voters voted with a certain intention."

Young on board with Brockett, Yates in exempting products that cannot be used for tobacco or nicotine, which to me seems like a sloppy fix.

Friend thinks so, too. "If we are going to put language in that gets at delivery, I think we should go to CLAB. ... I just wonder if we're over-complicating."

A better wording would be any device THAT IS NOT INTENDED to be used for tobacco or nicotine.

Cannot is so tricky, bc what does that mean? Intent is controlled at the manufacture level. It sounds like many of the interchangable uses are after-market, at the user level.

Young makes a motion, though, with the CANNOT language. Yates seconds.

Joseph: "Has this proposal been vetted by our legal staff?"
No, Haddock says. "We'd have to figure out if this is something we could enforce."

Joseph won't support. Send it to staff to work on, she says.

Yates: I don't want to delay or send this to CLAB. "Let's put this to bed if we can."

And basically bring it back for a third reading on consent, since the original language been amended.

Weaver: "I don't think this language changes a single thing we're talking about." But he's gonna vote for it.

LOLOL "Of course a lawnmower can be used to smoke marijuana in some way," Weaver says.

I've never tried, but thanks for the idea.

Weaver: "A reasonable person would say a lawnmower couldn't be used for that, but a reasonable person could easily look at one of these devices and think you could smoke nicotine with it."

Young also wants to send it to CLAB.

Wallach, too: I'm reluctant to accept third-party assurances (particularly when that third party benefits from not being taxed). I'd hope staff takes this language as illustrative but not set in stone.

So sounds like a formal vote is off; they're just giving direction to staff to come back with a different proposal.

And don't charge the tax on pot shops in the meantime, Yates says.

Moving on. @threadreaderapp please unroll. Thank you!