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The Town of Palisade has seen its sales tax revenues rise over the past two decades thanks in part to the opening of two retail marijuana stores a few years ago.
However, with Grand Junction now jumping into the cannabis industry, a large chunk has been taken out of a still relatively small pie.
Jesse Loughman — owner of the Colorado Weedery, which has locations in both Palisade and Grand Junction — said the impact to his Palisade store has been significant.
“I think people really like our brand, the store and how we do things,” Loughman said. “So I think we’re holding pretty strong market share over in Grand Junction. But as far as the Palisade market, it’s definitely a whole lot different than it was.”
Palisade Mayor Greg Mikolai said the impact to Palisade’s sales tax was easy to predict when Grand Junction recreational marijuana stores started opening late last year.
“I think the thing that I’ve never understood is this idea that by opening 10 stores that marijuana (demand) was going to increase tenfold,” Mikolai said. “It doesn’t work that way. If you’ve got a grocery store in a community and another grocery store opens, people don’t buy twice as much food.”
The Colorado Weedery was Palisade’s first recreational marijuana dispensary, opening in September 2017.
Loughman said he thinks convenience is also a factor when people decide where to buy cannabis.
“(Grand Junction) is obviously more convenient than driving into Palisade, but we’re still seeing all of our old-school regulars quite consistently, and we sure do enjoy that,” Loughman said. “I think we’ve always strived to give really good customer service and carry real high-end products, and I think it shows at the end of the day.”
The impact can be seen in the town’s sales tax figures, which can be found in the town’s annual audit. Last year was the largest amount of sales tax revenue generated in Palisade history at around $6.7 million.
In 2024, the town estimates it will collect around $5.1 million in total sales tax. State law prohibits a town with only two marijuana retail stores from releasing tax information specific to marijuana taxes and fees.
In June 2019, the Happy Camper Cannabis Co. officially opening, giving Palisade two marijuana retail stores.
A drop in sale tax will have future budget repercussions.
“You can see that the impact to a community like Palisade has been fairly dramatic,” Mikolai said. “(It) is going to impact primarily for us, I think, infrastructure and first responder needs. That’s the thing that concerns me.”
Over the past 20 years, the town has gotten help in increasing its sales tax collections in a few different ways.
In 2004, the town voted to increase its sales tax from 1% to 2%. Around the same time, Mesa County decided to start sharing some of its sales tax with the cities and towns. In the first full year of those two new policies, the town collected around $1.3 million in sales tax, according to town documents.
In 2012, the town began collecting a $5 fee on marijuana transactions at its lone medical dispensary, which — according to reporting from the Sentinel at the time — was estimated to bring in around $80,000 annually. By 2016, Palisade was collecting around $1.7 million in sales tax and fees. Voters then paved the way for a recreational store to open in 2017. In 2018, the first full year of recreational marijuana sales, the town collected $3.3 million in total sales tax with just the one dispensary.
The Supreme Court’s decision in South Dakota v. Wayfair in 2018 also had an impact on sales tax collections when it came to online retail sales, according to town officials.
By 2021, with the new Wayfair rules in effect and a second store opened for a full year, Palisade collected $6.1 million in sales tax.
That sales tax growth has helped the town grow its fund balance and provide matching funds for grants over the past few years, Mikolai said. Those grants, more than $16 million since 2018, have gone to projects like building the new medical center in town and tearing down the old high school and renovating the gym.
Looking at the impacts of Grand Junction’s cannabis industry carving away some of it’s sale tax, Palisade decided to go to the voters for some relief.
To address the drop in sales tax, the Palisade Board of Trustees asked voters to increase the town’s sales tax from 2% to 4%, which did not pass in November.
The town did not do enough to sell this increase proposal, Mikolai said. He said the board hasn’t yet discussed how to address the declining revenues since the vote failed in November.
Mikolai said it will be difficult for the town to address all of its infrastructure needs, like reconstructing Fifth Street, with the reduced revenue. He also cited rising wages for police officers and firefighters across Colorado as a challenge when hiring for the town’s public safety departments.
“It needs to be taken into consideration about what we need to do as a municipality moving forward to make sure that we provide those necessary services that a municipality needs to provide to its citizens,” Mikolai said.
As for Loughman, he said he doesn’t anticipate closing up shop in Palisade. He said the people of Palisade have been good to his business, though he said he questions some of the town’s decisions.
“I don’t think it’s a service that we need to take away from (Palisade),” Loughman said. “Our store will continue to operate there for quite some time, I’d imagine.”
”}]] The Town of Palisade has seen its sales tax revenues rise over the past two decades thanks in part to the opening of two retail marijuana stores a few years Read More
