MANITOU SPRINGS, Colo. (KOAA) — Manitou Springs is feeling the financial impact of Colorado Springs' recent legalization of recreational marijuana sales, with city officials already grappling with a significant decrease in tax revenue.
"The Manitou share of the market has changed substantially," said Manitou Springs Mayor John Graham.
For years, Manitou Springs was home to the only two recreational marijuana dispensaries in the area, creating almost a regional monopoly that city officials say generated approximately 30% of the city's sales tax revenue.
Philip Fralick, a Colorado Springs resident, continues to shop at Manitou's dispensaries despite new options closer to home.
"I always come here, because this is where I go," Fralick said.
But many other customers have shifted their spending to Colorado Springs, where numerous dispensaries have opened "rec" sales since its legalization.
"We pretty much figured it would be legalized sooner than it has been," Graham said.
To remain competitive, Manitou Springs slashed its recreational marijuana sales tax from 10% to 5%, further reducing revenue.
"We're now two of 34 [dispensaries], something like that," Graham said.
The city had previously used marijuana tax revenue to build up reserves exceeding $8 million and fund various infrastructure projects, including improvements to the city's aging water treatment plant.
"Our water treatment plant is 40 years old, so we went in there and took a look at it," Graham said. "We added a new ambulance service. It's kind of like, when you win the lottery, you pay off your car and so forth."
While consumers are seeing significant price drops—Fralick noted that a battery and cartridge that previously cost $90 now costs just $40—the city will need to be more conservative with spending.
"The wishlists are gonna stay wishlists," Graham said.
City officials are considering alternatives to make up for lost revenue, including potential increases to the excise tax on tourism attractions like the Cog Railway or raising parking rates throughout the city.
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