Colorado Proposition EE, Tobacco and E-Cigarette Tax Increase for Health and Education Programs Measure (2020)

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Colorado Proposition EE
Flag of Colorado.png
Election date
November 3, 2020
Topic
Tobacco and Taxes
Status
Approveda Approved
Type
State statute
Origin
State legislature


Colorado Proposition EE, the Tobacco and E-Cigarette Tax Increase for Health and Education Programs Measure, was on the ballot in Colorado as a legislatively referred state statute on November 3, 2020. It was approved.

A "yes" vote supported creating a tax on nicotine products such as e-cigarettes, increasing cigarette and tobacco taxes, setting minimum cigarette prices, and dedicating revenues to various health and education programs. 

A "no" vote opposed this measure creating a tax on nicotine products such as e-cigarettes, increasing cigarette and tobacco taxes, setting minimum cigarette prices, and dedicating revenues to various health and education programs. 


Aftermath

On October 15, 2020, Liggett Group LLC, Vector Tobacco Inc., and Xcaliber International Ltd., LLC filed a lawsuit in United States District Court for the District of Colorado alleging that the fixed minimum price for a pack of cigarettes created by Proposition EE violates the Commerce Clause of the U.S. Constitution. On December 28, 2020, U.S. District Judge Raymond P. Moore denied the plaintiffs' request for a preliminary injunction. Plaintiffs also filed a lawsuit alleging that Proposition EE violated Colorado's single-subject rule, which requires initiatives to concern a single subject. Both lawsuits were ongoing as of October 1, 2021. For more information, click here.

Election results

Colorado Proposition EE

Result Votes Percentage

Approved Yes

2,134,608 67.56%
No 1,025,182 32.44%
Results are officially certified.
Source


Overview

What did Proposition EE do?

See also: Measure design

This measure was designed to incrementally increase cigarette and tobacco product taxes and create a new tax on nicotine products such as e-cigarettes. In Colorado, cigarettes have been taxed at a statutory rate of 20 cents per pack (one cent per cigarette). Additionally, Amendment 35 of 2004 authorized an additional constitutional tax of 64 cents per pack (3.2 cents per cigarette), for a total state-levied cigarette tax of 84 cents. The ballot measure was designed to incrementally increase the statutory cigarette tax rate to $1.80 per pack by July 2027, thereby increasing the total state-levied cigarette tax to $2.64 per pack. Proposition EE was also designed to set minimum price requirements for cigarettes.

In Colorado, tobacco products (cigars and tobacco designed to be chewed or smoked in a pipe) have been taxed at a statutory rate of 20% of the manufacturer's list price (MLP) and a constitutional rate of 20% of the MLP for a total rate of 40% of the MLP. The measure was designed to incrementally raise the statutory tax rate by 22 percentage points by July 2027 for a new total state-levied tobacco products tax rate of 62% of the MLP.

Prior to Proposition EE, in Colorado, nicotine products such as e-cigarettes were not taxed. The ballot measure creates a tax on nicotine products that would match the tobacco products tax rates. The rate bagan at 30% of the MLP in 2021 and was set to increase gradually to 62% of MLP by July 2027.

Revenues were set to be dedicated to health and education programs including the following:[1]

  • Preschool programs cash fund;
  • State education fund;
  • Rural schools cash fund;
  • Housing development grant fund;
  • Tobacco tax cash fund;
  • Tobacco education programs fund;
  • State general fund.

How did this measure get on the ballot?

See also: Path to the ballot


This measure was sponsored in the Colorado State Legislature by Democratic state representatives Yadira Caraveo and Julie McCluskie and Democratic state senators Rhonda Fields and Dominick Moreno. The measure was passed along party lines with Democrats voting in favor and Republicans voting against, except for three House Republicans and one Senate Republican that joined all Democrats in voting in favor. Due to the Colorado Taxpayer Bill of Rights (TABOR), statewide voter approval is required to enact this legislation because it seeks to increase government revenue at a faster rate than the combined rate of population increase and inflation (the TABOR limit).

Who was behind the campaigns surrounding this measure?

See also: Campaign finance


A Brighter, Healthier Future for Colorado's Kids and Save the Children Action Network (SCAN) registered to support Proposition EE. The committees reported $4.72 million in contributions and $4.69 million in expenditures. SCAN gave $250,000 to A Brighter Healthier Future for Colorado's Kids. To avoid double-counting funds, Ballotpedia subtracted $250,000 from SCAN's contributions and expenditures.[2]

No on EE-- A Bad Deal for Colorado registered to oppose Proposition EE. The committee reported $4.54 million in contributions and $4.54 million in expenditures.[2]

Measure design

This measure increased cigarette taxes and tobacco product taxes and creates a new tax on nicotine products such as e-cigarettes. Under the measure, revenues were set to be dedicated to various health and education programs. Click on the links below to expand the sections.[1]

Tax rate changes and new taxes: Cigarette tax and tobacco products tax increase, and new nicotine tax, etc.

Cigarette tax increase

In Colorado, cigarettes have been taxed at a statutory rate of 20 cents per pack (one cent per cigarette). Additionally, Amendment 35 of 2004 authorized an additional constitutional tax of 64 cents per pack (3.2 cents per cigarette).

The 2020 ballot measure incrementally increased the statutory cigarette tax rates as follows:[3]

Jan. 1, 2021- July 1, 2024 July 1, 2024, - July 1, 2027 July 1, 2027 - N/A
Cigarette tax as of 2020[4]$0.84$0.84$0.84
Increase to statutory tax rate$1.10$1.40$1.80
New total tax rate$1.94$2.24$2.64

Tobacco products tax increase

In Colorado, tobacco products have been taxed at a statutory rate of 20% of the manufacturer's list price (MLP) and a constitutional rate of 20% of the MLP for a total rate of 40% of the MLP. Tobacco products include cigars and tobacco designed to be chewed or smoked in a pipe.[5]

The 2020 ballot measure incrementally increased the statutory tobacco product tax rates as follows:[3]

Jan. 1, 2021- July 1, 2024 July 1, 2024, - July 1, 2027 July 1, 2027 - N/A
Tobacco products tax as of 2020[6]40% of MLP$40% of MLP40% of MLP
Increase to statutory tax rate10% of MLP16% of MLP22% of MLP
New total tax rate$50% of MLP56% of MLP62% of MLP

New tax on nicotine products

Prior to Proposition EE, in Colorado, nicotine products such as e-cigarettes were not taxed. The ballot measure creates a tax on nicotine products designed to match the tobacco products tax rates, as follows:[1][3]

  • 30% of MLP in 2021;
  • 35% of MLP in 2022;
  • 50% of MLP from Jan. 2023-June 2024;
  • 56% of MLP from July 2024-July 2027; and
  • 62% of MLP from July 2027 and thereafter.

Those who distribute nicotine products need to have a license, which costs $10 per year. Licensees need to have tax licenses and retain certain records about nicotine product inventory.[1]

Modified risk tobacco products

Modified risk tobacco products (MRTP) are defined under 21 U.S. Code Sec 378k as "any tobacco product that is sold or distributed for use to reduce harm or the risk of tobacco-related disease associated with commercially marketed tobacco products." The measure creates a separate tax for products that are authorized to be commercially marketed as MRTPs by the U.S. Department of Health and Human Services. Products with modified risk orders may be found here.[1][3]

Cigarettes that are given MRTP status are to be taxed at the following rates per cigarette:

  • $0.325 from January 2021-June 30, 2024;
  • $0.04 from July 1, 2024-June 30, 2027; and
  • $0.05 from July 1, 2027 and thereafter.

Tobacco products that are given MRTP status are to be taxed at a rate of 15% of the manufacturer's list price (MLP) from January 2021-June 2024, 18% from July 2024 to June 2027, and 21% after July 2027.[1][3]

Nicotine products that are given MRTP status are to be taxed at the following rates:

  • 15% of the manufacturer's list price (MLP) from January 2021-January 2022;
  • 17.5% of the MLP from January 2022-January 2023;
  • 25% of the MLP from January 2023-June 30, 2024;
  • 28% of the MLP from July 1, 2024-June 30, 2027; and
  • 30% of the MLP from July 1, 2027, and thereafter.

Moist snuff minimum tax rate

The measure requires a minimum tax rate on moist snuff for each 1.2oz can as follows:[1][3]

  • $1.48 from January 2021-June 2024;
  • $1.84 from July 2024- June 2027; and
  • $2.26 from July 2027 and thereafter.

Vender allowance rate change

Cigarette and tobacco product distributors can retain a portion of tax money due (referred to as a vendor allowance) if they file taxes on time. The measure reduces the vendor allowance for tobacco distributors from 3.33% to 1.6% and for cigarette distributors from 4% to 0.4%. The measure allows nicotine distributors to retain a vendor allowance of 1.1%.[1][3]

Cigarette minimum prices: Minimum cigarette sale prices, civil penalties (fines)

Mimimum pack of cigarettes price

The measure sets a minimum price that a retailer could sell a pack of cigarettes for. The minimum prices are as follows:[1][3]

  • $7.00 per pack and $70 per carton from January 1, 2021, until July 1, 2024; and
  • $7.50 per pack and $75 per carton on and after July 1, 2024.

The minimum sale price for cigarettes is expected to increase state sales tax revenue.[3][1]

Under the measure, civil penalties (fines) for selling cigarettes for less than the minimum sale price are as follows:[3][1]

  • $500 for a first violation in a five-year period;
  • $1,000 for a second violation in a five-year period; and
  • $1,500 for a third violation in a five-year period.

A person cannot be held liable for more than one violation in a single day. Fines are to be deposited into the Tobacco Tax Enforcement Cash Fund.[3][1]

The Legislative Council Staff must report an estimate of additional sales tax revenue that is attributable to the minimum cigarette prices in its annual June forecast. Each year on June 30, the state treasurer must transfer 73% of the estimated amount identified by the Legislative Council Staff from the state's general fund to the Preschool Programs Cash Fund. The remaining 27% must be left in the general fund.[1]

Revenue dedication: Revenues dedicated to various funds including preschool programs

Revenue dedication

The measure is expected to generate $82.7 million in the 2020-21 fiscal year and $167.6 million in the first full fiscal year (2021-22).[1][3]

Under the measure, 85% of the tax revenue is to be deposited into the Old Age Pension Fund and 15% is to be directly credited to the general fund. In Colorado, 85% of all net revenue from any excise taxes must be deposited into the Old Age Pension Fund. After funds have been used to cover basic minimum payments to pension recipients, funds must be used to maintain the Stabilization Fund, which is used to stabilize pension payments, at $5 million. Next, funds are directed to a health and medical care fund for those qualified to receive pensions that is not to exceed $10 million. After these three funding obligations are satisfied, remaining funds can be transferred to the state general fund and appropriated by law.[1]

Of the 15% of revenue that is directly credited to the general fund, the state treasurer must transfer the total revenue attributable to the new nicotine products tax and the tax increases on tobacco products, modified risk tobacco products, and moist snuff, to the 2020 Tax Holding Fund, created by the measure.[1]

2020 Tax Holding Fund distributions

Funds in the 2020 Tax Holding Fund are to be distributed as follows:

Appropriations to preschool programs cash fund

Mimimum cigarette price tax revenue: Under the measure, the Legislative Council Staff must report an estimate of additional sales tax revenue that is attributable to the minimum cigarette prices in its annual June forecast. Each year on June 30, the state treasurer must transfer 73% of the estimated amount identified by the Legislative Council Staff from the state's general fund to the preschool programs cash fund. The remaining 27% is to be left in the general fund.[1]

Other appropriations: In fiscal years beginning in 2023, after other specified appropriations are made, remaining revenue attributed to the new taxes and tax increases enacted by the measure are to be deposited in the preschool programs cash fund. Exact amounts of funds to be appropriated to the fund are unknown, though the Colorado Sun reported an estimated amount of $168 million for 2023.[7][1]

The measure requires funds in the preschool programs cash fund to be used to expand and enhance the Colorado Preschool Program (CPP) in order to provide at least 10 hours per week of preschool to every Colorado child free of charge during the child's last year of preschool before beginning kindergarten.[1]


Text of measure

Ballot title

The ballot title for the measure was as follows:[1]

SHALL STATE TAXES BE INCREASED BY $294,000,000 ANNUALLY BY IMPOSING A TAX ON NICOTINE LIQUIDS USED IN E-CIGARETTES AND OTHER VAPING PRODUCTS THAT IS EQUAL TO THE TOTAL STATE TAX ON TOBACCO PRODUCTS WHEN FULLY PHASED IN, INCREMENTALLY INCREASING THE TOBACCO PRODUCTS TAX BY UP TO 22% OF THE MANUFACTURER'S LIST PRICE, INCREMENTALLY INCREASING THE CIGARETTE TAX BY UP TO 9 CENTS PER CIGARETTE, EXPANDING THE EXISTING CIGARETTE AND TOBACCO TAXES TO APPLY TO SALES TO CONSUMERS FROM OUTSIDE OF THE STATE, ESTABLISHING A MINIMUM TAX FOR MOIST SNUFF TOBACCO PRODUCTS, CREATING AN INVENTORY TAX THAT APPLIES FOR FUTURE CIGARETTE TAX INCREASES, AND INITIALLY USING THE TAX REVENUE PRIMARILY FOR PUBLIC SCHOOL FUNDING TO HELP OFFSET REVENUE THAT HAS BEEN LOST AS A RESULT OF THE ECONOMIC IMPACTS RELATED TO COVID-19 AND THEN FOR PROGRAMS THAT REDUCE THE USE OF TOBACCO AND NICOTINE PRODUCTS, ENHANCE THE VOLUNTARY COLORADO PRESCHOOL PROGRAM AND MAKE IT WIDELY AVAILABLE FOR FREE, AND MAINTAIN THE FUNDING FOR PROGRAMS THAT CURRENTLY RECEIVE REVENUE FROM TOBACCO TAXES, WITH THE STATE KEEPING AND SPENDING ALL OF THE NEW TAX REVENUE AS A VOTER-APPROVED REVENUE CHANGE?[8]

Summary and analysis

The summary and analysis provided for this measure in the 2020 State Ballot Information Booklet are available on page 25 at this link.

Fiscal impact statement

The fiscal impact statement was as follows:[9]

State revenue. Proposition EE will increase state revenue from cigarette, tobacco product, and nicotine product taxes by $87 million in state budget year 2020-21 and

$176 million in state budget year 2021-22, the first full year under the measure. The amount of new revenue will increase as the measure is phased in, with $276 million expected to be generated in state budget year 2027-28. In addition, the measure will also increase state revenue from sales taxes by $0.8 million in state budget year 2020-21 and by $1.5 million in state budget year 2021-22, the first full year under the measure. The amount of additional sales tax revenue will decline as the measure is phased in, with no new sales tax revenue expected in state budget year 2027-28.

State spending. Proposition EE will increase state spending by $87 million in state budget year 2020-21 and by $177 million in state budget year 2021-22. As the measure is phased in, state spending will increase, with $276 million expected to be spent in state budget year 2027-28. Spending includes the amounts shown in Figure 1 for education, housing, preschool, tobacco and nicotine education and cessation programs and other programs, as well as costs for administrative and auditing purposes.

Taxpayer impacts. Proposition EE is expected to increase taxes paid by an average of $38 per Colorado adult in state budget year 2021-22, and $53 per Colorado adult in budget year 2027-28; however, the direct tax impact applies only to people who consume cigarette, tobacco products, and/or nicotine products. If the percentage of adult smokers remains constant at 14.5 percent, the measure is expected to increase the taxes paid by cigarette smokers by an average of $222 in state budget year 2021-22 and by $291 in state budget year 2027-28. [8]

Note: The full fiscal impact statement including tables of estimated revenue can be found on pages 30 and 31 in the 2020 Blue Book.

Full text

The full text of the measure can be read below. Text in CAPITAL LETTERS would be added and struck-through text would be deleted:[1]

Readability score

See also: Ballot measure readability scores, 2020
Using the Flesch-Kincaid Grade Level (FKGL and Flesch Reading Ease (FRE) formulas, Ballotpedia scored the readability of the ballot title and summary for this measure. Readability scores are designed to indicate the reading difficulty of text. The Flesch-Kincaid formulas account for the number of words, syllables, and sentences in a text; they do not account for the difficulty of the ideas in the text. The Colorado State Legislature wrote the ballot language for this measure.


The FKGL for the ballot title is grade level 76, and the FRE is -129. The word count for the ballot title is 186, and the estimated reading time is 49 seconds.


Support

Yesoneelogo.png

A Brighter, Healthier Future for Colorado's Kids (Yes on EE) led the campaign in support of Proposition EE. The campaign provided a full list of endorsements on its website, which is available here.

Supporters

Officials

Unions

  • Colorado Education Association

Organizations

  • Colorado Cancer Coalition
  • Colorado Children's Campaign
  • Colorado Children’s Campaign
  • Colorado Community Health Network
  • Colorado Concern
  • Denver Metro Chamber of Commerce
  • Education Reform Now
  • Teach for America
  • Young Invincibles


Arguments

  • The Colorado Children's Campaign: "This bill will offer additional preschool programming to children from families with low incomes and to children at-risk of entering kindergarten with low levels of school readiness. This will allow targeted resources to children who benefit most from high-quality early childhood education. ... the measure would also have substantial impact on Colorado’s highest in the nation rate of youth vaping by putting the price of vaping and tobacco products out of reach. In Colorado, 5,100 people die each year from smoking, and 91,000 kids under 18 right now will eventually die from smoking. Colorado also has the nation’s highest rate of nicotine vaping among youth, with over 27% of high school students using e-cigarettes."
  • Colorado Governor Jared Polis (D): "Colorado voters will have a really important opportunity this November to say it's time that Colorado no longer be the top state for teen vaping. It's time that we help make sure that less kids get hooked on nicotine, a habit that is hard to kick and often stays for life and will shorten their lives."
  • Former state Senator Michael Johnston (D), president and CEO of Gary Community Investments: "In a moment where there’s a lot to be worried about, we think this is something to be profoundly excited about, the opportunity to expand the quality and the quantity of education to Colorado’s kids by establishing universal preschool."
  • Speaker of the House K.C. Becker: "The evidence shows that it actually does lead to less smoking, and it leads to people delaying the time that they become smokers. The costs of people smoking are borne by all of society. It isn’t progressive to align yourself with tobacco interests that are targeting low-income communities and really negatively impacting their health. I think Colorado has shown itself only willing, when it comes to a statewide tax, to support a tax that’s a sin tax. I think that’s unfortunate. It’s the reality of the constitutional and fiscal situation that we put ourselves in."

Official arguments

  • Official Blue Book argument: "1) Colorado has one of the highest rates of youth vaping in the country, while also having one of the lowest tax rates on cigarettes and tobacco products, and no tax on vaping products. Cigarettes, tobacco, and nicotine products are addictive and have negative health impacts, which can include cancer as well as heart and lung disease. Tax increases usually result in higher prices, which deter smoking and tobacco use, especially among youth and young adults. Higher taxes on cigarettes, tobacco products, and vaping products could decrease consumption while funding health care, and tobacco cessation, education, and prevention programs. 2) Proposition EE provides needed funding for education. The impacts of the COVID-19 pandemic on the state budget have resulted in a 10 percent decrease in the state share of public school funding for the 2020-21 school year. Additional federal funding has helped lessen the impact of this state budget cut in 2020; however, it is not likely to be available next year, and further cuts are expected. The measure provides vital funding for schools as the economy recovers, and additional assistance for small rural districts that are disproportionately impacted by state funding cuts. 3) Providing access to free preschool gives all children the same foundation before entering kindergarten. Currently, half of Colorado three- and-four-year-olds do not attend any type of preschool. High quality preschool is shown to improve educational, economic, and health outcomes throughout a child’s life, including higher wages, higher graduation rates, and fewer criminal convictions. Access to preschool also supports working parents by giving them the option to enroll their children in up to ten hours per week at no cost."


Opposition

No on EE-- A Bad Deal for Colorado led the campaign in opposition to Proposition EE.

Opponents

Unions

  • Consumer Advocates for Smoke-Free Alternatives Association

Organizations

  • Americans for Tax Reform

Arguments

  • Consumer Advocates for Smoke-Free Alternatives Association: "Taxes on traditional cigarettes are intended to discourage use. But, e-cigarettes and other smoke-free tobacco products are estimated to be 98 – 99% less harmful than smoking. Discouraging use of these low-risk products is counter to the goals of reducing smoking rates. Sin taxes are regressive. People who smoke and those who switch to vaping and other smoke-free alternatives are disproportionately poor and low income people. Sin taxes place unnecessary burdens on an already financially challenged group. To make matters worse, people in the low-income bracket are less likely to be insured and lack access to health care providers."
  • No on EE campaign spokesperson Michelle Lyng: "If we agree that preschool is something that should be paid for by the government … then why are only 14% of the population responsible for paying for it?"

Official arguments

  • Official Blue Book argument: "1) Increasing taxes on cigarette, tobacco, and nicotine products imposes a financial burden on people who choose to consume them, particularly low-income users. Because these products are addictive, users may continue to purchase them even after a tax increase. In addition, vaping products are used by many as a way to quit using traditional cigarettes. Youth vaping should be addressed through enforcement of existing age restrictions and additional education and prevention, not through raising taxes on a product that some use as a cessation device. 2) Raising taxes and establishing a minimum purchase price hurts business owners. This is particularly true for businesses that sell low-cost products, or that are in areas of the state where local governments have already imposed cigarette, tobacco, and nicotine taxes. Businesses selling these products may see a decline in sales, which can be particularly harmful for small, local businesses at a time when many are already struggling. Private businesses and market competition are best suited to determine the prices at which products are bought and sold. 3) The state should not be dependent on tax revenue from a specific, addictive product to fund schools, preschool, and other state services. Once Proposition EE is fully phased in, revenue from this tax is likely to decline over time as the increased price results in fewer products being purchased. At the same time, preschool funding needs are likely to grow. A tax intended to decrease consumption is not a funding source on which the state should rely."


Other positions

Altria Group, which owns tobacco companies and brands including Marlboro, Copenhagen, Skoal, and Black and Mild, said it was neutral on Proposition EE. George Parman, a spokesman for Altria, said, "Altria was pleased to be a stakeholder in this process on behalf of Colorado adult tobacco consumers."[10][11]

Campaign finance

See also: Campaign finance requirements for Colorado ballot measures
The campaign finance information on this page reflects the most recently scheduled reports processed by Ballotpedia, which covered through November 30, 2020.


Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
Support $4,588,208.00 $134,058.09 $4,722,266.09 $4,560,617.06 $4,694,675.15
Oppose $365,275.00 $4,180,395.20 $4,545,670.20 $363,805.37 $4,544,200.57

A Brighter, Healthier Future for Colorado's Kids and Save the Children Action Network (SCAN) registered to support Proposition EE. The committees reported $4.72 million in contributions and $4.69 million in expenditures. SCAN gave $250,000 to A Brighter Healthier Future for Colorado's Kids. To avoid double-counting funds, Ballotpedia subtracted $250,000 from SCAN's contributions and expenditures.[2]

No on EE-- A Bad Deal for Colorado registered to oppose Proposition EE. The committee reported $4.54 million in contributions and $4.54 million in expenditures.[2]

Support

The following table includes contribution and expenditure totals for the committee in support of the initiative.[2]

Committees in support of Proposition EE
Committee Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
A Brighter, Healthier Future for Colorado's Kids $4,578,208.00 $130,308.09 $4,708,516.09 $4,550,617.06 $4,680,925.15
Save the Children Action Network $10,000.00 $3,750.00 $13,750.00 $10,000.00 $13,750.00
Total $4,588,208.00 $134,058.09 $4,722,266.09 $4,560,617.06 $4,694,675.15

Donors

The top donors are below.[2]

Donor Cash Contributions In-Kind Contributions Total Contributions
Gary Community Investment Company $1,250,000.00 $0.00 $1,250,000.00
Healthier Colorado $566,768.00 $57,294.29 $624,062.29
Education Reform Now Advocacy, Inc $535,000.00 $0.00 $535,000.00
Stacy Schusterman $500,000.00 $0.00 $500,000.00
Pat Stryker $250,000.00 $0.00 $250,000.00
Save the Children Action Network (SCAN) $250,000.00 $0.00 $250,000.00

Opposition

The following table includes contribution and expenditure totals for the committee in opposition to the initiative.[2]

Committees in opposition to Proposition EE
Committee Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
No on EE-- A Bad Deal for Colorado $365,275.00 $4,180,395.20 $4,545,670.20 $363,805.37 $4,544,200.57
Total $365,275.00 $4,180,395.20 $4,545,670.20 $363,805.37 $4,544,200.57

Donors

The top donors are below.[2]

Donor Cash Contributions In-Kind Contributions Total Contributions
Liggett Vector Brands LLC $257,750.00 $4,163,495.20 $4,421,245.20
XCaliber International LTD LLC $100,000.00 $0.00 $100,000.00
Smoker Friendly $0.00 $8,500.00 $8,500.00

Methodology

To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.

Media editorials

See also: 2020 ballot measure media endorsements

Support

  • Colorado Springs Gazette Editorial Board: "In 2018, the National Institute for Drug Abuse associated vaping with the largest increase in any substance use in the agency’s 43-year tracking history. Nicotine addiction is a drain on this country and a threat to public health. We want less of nicotine and therefore should tax it like any dangerous product that harms our country and economy. Vote 'yes' on Prop EE. Vote yes to make nicotine a cost-prohibitive addiction."
  • Colorado Springs Indy Editorial Board: "Colorado teen nicotine vaping rates are among the highest in America, while the state has one of the lowest tax rates for tobacco products in the nation, and no tax on vaping products. It’s time we do something about it. ... Higher taxes on cigarettes, tobacco products and vaping products will decrease consumption — and the additional funding will go toward preschool, health care and tobacco cessation and prevention initiatives throughout Colorado." Vote Yes on Prop EE
  • Journal-Advocate Editorial Board and Fort Morgan Times Editorial Board: "Colorado has one of the highest rates of youth vaping in the country, while also having one of the lowest tax rates on cigarettes and tobacco products, and no special tax on vaping products. We believe that needs to change: Vaping products should be taxed just as cigarette and tobacco products are."
  • Durango Herald Editorial Board: "Proposition EE would tax nicotine from all sides, adding to cigarette taxes, taxing wholesalers and for the first time taxing vaping. It would set a minimum price on cigarettes, adding to tax revenue and likely discouraging use. Revenue from the added and new taxes will go to public schools, including free preschool programs, and to programs that reduce nicotine use. Yes on Prop. EE."

Opposition

  • Steamboat Pilot & Today Editorial Board: "We recommend a 'no' vote. We cannot endorse what would be a sizable, and inequitable, tax that picks winners and choosers when it comes to nicotine delivery. This legislation was passed without public comment with big-tobacco influence that offers the prospects of large increase in short-term funding for a variety of education, health and housing programs, in addition to anti-tobacco/vaping education. While we’re supportive of increased funding in those areas, there are no guarantees the funding would exist long term. We know teen use of tobacco and vaping deserves closer attention, but believe there are better approaches to address that challenge in ways that offer sustainable long-term funding."
  • Boulder Weekly Editorial Board: "It’s clear the state is in need of additional revenue streams, but this isn’t the way to do it. Nationwide tobacco tax revenue has been steadily declining, and the funds raised from this measure would be a stop gap solution, not an effective long-term fiscal strategy."


Background

See the sections below for further information on the following topics:

  1. Cigarette and tobacco taxes in Colorado, 2020: This section provides general information about current cigarette and tobacco taxes in Colorado and how the tax revenue is distributed.
  2. Cigarette tax rates by state, 2019: This section provides information about state-levied cigarette taxes as of 2019.
  3. E-cigaratte (vapor) tax rates by state, 2020: This section includes data on statewide taxes on e-cigarettes and vaping products as of 2020.
  4. Tobacco on the ballot: This section includes a (1) summary of tobacco tax measures Colorado has voted on in the past, (2) a summary of measures related to tobacco that were set to be voted on at statewide elections on November 3, 2020, and (3) a summary of tobacco tax increase measures that were on the ballot between 2008 and 2018.
  5. Colorado Taxpayer Bill of Rights (TABOR): This measure required voter approval under TABOR since it would increase state revenue. This section includes information about TABOR and other ballot measures that have been referred to voters as required under TABOR.

Cigarette and tobacco taxes in Colorado, 2020

As of 2020, in Colorado, cigarettes were taxed at 84 cents per pack. The state levied a statutory rate of 20 cents per pack (one cent per cigarette) and an additional constitutional tax of 64 cents per pack (3.2 cents per cigarette) that was approved by voters under Amendment 35 of 2004.

As of 2020, in Colorado, tobacco products were taxed at a statutory rate of 20% of the manufacturer's list price (MLP) and a constitutional rate of 20% of the MLP for a total rate of 40% of the MLP. Tobacco products include cigars and tobacco designed to be chewed or smoked in a pipe.

Nicotine products such as e-cigarettes were not taxed in Colorado as of 2020.

As of 2020, cigarette and tobacco product distributors in Colorado could retain a portion of tax money due (referred to as a vendor allowance) if they file taxes on time. The measure was designed to reduce the vendor allowance for tobacco distributors from 3.33% to 1.6% and for cigarette distributors from 4% to 0.4%. The measure was designed to allow nicotine distributors to retain a vendor allowance of 1.1%.

Colorado cigarette tax revenue distribution

The following table from the Colorado Legislative Council Staff displays the revenue distributions of cigarette and tobacco taxes for the 2018-19 fiscal year. Amounts are in millions.[12]

Cigarette tax rates by state, 2019

Cigarette tax rates vary from state to state and, sometimes, between localities within a state. Cigarettes are also subject to a federal excise tax of approximately $1.00 per pack. The information in this section details state-levied cigarette taxes as of January 2019.[13][14]

Highlights:

  • As of January 2019, Washington, D.C. had the highest cigarette tax rate of $4.50 per pack.
  • Missouri levied the lowest state-imposed cigarette tax of $0.17 per pack.
  • 13 states levied a tax rate less than $1.00 per pack (ranging from $0.17 to $0.84).
  • 18 states levied a tax rate ranging from $1.00 to $1.98 per pack.
  • 11 states levied a tax rate between $2.00 and $2.87 per pack.
  • The remaining eight states levied a tax rate between $3.03 and $4.35 per pack of cigarettes.

E-cigaratte (vapor) tax rates by state, 2020

E-cigarette (vapor) taxes may be levied by state or local governments and vary by method. Some authorities tax a percentage of the wholesale value, while others tax per unit or milliliter of e-liquid. The following chart shows how different states tax vapor products. A total of 25 states and Washington, D.C., have enacted a tax on vapor products. States not listed have not enacted a tax on vapor products.[15]

Click [show] below to expand the table.

The main difference between open- and closed- system e-cigarettes is the way the e-liquid is delivered to the heating mechanism of the device. Open-system e-cigarettes have a clearomizer which is filled with e-liquid manually, whereas closed-system e-cigarettes use ready-filled tanks or pods of e-liquid that screw directly onto the e-cig battery. Open-system e-cigarettes also have a removable mouthpiece, whereas the mouthpiece on closed-system e-cigarettes is built into the e-cigarette tank. JUUL, a popular brand of e-cigarette, is a closed-system device.[16]

Tobacco on the ballot

Tobacco on the ballot in Colorado

Colorado has voted on three measures to increase tobacco taxes.

  • Amendment 72 of 2016 was designed to raise the tax on cigarettes by $1.75 per pack and increase the constitutional tax on tobacco products from 20% to 22% (thereby raising the total tax to 42%). The measure was defeated by a vote of 53% to 47%. Altria, a company that owns tobacco brands including Marlboro, spent $17 million opposing Amendment 72 in 2016.[17]
  • Initiative 35 of 2004 was an initiated constitutional amendment that was designed to increase tobacco taxes to fund educational and preventative medicine health programs. It was approved by a vote of 61% in favor to 39% against. The measure increased tobacco taxes from 20 cents per pack of cigarettes to 84 cents and increased the tax on tobacco products from 20% to 40%.
  • Amendment 1 of 1994 was an initiated constitutional amendment that was designed to amend the Colorado Constitution to place a 50% tax on each pack of cigarettes. The revenues of the tax would have been used for health care, educational programs to reduce tobacco use and research concerning tobacco use, and tobacco-related illnesses. The measure was defeated by a vote of 61% against to 39% in favor.

Tobacco on the ballot in 2020

  • Oklahoma State Question 814, the Decrease Tobacco Settlement Endowment Trust Fund Payments and Fund Medicaid Program Amendment, was on the ballot in Oklahoma as a legislatively referred constitutional amendment on November 3, 2020. The measure was designed to decrease the percentage of money (from 75% to 25%) that is deposited to the Tobacco Settlement Endowment Trust (TSET) Fund from funds the state receives from tobacco settlements and directing the state legislature to appropriate funds to secure federal matching funds for the state's Medicaid program.

Tobacco tax increase ballot measures (2008-2018)

In the ten-year period from 2008 to 2018, nine measures to increase tobacco taxes appeared on statewide ballots. Revenues generated from the tobacco taxes were designed to be allocated for funding programs related to things such as healthcare, education, veterans' services, and transportation. All measures were defeated except for California Proposition 56 of 2016, which raised cigarette taxes by $2.00 per pack and dedicated revenues to health programs.

Click [show] below to expand the table.

Colorado Taxpayer's Bill of Rights (TABOR)

This measure required voter approval under TABOR since it would increase state revenue.

TABOR limits the amount of money the state of Colorado can take in and spend. It limits the annual increase for some state revenue to inflation plus the percentage change in state population. Any money collected above this limit is refunded to taxpayers unless the voters allow the state to spend it.

To read about the Taxpayer's Bill of Rights, click here.

Tax policies on the ballot in 2020

See also: Taxes on the ballot

In 2020, voters in 14 states voted on 21 ballot measures addressing tax-related policies. Ten of the measures addressed taxes on properties, three were related to income tax rates, two addressed tobacco taxes, one addressed business-related taxes, one addressed sales tax rates, one addressed fees and surcharges, and one was related to tax-increment financing (TIF).

Click Show to read details about the tax-related measures on statewide ballots in 2020.

Path to the ballot

The state process

In Colorado, a legislatively referred state statute must be passed by a simple majority vote in each chamber of the state legislature. Legislatively referred measures do not need to be signed by the governor. Due to the Colorado TABOR, statewide voter approval is required to enact any legislation to increase government revenue at a faster rate than the combined rate of population increase and inflation.

The measure was introduced as House Bill 20-1427 on June 11, 2020. The measure was passed in the House on June 12, 2020, in a vote of 41-19 with five representatives excused. It was approved in the Senate on June 15, 2020, in a vote of 20-13 with two senators excused. The measure was passed along party lines with Democrats voting in favor and Republicans voting against, except for three House Republicans and one Senate Republican that joined all Democrats in voting in favor.

Vote in the Colorado House of Representatives
June 12, 2020
Requirement: Simple majority vote of all members in each chamber
Number of yes votes required: 33  Approveda
YesNoNot voting
Total41195
Total percent63.07%29.2%7.7%
Democrat3803
Republican3192

Vote in the Colorado State Senate
June 15, 2020
Requirement: Simple majority vote of all members in each chamber
Number of yes votes required: 18  Approveda
YesNoNot voting
Total20132
Total percent57.14%37.14%5.71%
Democrat1900
Republican1132

Lawsuits


BP-Initials-UPDATED.png This article contains a developing news story. Ballotpedia staff are checking for updates regularly. To inform us of new developments, email us at [email protected].


Constitutionality lawsuit

  
Lawsuit overview
Issue: Whether the fixed minimum price for a pack of cigarettes created by Proposition EE is constitutional
Court: United States District Court for the District of Colorado
Plaintiff(s): Liggett Group LLC, Vector Tobacco Inc., and Xcaliber International Ltd., LLCDefendant(s): Colorado Governor Jared Polis, Attorney General Philip Weiser, and the Colorado State Legislature
Plaintiff argument:
The fixed minimum price for a pack of cigarettes created by Proposition EE violates the Commerce Clause of the U.S. Constitution
Defendant argument:
The measure is constitutional

  Source: Colorado Sun

Single-subject lawsuit

  
Lawsuit overview
Issue: Whether Proposition EE violated the state's single-subject rule
Court: Denver District Court, appealed to the Colorado Court of Appeals
Ruling: Ruled in favor of defendants in lower court and upheld in the Colorado Court of Appeals
Plaintiff(s): Liggett Group LLC, Vector Tobacco Inc., and Xcaliber International Ltd., LLCDefendant(s): Colorado Governor Jared Polis, Attorney General Philip Weiser, and the Colorado State Legislature
Plaintiff argument:
Proposition EE violated the state's single-subject rule
Defendant argument:
Proposition EE did not violate the state's single-subject rule

  Source: Colorado Sun

On October 15, 2020, Liggett Group LLC, Vector Tobacco Inc., and Xcaliber International Ltd., LLC filed a lawsuit in United States District Court for the District of Colorado. The lawsuit, in which Colorado Governor Jared Polis, Attorney General Philip Weiser, and the Colorado State Legislature were named as defendants, alleges that the fixed minimum price for a pack of cigarettes created by Proposition EE violates the Commerce Clause of the U.S. Constitution. On December 28, 2020, U.S. District Judge Raymond P. Moore denied the plaintiffs' request for a preliminary injunction.

Plaintiffs, including Jennifer Ann Smith, a resident of Littleton, also filed a lawsuit alleging that Proposition EE violated Colorado's single-subject rule, which requires initiatives to concern a single subject. The lawsuit also claimed the ballot language was misleading.

In 2021, a Denver District Court Judge declined to grant an injunction against the enforcement the price minimum provisions. On May 12, 2022, the Colorado Court of Appeals upheld the lower court's ruling.[39][40]

How to cast a vote

See also: Voting in Colorado

Click "Show" to learn more about voter registration, identification requirements, and poll times in Colorado.

See also

External links

Support

Opposition

Submit links to [email protected].

Footnotes

  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 Colorado State Legislature, "House Bill 20-1427," accessed June 15, 2020
  2. 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Colorado TRACER, "Committee information," accessed March 29, 2021
  3. 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 Colorado State Legislature, "HB 20-1427 fiscal impact statement," accessed June 26, 2020
  4. This includes the statutory tax rate of one cent per cigarette (20 cents per pack) and the constitutional tax rate of 64 cents per pack (3.2 cents per cigarette)
  5. Lexis Nexis, "Colorado Constitution, Article X, Section 21. TOBACCO TAXES FOR HEALTH RELATED PURPOSES," accessed June 26, 2020
  6. This includes the statutory rate of 20% of MLP and the constitutional tax rate of 20% of MLP
  7. Colorado Sun, "Voters will decide in November whether all Colorado 4-year-olds can attend preschool starting in 2023," accessed July 8, 2020
  8. 8.0 8.1 8.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
  9. Colorado State Legislature, "2020 Blue Book," accessed September 21, 2020
  10. Vault, "Altria Group Inc.," accessed October 19, 2020
  11. Colorado Sun, "Marlboro’s owners negotiated Colorado’s proposed tobacco tax hike — and it could help them dominate the cigarette market," accessed October 19, 2020
  12. Colorado State Legislature, "Cigarette Tax," accessed June 15, 2020
  13. Tax Foundation, "How High Are Cigarette Tax Rates in Your State?" July 18, 2019
  14. Tax Policy Center, "State Cigarette Tax Rates," August 10, 2018
  15. Tax Foundation, "Vaping taxes by state, 2020" accessed June 8, 2020
  16. Blu, "What Are Open & Closed System E-cigarettes?" accessed July 18, 2019
  17. Colorado Sun, "Marlboro’s owners negotiated Colorado’s proposed tobacco tax hike — and it could help them dominate the cigarette market," accessed October 19, 2020
  18. Oregon State Legislature, "HB 2270 full text," accessed June 25, 2019
  19. Oregon State Legislature, "Staff Measure Summary," accessed June 25, 2019
  20. Arizona Secretary of State, "Initiative 31-2020," February 14, 2020
  21. Colorado Secretary of State, "2019-2020 Initiative Filings, Agendas & Results," accessed April 17, 2020
  22. Illinois State Legislature, "Senate Joint Resolution Constitutional Amendment 1," accessed May 2, 2019
  23. Illinois State Board of Elections,"Committee Search," accessed May 28, 2019
  24. Alaska Division of Elections, "Alaska's Fair Share Act," accessed January 13, 2020
  25. Anchorage Daily News, "Group says it has enough signatures to put Alaska oil tax initiative on ballot," January 14, 2020
  26. APOC, "Online Reports," accessed January 7, 2020
  27. Nebraska Secretary of State, "Initiative Petition text," accessed August 22, 2019
  28. California Attorney General, "Initiative 19-0008," September 17, 2019
  29. California the Legislative Analyst's Office, "A.G. File No. 2019-0008," February 5, 2018
  30. California State Legislature, "Assembly Concurrent Resolution 11," accessed May 8, 2019
  31. Colorado General Assembly, "SCR 20-001," accessed June 10, 2020
  32. Arkansas State Legislature, "House Joint Resolution 1018," accessed March 7, 2019
  33. UA Little Rock Public Radio, "Arkansas Governor Signs $95 Million Highway Funding Bill Into Law," accessed March 25, 2019
  34. Arkansas Ethics Commission, "Filings," accessed August 18, 2020
  35. Colorado State Legislature, "House Bill 20-1427," accessed June 15, 2020
  36. Oregon State Legislature, "HB 2270," accessed June 25, 2019
  37. Colorado Secretary of State, "2019-2020 Initiative Filings, Agendas & Results," accessed February 10, 2020
  38. Nebraska State Legislature, "LR14CA," accessed April 5, 2019
  39. Colorado Sun, "Emails show negotiations involving Colorado governor, cigarette giant that led to tobacco tax hike," accessed January 8, 2021
  40. The Gazette, "Appeals court denies request to block voter-approved minimum price for cigarettes" May 13, 2022
  41. Colorado Secretary of State, "Mail-in Ballots FAQs," accessed July 16, 2024
  42. Colorado Revised Statutes, "1-7-101," accessed July 16, 2024
  43. 43.0 43.1 Colorado Secretary of State, "Voter Registration FAQs," accessed July 16, 2024
  44. Colorado Secretary of State, "Go Vote Colorado," accessed July 15, 2024
  45. Colorado Secretary of State, "Acceptable Forms of Identification," accessed July 17, 2024