COLORADO COURT OF APPEALS                                         2016COA181


Court of Appeals No. 15CA1743
Adams County District Court No. 15CV30862
Honorable F. Michael Goodbee, Judge


City of Northglenn, Colorado, a Colorado municipality; City of Aurora,
Colorado, a Colorado municipality; City of Commerce City, Colorado, a
Colorado municipality,

Plaintiffs-Appellants and Cross-Appellees,

v.

Board of County Commissioners, Adams County, Colorado, a Colorado
statutory county,

Defendant-Appellee and Cross-Appellant.


                           JUDGMENT REVERSED

                                  Division VII
                         Opinion by JUDGE BERGER
                         Terry and Booras, JJ., concur

                        Announced December 15, 2016


Hoffman Parker Wilson & Carberry P.C., Corey Y. Hoffman, Denver, Colorado,
for Plaintiff-Appellant and Cross-Appellee City of Northglenn, Colorado

Michael Hyman, City Attorney, Teresa L. Kinney, Assistant County Attorney,
Daniel L. Money, Assistant County Attorney, Aurora, Colorado, for Plaintiff-
Appellant and Cross-Appellee City of Aurora, Colorado

Robert D. Sheesley, City Attorney, for Plaintiff-Appellant and Cross-Appellee
Colorado, City of Commerce City

Heidi M. Miller, County Attorney, Jennifer D. Stanley, Assistant County
Attorney, Brighton, Colorado, for Defendant-Appellee and Cross-Appellant
¶1    In 2012, Colorado voters adopted Amendment 64, which

 legalized recreational marijuana use as a matter of state law, under

 particular circumstances. To effectuate Amendment 64, the

 General Assembly enacted the retail marijuana sales tax, sections

 39-28.8-101 to -606, C.R.S. 2016, which Colorado voters approved

 through Proposition AA. The retail marijuana sales tax authorizes

 the state to levy a statewide special sales tax on retail marijuana.1

¶2    In 2014, Adams County voters approved a resolution

 authorizing the county to levy a countywide special sales tax on

 retail marijuana.2 Three home rule cities in Adams County

 challenged the Adams County tax, claiming that it was

 unauthorized by Colorado law. Adams County asserted that the




 1 “‘Retail marijuana’ means all parts of the plant of the genus
 cannabis whether growing or not, the seeds thereof, the resin
 extracted from any part of the plant, and every compound,
 manufacture, salt, derivative, mixture, or preparation of the plant,
 its seeds, or its resin, including marijuana concentrate.” § 39-28.8-
 101(7), C.R.S. 2016.
 2 A general sales tax applies to “all sales and purchases of tangible

 personal property at retail.” § 39-26-104(1)(a), C.R.S. 2016. A
 special sales tax only applies to certain sales and purchases of
 tangible personal property at retail. See, e.g., § 29-2-103.5(1)(a),
 C.R.S. 2016. Both general and special sales taxes can apply to the
 same sale or purchase. Id.
                                    1
 cities did not have standing, and, on the merits, that the county tax

 was authorized by the retail marijuana sales tax.

¶3    We conclude that the district court correctly determined that

 the cities had standing to bring their claims. On the merits, we

 hold that Adams County does not have either constitutional or

 statutory authorization to impose a special sales tax on retail

 marijuana. Accordingly, we hold that the Adams County special

 sales tax is invalid and reverse the judgment.

              I.   Relevant Facts and Procedural History

¶4    Following the passage of Amendment 64, Colorado voters

 approved a number of special sales taxes on retail marijuana. At

 the state level, the General Assembly enacted and voters approved

 the retail marijuana sales tax, imposing a statewide special sales

 tax. At the county level, the Adams County Board of County

 Commissioners (the County) proposed a countywide special sales

 tax, which Adams County voters approved. At the municipal level,

 voters of the cities of Aurora, Northglenn, and Commerce City

 (collectively the Cities) also approved special sales taxes.

¶5    These special sales taxes, which only apply to retail

 marijuana, were imposed in addition to all pre-existing general

                                    2
 sales taxes, which apply to the sale of any good or service, including

 retail marijuana. As a result, retail marijuana sold in the Cities was

 subject to a special sales tax at the city, county, and state levels, in

 addition to general sales taxes.

¶6    While the Cities anchored their authority to enact special sales

 taxes to their constitutionally granted powers as home rule cities,

 the County claimed its authority emanated from sections 39-28.8-

 101 to -606, C.R.S. 2016 (the retail marijuana sales tax), and

 section 29-2-103, C.R.S. 2016 (its general sales tax authority).

¶7    The Cities disagreed with the County’s reading of the retail

 marijuana sales tax and claimed that it did not expressly grant the

 County authority to impose a special sales tax and, therefore, the

 tax was invalid. Both the Cities and the County sought legislative

 clarification from the General Assembly on this question, but the

 General Assembly declined to enact any clarifying legislation with

 respect to county special sales taxes.3



 3 Because there may be multiple reasons why the General Assembly
 does not enact legislation, drawing inferences of legislative intent
 from what it does not enact is subject to considerably more
 speculation than drawing inferences of legislative intent from what
 it does enact. People v. Adams, 2016 CO 74, ¶ 22 n.2. Accordingly,
                                    3
¶8     After the County enacted ordinances and regulations

  implementing the countywide special sales tax, the Cities sued the

  County, seeking an injunction and declaratory judgment against

  the tax. The Cities moved for a preliminary injunction 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, but denied their motion for a

  preliminary injunction, finding that they had not met several of the

  requirements for a preliminary injunction.

¶9     The district 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.

  The court concluded that there was sufficient legislative authority to

  support the countywide special sales tax.

                     II.   The Cities Have Standing

¶ 10   Because standing is a threshold jurisdictional question, we

  must address it first. City of Greenwood Village v. Petitioners for

  Proposed City of Centennial, 3 P.3d 427, 436 (Colo. 2000).



  our analysis does not rely upon the fact that the General Assembly
  declined to pass such legislation.
                                     4
¶ 11   Plaintiffs seeking a declaratory judgment must demonstrate

  that there is “an existing legal controversy that can be effectively

  resolved by a declaratory judgment, and not a mere possibility of a

  future legal dispute over some issue.” Bd. of Cty. Comm’rs v.

  Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1053 (Colo. 1992).

  They must show that (1) they will suffer an injury in fact from the

  challenged regulation and (2) the injury will be to a legally protected

  interest. City of Greenwood Village, 3 P.3d at 437. Colorado courts

  have held that this two-pronged test has traditionally been

  “relatively easy to satisfy.” Ainscough v. Owens, 90 P.3d 851, 856

  (Colo. 2004). We address each element of the test in turn.

¶ 12   First, we must determine whether the County’s special sales

  tax would cause the Cities to suffer an injury in fact. The district

  court heard testimony from the interim deputy city manager for the

  city of Aurora and the director of finance for the city of Northglenn

  on this question. Both cities claimed the County’s special sales tax

  would impair their tax revenues because it would place retail

  marijuana businesses in the cities at a competitive disadvantage to

  retail marijuana businesses in other jurisdictions, such as Denver,

  which only imposed the state and local special sales taxes.

                                     5
¶ 13   Considering this testimony, we conclude, like the district

  court, that the County’s special sales tax likely would harm the

  fiscal interests of the Cities by reducing their tax revenues. Like in

  Denver Urban Renewal Authority v. Byrne, “the general fund of [the

  Cities] will arguably be directly and substantially affected.” 618

  P.2d 1374, 1380 (Colo. 1980).4

¶ 14   On this record, the Cities suffered at least prospective

  economic harm from the imposition of the County’s special sales

  tax. Present or threatened economic harm constitutes an injury in

  fact. Ainscough, 90 P.3d at 856; see also Byrne, 618 P.2d at 1381.

¶ 15   Second, the Cities suffered an injury to a legally protected

  interest. The Cities are home rule cities and “[t]he Colorado

  Constitution confers upon a home rule city a legally protected

  interest in its local concerns.” Byrne, 618 P.2d at 1381. “[C]ity

  budgeting and the assessment and collection of taxes for municipal

  purposes” are local concerns and each city has a legally protected


  4 We reject the County’s argument that Denver Urban Renewal
  Authority v. Byrne, 618 P.2d 1374 (Colo. 1980), and the other cases
  the Cities rely on to demonstrate standing are inapposite. To the
  contrary, in Denver Urban Renewal Authority, like the Cities here,
  the home rule cities exercised their constitutional authority to
  protect their fiscal integrity. Id. at 1380.
                                     6
  interest in them. City of Colorado Springs v. State, 626 P.2d 1122,

  1127 (Colo. 1980). Put another way, the fiscal integrity of a home

  rule city is a legally protected interest of the city. The imposition of

  the County’s special sales tax would create a nonspeculative risk

  that the Cities’ tax collections would be impaired, which in turn

  would harm the fiscal integrity of the Cities. These circumstances

  are sufficient to conclude that the Cities would suffer an injury to a

  legally protected interest.

¶ 16     For these reasons, the district court correctly held that the

  Cities have standing.5

  III.   A County May Only Impose a Special Sales Tax When There Is
         Express Constitutional or Legislative Authority to Do So

¶ 17     It is important to distinguish what is at issue in this case from

  what is not at issue. The Cities have not challenged the County’s

  authority to impose a general sales tax that taxes all goods or

  services, including retail marijuana, sold in the County. Instead,

  the Cities only challenge the County’s authority to impose a special

  sales tax that taxes only retail marijuana.


  5Because we conclude that the Cities have traditional standing, we
  do not address the Cities’ argument that they also have parens
  patriae standing.
                                      7
¶ 18   Colorado counties are political subdivisions of the state. Bd.

  of Cty. Comm’rs v. Love, 172 Colo. 121, 125, 470 P.2d 861, 862

  (1970). As such, “they possess only those authorities expressly

  conferred upon them by the state and those incidental implied

  powers reasonably necessary to carry out their expressly granted

  powers.” Colorado Mining Ass’n v. Bd. of Cty. Comm’rs, 199 P.3d

  718, 729 (Colo. 2009).

¶ 19   In Colorado, a grant of taxation authority, either to the state

  itself or to one of its political subdivisions, must be explicit. “The

  taxing power of the state is exclusively a legislative function, and

  taxes can be imposed only in pursuance of legislative authority,

  there being no such thing as taxation by implication.” Skidmore v.

  O’Rourke, 152 Colo. 470, 473, 383 P.2d 473, 474 (1963) (quoting

  City & Cty. of Denver v. Lewin, 106 Colo. 331, 336, 105 P.2d 854,

  858 (1940)). Thus, a county has no power to impose a tax unless

  the General Assembly or the Colorado Constitution directly

  authorizes it. Skidmore, 152 Colo. at 474-75, 383 P.2d at 475.

¶ 20   The County makes no claim of authority under the Colorado

  Constitution. Instead, the County relies on its general sales tax

  authority, section 29-2-103, and the retail marijuana sales tax as

                                      8
  the sources of its authority to enact a special sales tax on retail

  marijuana.

    IV. The County General Sales Tax Authority Does Not Confer
   Express Authority on Colorado Counties to Enact a Special Sales
                                Tax

¶ 21   While the County appears to contend in the text of its special

  sales tax resolution that its general sales tax authority, contained in

  section 29-2-103, also confers authority to impose a countywide

  special sales tax on retail marijuana, the context of Article 2, Title

  29, within which section 29-2-103 resides, demonstrates that it

  authorizes only a general and not a special sales tax. Moreover, the

  county conceded at oral argument that it does not rely upon section

  29-2-103 as stand-alone authority to impose a special sales tax.

    V.  The Colorado Retail Marijuana Sales Tax Does Not Confer
   Express Authority on Colorado Counties to Enact a Special Sales
                                Tax

¶ 22   The question presented here is whether the retail marijuana

  sales tax, specifically section 39-28.8-203(1)(a)(VI), C.R.S. 2016,

  grants the County express authority to enact its special sales tax.

  This is a question of statutory interpretation.

¶ 23   Statutory interpretation presents a question of law we review

  de novo. Sperry v. Field, 205 P.3d 365, 367 (Colo. 2009). “When

                                     9
  interpreting a statute, we must ascertain and effectuate the intent

  of the General Assembly.” Vanderborgh v. Krauth, 2016 COA 27,

  ¶ 8. To do so, we look first to the statutory language, giving words

  and phrases their plain and ordinary meanings according to the

  rules of grammar and common usage. § 2-4-101, C.R.S. 2016; Krol

  v. CF & I Steel, 2013 COA 32, ¶ 15.

¶ 24   “We read the language in the dual contexts of the statute as a

  whole and the comprehensive statutory scheme, giving consistent,

  harmonious, and sensible effect to all of the statute’s language.”

  Krol, ¶ 15. After doing this, if we determine that the statute is not

  ambiguous, we enforce it as written and do not resort to other rules

  of statutory construction. Id.

¶ 25   In enacting the retail marijuana sales tax, the General

  Assembly enacted a statewide retail marijuana sales tax as well as a

  mechanism to share that tax revenue with local governments. In so

  doing, the General Assembly also provided that the new sales tax on

  marijuana would not pre-empt or displace other authorized local

  government taxes on retail marijuana:

            Nothing in this paragraph (a) shall be
            construed to prevent a local government from
            imposing, levying, and collecting any fee or any

                                    10
             tax upon the sale of retail marijuana or retail
             marijuana products or upon the occupation or
             privilege of selling retail marijuana products,
             nor shall the provisions of this paragraph (a)
             be interpreted to affect any existing authority
             of a local government to impose a tax on retail
             marijuana or retail marijuana products to be
             used for local and municipal purposes;
             however, any local tax imposed at other than
             the local jurisdiction’s general sales tax rate
             shall not be collected, administered, and
             enforced by the department of revenue
             pursuant to section 29-2-106, C.R.S., but
             shall instead be collected, administered, and
             enforced by the local government itself.

  § 39-28.8-203(1)(a)(VI).

¶ 26   The County argues that this section gives it the express

  authority to enact a special sales tax on retail marijuana. We

  conclude that this statutory language does not bear the weight of

  the County’s claim.

¶ 27   Essentially, the County argues that because the statute does

  not prohibit it from imposing a special sales tax, the statute

  necessarily authorized it to impose such a tax. This argument runs

  squarely into, and violates, two principles: (1) that the grant of

  taxing authority must be explicit not implied, Skidmore, 152 Colo.

  at 474-75, 383 P.2d at 475; and (2) that counties only have those



                                    11
  powers expressly conferred by the state, Colorado Mining Ass’n, 199

  P.3d at 729.

¶ 28   Every statute cited by the parties that authorizes a county to

  impose a sales tax, and every such statute that we have

  independently found, share common attributes. Each of the

  statutes explicitly states that the counties are “authorized to levy”

  or “may levy” a county sales tax. See, e.g., § 29-2-103.5(1)(b),

  C.R.S. 2016; § 30-11-107.5(1), C.R.S. 2016. This essential feature

  is not present in section 39-28.8-203(1)(a)(VI).

¶ 29   The absence of any limitation whatsoever on the tax rate that

  could be imposed by Colorado counties further supports our

  conclusion that no express taxation authority is conferred by

  section 39-28.8-203(1)(a)(VI). Every other legislative grant of special

  sales tax power of which we are aware has rate parameters or caps.

  For instance, the special sales tax for the rental of personal

  property limits the county to levying a tax of “one percent of the

  amount of the rental payment paid or charged to persons who rent

  such personal property.” § 30-11-107.7(2)(a), C.R.S. 2016.

¶ 30   We cannot infer that the General Assembly granted unlimited

  special sales tax authority to counties because such a grant could,

                                    12
  and likely would, frustrate the operation of Amendment 64, which

  is a matter of compelling state interest. Under the County’s

  argument, it could impose a special retail marijuana sales tax at

  such a level that it would essentially prohibit the sale of marijuana

  in home rule cities, whose citizens had voted to permit the sale of

  marijuana. That result would violate the constitutional structure

  created by Amendment 64.

¶ 31        For all of these reasons, we hold that section 39-28.8-

  203(1)(a)(VI) does not authorize the County to impose a special sales

  tax on retail marijuana.6 Therefore, the county special sales tax is

  invalid.

      VI.    The Election Approving the County’s Special Sales Tax Does
             Not Constitute Legislative Authority to Impose the Tax

¶ 32        The County nevertheless argues that, because it held a valid

  election authorizing the special sales tax, we do not have the




  6 In contrast, home rule cities, such as Northglenn, Aurora, and
  Commerce City, enjoy “the full right of self-government in both local
  and municipal matters.” Colo. Const. art. XX, § 6(h); see also Webb
  v. City of Black Hawk, 2013 CO 9, ¶ 4. Because the question is not
  before us, we do not decide whether they have the constitutional
  authority to impose their own special sales tax on the sale of retail
  marijuana. See Colo. Const. art. XX, § 6; see also Berman v. City &
  Cty. of Denver, 156 Colo. 538, 400 P.2d 434 (1965).
                                        13
  authority to overturn the election results and enjoin the collection

  of the tax.

¶ 33     We reject this argument because whether the County held a

  valid election is irrelevant to whether it had the legislative power to

  impose a special sales tax. Unless the General Assembly or

  Colorado Constitution authorized the County to impose such a tax,

  the County simply does not have the power to enact such a tax,

  irrespective of a valid election.

                VII. Collection of the County Special Sales Tax

¶ 34     Because we hold that the special tax is invalid, we need not

  and do not address whether the County has the authority to

  promulgate regulations in connection with the collection of such a

  tax.

                               VIII. Conclusion

¶ 35     The County’s special sales tax on the sale of retail marijuana

  is invalid. Accordingly, the district court’s judgment is reversed.

         JUDGE TERRY and JUDGE BOORAS concur.




                                      14
