$5 million plan to use marijuana taxes for hemp processing fails in Colorado

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A Colorado proposal to use $5 million in marijuana tax collections to help buy machines to process hemp fibers failed.

The idea from the Colorado Department of Agriculture aimed to help one of the oldest chicken-or-egg dilemmas facing the young hemp industry: a lack of processing capacity.

Because so few U.S. facilities can remove hemp fibers from the plant’s woody core – a process called decortication – farmers have limited options for selling fiber varieties of the plant, spurring them to stick with cannabinoid-heavy varieties.

Colorado has only one decortication facility, agriculture officials say. One machine costs $600,000 to $3 million.

The proposal would have taken $5 million from Colorado’s Marijuana Tax Cash Fund, which includes sales and excise taxes from medical and adult-use marijuana sales, according to Denver alt-weekly Westword.

But lawmakers failed to add the money to the state’s final budget, the newspaper reported.

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Meanwhile, a separate measure to limit the sale of hemp-derived intoxicants such as delta-8 THC did pass the Legislature, but only after the proposal was changed to give officials a year to study how hemp intoxicants should be regulated.

That bill would also set aside almost $600,000 for law enforcement to hire three staffers to work on hemp-related consumer protection, according to Colorado Newsline.

The measure awaits the signature of Gov. Jared Polis.