March 20, 2026 · 7,084 words · 6 speakers · 179 segments
Thank you. Okay, let's see. Just confirming that the audio is working. When you said the deadline with today, the deadline for filing for the next title board hearing is today. But there's also the deadline on this being the last day for that whole two-part cycle. Today is the last day to file an initiative for review and comment in the 2025-26 cycle. Okay, so you would see it, then you would just say, okay, comparative version A versus B, then, okay, got it. We can do it. Okay, the audio is all set up.
So, we're calling the meeting order.
This is the hearing for the proposed initiative measures 26-274 and 275 concerning eliminate sales tax on food and eliminate sales tax on food for immediate consumption. It is 1246 on March 20th, 2026 in the House Committee Room 109.
We will go around and introduce ourselves for the record.
My name is Christine McLaughlin, and I'm here with legislative staff. Nicole Myers, Legislative Legal Services.
Natalie Menton, petition representative for 274.
Brandon Work, petition representative for 275 or 274, sorry. right now. Okay, section 1-40-1051 of the Colorado Revised Statutes requires the directors of the Colorado Legislative Council and the Office of Legislative Legal Services to review and comment on initiative petitions for proposed laws and amendments to the Colorado Constitution. The purpose of this statutory requirement of the directors of Legislative Council and the Office of legislative legal services is to provide comments intended to aid proponents in determining the language of their proposals and to avail the public of knowledge of its contents of the proposals. While this is a public meeting and members of the public are free to be here and listen in, the purpose is not to hear from members of the public but to hear from the designated representatives of the proponents of the initiative and their council. Other persons are not permitted to comment. Our first objective is to make sure we understand your objectives in proposing the laws. We hope that the statements and questions contained in our memorandums will provide a basis for this discussion and understanding of your proposals. We will start with 26274 by reading the purposes
stated in the memorandum dated March 18, 2026. Let's pass it on to Natalie. And I just wanted to add
one thing because there were two measures submitted at the same time I just going to read that last paragraph The proposed initiative 2025 number 274 was submitted by the same designated representatives as part of a group of related proposed initiatives including proposed initiatives 2025-26 274 and 275. The comments and questions raised in this memorandum do not include comments and questions that were addressed in the memorandum for proposed initiative number 275 except as necessary to fully understand the proposed Initiative 274. Comments and questions in that memorandum may also be relevant, and those questions and comments are considered part of this memorandum. Okay, purposes. The major purposes of the proposed amendments to the Colorado Revised Statutes appear to be to, one, make findings and declarations of the people of the state of Colorado. Two, eliminate state sales tax on all food. 3. Redefine food as any food or drink intended for human consumption, whether liquid, solid, frozen, prepared or unprepared, and whether sold for domestic home consumption or immediate consumption. 4. Specify that the classification of an item as food does not depend on packaging, labeling, or the absence of a federal or state labeling requirement. 5. Exclude alcohol beverages, products required to have a supplement fax panel, drug or medical devices, marijuana products, and tobacco or nicotine products from the definition of food. 6. Specify that cover charges shall be included as part of the amount paid for alcohol beverages. 7. Preempt municipalities, counties, cities and counties, homeroom municipalities, and special districts from imposing or collecting any sales tax, use tax, fee, or other governmental assessment imposed on or measured by the sale or purchase of food. 8. Allow reasonable regulatory licensing or inspection fees on food establishments if imposed solely to recover the direct and indirect costs of administering a regulatory program. 9. Protect existing bonded indebtedness lawfully authorized and outstanding prior to January 1, 2028 by allowing local governments to continue collecting sales or use tax on food solely to satisfy scheduled principal and interest payments. 10. Prohibit any bonded indebtedness issued on or after January 1, 2028 from pledging or relying upon revenue derived from the sale of food. Do those purposes encompass your intent?
There would be clarification after taking the suggestions that were in the review and comment.
Hearing there, I would say, in item number six here, where it's addressing that cover charges shall be included.
I would say that that was not our primary intent and it's been clarified within the language to that part of law that was really tied into prepared foods and so forth. So we hope that it's been clarified. So that is, I would say, not our purpose in that.
Okay, thank you. And one other thing, since we're on record so this time to do it.
So item number three says redefine food. I really consider it clarifying what is food versus redefine. There's in our current statute a lot of ifs, ands, and buts with food, and we're trying to, as one purpose here, simplify this. So I only – it wouldn't have been the first word that I would have chosen personally to describe what we do there.
that is all that I noticed in the purposes Do you Yeah Yeah Okay Thank you Thank you for clarifying Okay
I'll start.
You want me to start? Okay.
Substantive comments and questions. The substance of the proposed initiative raises the following comments and questions. One, Article 5, Section 1, 5.5 of the Colorado Constitution requires all proposed initiatives to have a single subject. What is the single subject of the proposed initiative?
It's concerning the elimination of state and local taxes and governmental fees on food.
Do you want to switch off?
Is it the proponent's intent that the findings and declarations of the people in Section 1 of the proposed initiative appear in the Colorado revised statutes? If so, which sections of the Colorado revised statutes will this section be added?
In the amended package, that will be 39-26-1015 added to Colorado revised statutes. with legislative declaration.
Okay, thank you.
Three, the following comments and questions relate to Section 2 of the proposed initiative, which modifies the definition of food for purposes of state sales tax as it is currently defined in Section 3926.102.4.5 CRS. A, is it the proponent's intent to completely repeal the existing statutory definition of food and replace it with the definition of food specified in the proposed initiative? If so, to make that clear, consider using the correct language in the amending clause to indicate that effect. For example, Section 2 in Colorado Revised Statutes 3926102, repeal and reenact with amendments subsection 4.5 as follows.
Yes, that is our intent. And on a coming up question in Section 2 would be the same that we have done the repeal and reenact.
Okay. Thank you.
B, the proposed definition of food includes ice intended for human consumption. How is a retailer expected to determine, at the point of sale, whether ice is purchased for human consumption as opposed to other purposes, such as cooling food or beverages in a cooler?
This question we tried to leave. There was a slight change within this to try to narrow it a little more. So the things such as, for instance, dry ice, which it's clear that's not human consumption that it is labeled. But I would suspect that the Department of Revenue would have some guidelines already in regards to this and could perhaps, if there's further, there's really no way to explain plain ice, I think. So the human consumption is dependent on that. And right now there is just white definition, so we're trying to make it clear.
C. The proposed definition of food explicitly excludes any product required to be labeled with a supplement facts panel under federal law. If a product is unlawfully sold without the federally required supplement facts panel, is it the proponent's intent that the product remain taxable or would it be treated as exempt food?
Well it was hard to digest this question because unlawfully sold which was difficult for me personally to understand where we gauge where the stands when something is unlawfully sold without the labeling it supposed to So the way we have put it in the words have been amended within this draft. And I'm sorry, I'm trying to move. We're on top of the next page. so that now it reads any product required to be labeled with a supplement facts panel under federal law at the time of sale. It is excluded as the definition of food.
Yeah. Okay.
So if it's sold without the label, what would be the consequence? If it was required to have a label, but it doesn't?
It's so hard for me to get my brain around with an unlawfully soul because there was already a problem.
Okay. I don't know that this changes that.
Does it?
Current lasagna is currently?
I don't think so.
So basically what we are saying is if this is a supplement, not a food as defined, those are taxed.
Okay.
I mean, that's the intent.
Okay.
We are not changing. We're not going into drugs and the different things that all under that and not are considered normal traditional food. So they would be taxed. Yeah, we remain as taxable.
Okay. And then the second question in this question is how will retailers categorize products that are dual labeled or ambiguous under federal dietary supplement guidelines?
I think there is where then it is the nutritional facts, and so it's considered food. That is the overriding. Would you agree, Brandon?
I'm trying to think of all the examples. That's why I brought so many things. There's all sorts of things that are like...
Ready?
Our intention is labeled out... I'm just going to go this route. We have labeled pretty specifically, I think it's been clear on the last time the food had examples. There's been parts to our food definition that are added to address some of these things that border on which one do we consider it.
Okay. Okay. All right. Do you have any example of... I came to mind to prompt that?
You know, I didn't think of any specific example. It was more of just I don't know enough about how the guidelines work and how strict the labeling is. And so it was just the question was how will the retailer be put in the position of having to make that determination? And if so, how would they do that?
Right.
And I think with the amended, if it has the supplement facts panel, then that is what categorizes it differently. So if it doesn't have that, then it's considered regular food and not taxable. That's added.
Yes.
And I think maybe I said that a little bit backwards when I said it before, and you're correct. I mean, if it's got the supplements panel and the feds. under their definitions, have required that label. That's where I would like to find some. Then, yeah. Then that would be what signifies it is not food.
Food.
Okay.
Specifically, do this.
And I'm just not, as you mentioned, it's with different labelers.
I understand. So. Okay.
Number four. The following comments and questions relate to Section 3 of the proposed initiative, which amends Section 3926-707-1A of the Colorado Revised Statutes, to state that all sales of food are exempt from taxation under Part 1 of this Article 26. Point A. Is it the proponent's intent to completely repeal this section, as it currently exists, and replace it with the sales tax exemption on all sales food as specified in the initiative? If so, to make that clear, consider using the correct language in the amending clause to indicate that effect. Section 3 in Colorado Revised Statutes 3626707, repeal and reenact with Amendments 1A as follows.
I have done that, and it's now reading in Colorado Revised Statutes 3926707, repeal and reenact with Amendments 1A and repeal 1.5A as follows. To join those two.
Okay. I'm sorry, insert both of those, not just join us.
Okay. Point B, under Section 3926-707-1-E, current law exempts all sales of food from sales tax. Given the change in Section 2 of the measure to the definition of food, is this change to Paragraph 1A necessary?
In this draft, it was kept in there, the revision with the amendments, simply because that's the exemptions part. And, I don't know, it just felt more comfortable and safe to have it repeated within exemptions.
All right.
So, doesn't the current paragraph 1E with the broader definition of food under Section 2 of the measure effectuate the broader exemption of food for human consumption regarding the regardless of whether consumed at home or at a dining establishment.
It does. It does. So I would agree that it's reinstating it, and I'll agree with it, but I felt it was uncomfortable deleting it all from that section under where exemptions are.
Part C. Part 1 of Article 26, CRS, concerns the state sales tax, whereas Part 2 of Article 26 concerns the state's use tax. Section 3926702, Part 2, CRS currently exempts certain foods from use tax. Is it the proponent's intent that food not specifically exempt in Part 2 of Article 26 remain subject to the state use tax?
No, that was not in the intent. what was meant to match the legislative intent at the beginning that this would apply to sales and use tax. Therefore that has been included with the section along with a repeal and reenactment.
If the proponents intent is to eliminate both sales and use tax at the state level consider making any necessary changes to Section 3926
That was done. Yes, that was done.
The proposed initiative repeal Section 3926.707.1.5a. Have the proponents reviewed the introduction of this repeal with other existing tax exemptions and definitions currently established in the Colorado Revised Statutes to ensure that there
are no unintended statutory conflicts. I will answer with this, I don't know of any conflicts at this point, and I think the whole process is part of that, but I don't know of any conflicts
at this time. Five, the following comments and questions relate to Section 4 of the proposed initiative, which amends Section 39261041E CRS to specify that a tax shall be levied on the amount paid for alcohol beverages in certain venues. Is it the proponent's intent to completely repeal Section 39261041E CRS as it currently exists and replace it with a requirement that a tax be levied on alcoholic beverages in certain circumstances, as specified in the proposed initiative? If so, to make that clear, consider using the correct language in the amending clause to indicate that effect, which we've gone over, starts with Section 4 and Colorado Revised Statutes 3926-104, repeal and reenact with Amendments 1E as follows.
Hold on.
The purpose is not to add an additional sales tax or use tax on alcohol beverages.
so if the purpose in the question was is this an additional tax no and so that section has been cleared up with the repeal and reenactment along with the correction on alcoholic beverages to
alcohol beverages okay um i'm just going to read b anyway just because even though you answered the
question um the proposed to b the proposed initiative specifies that alcoholic beverage has the same meaning as in section 44.3.103.2 CRS. However, that section defines alcohol beverage. Is that the term the proponents intended to use?
Yes, that is.
C, alcohol is subject to the standard state sales tax in Colorado. What kind of tax does a proposed initiative levy on alcohol beverages? Is this tax in addition to the standard sales tax?
I think you just... I know you want to take that one.
Okay. Oh, yeah.
No, we are not adding anything in addition to the standard state sales tax in Colorado.
D, the proposed initiative specifies that cover charges shall be included as part of the amount paid for alcohol beverages. What is the proponent's intent in including this language in the proposed initiative?
That section has been amended to clear that up. That was another one of the strange parts of our law regarding food taxation. And it's been cleared up in the amended version.
Okay.
And then two, is this language related to the taxation of any alcohol beverage?
No. No.
All right Question six The following comments and questions relate to section five of the proposed initiative, which preempts municipalities, counties, cities, and counties, home rule municipalities, and special districts from imposing or collecting sales tax, use tax fees, or other government assessments imposed on or measured by the sale or purchase of food. Point A. A proposed initiative must indicate where the text of the proposed initiative will be located in the Colorado Constitution or Colorado Revised Statutes. To which section of the Colorado Constitution or the Colorado Revised Statutes do the proponents intend to add the language in Section 5 of the proposed initiative? Section 4 now reads, in Colorado's right statutes 3926-707, repeal and reenact 2A with amendments as follows, which would then say the storage, use, or consumption of food as defined in section 3926-102-4.5. Section 5.1 prohibits local governments from imposing any sales tax, use tax, fee charge, or other governmental assessment imposed on or measured by the sale or purchase of food. Would this language prohibit local governments from imposing general retail delivery fees, bag fees, or packaging fees on grocery deliveries or takeout orders that contain food?
Our intent is not to affect bag fees or delivery fees. our intent is to make it very clear within the legislative intent that any governmental fees outside of the health department, customary fees noted in here, that those fees on the food itself are prohibited.
Okay.
Part C. Section 5.2 of the proposed initiative states that the proposed initiative is not intended to prohibit the implementation of regulatory licensing or inspection fees on food establishments under certain conditions. Does Section 5.2 apply to only local governments or does it also apply to the state?
the amended version i believe clarifies it a little better on that one but really it appears to be local governments mainly with their health departments and that the state so i think in fact who's charging the fee and who's that that's charging fees that's local governments charging health department fees. And the state really is providing the rules, the laws, the things for that health department and businesses too. So it's... I think it will be cleared up in the measure that it's really saying those regulatory fees, whether it's the state, which rarely would charge them, or the local, which mainly charges them, would be allowed to charge their customary fees.
Okay. Simple.
I am not a health department inspector, so I can't speak to my – I'm speaking to my general understanding of how that operates.
Okay D Article XX Section 6 of the Colorado Constitution Article 20 of the Colorado Constitution grants home rule municipalities the power to legislate upon provide regulate conduct and control local and municipal matters which the Colorado Supreme Court has historically recognized includes the power to levy and collect sales use taxes. Part one, does this provision conflict with the Article 20, Section 6 of the Colorado Constitution?
As noted in our legislative intent and in a couple ways, we believe this is a matter of statewide concern, specifically jurisdiction to jurisdiction and a uniform taxation or in this case elimination of food, taxation on food. And secondly, that this is the necessary route to accomplish this because of the fact that citizens cannot control with a home rule in some, well, this is a little more generally broad, but citizens do not have the power of initiative, as was mentioned. So the statewide concern and the fact that we'll be providing a uniform system, we don't believe there will be a problem or conflict.
Okay.
That answers the next two, but I'll go ahead and read them. Does the proposed initiative attempt to preempt the constitutionally granted taxing authority of homeroom municipalities through a statutory enactment?
In this matter of statewide concern and taxation, yes. And I need, did I answer, in our belief that this is a matter of statewide concern, it does preempt the taxing authority that we need uniform taxation and statewide initiative is the way to do that and accomplish it. since we don't have the right to petition at various levels of government.
Three, is it the proponent's intent that declaring the taxation of food as a matter of statewide concern in Section 5.4 of the proposed initiative is sufficient to supersede home rule constitutional authority?
The answer is yes. Yes.
Okay.
Okay. Seven. The following comments and questions relate to section six of the proposed initiative that protects existing bonded and bonded obligations or bonding obligations. As stated above, a proposed initiative must indicate where the text of the proposed initiative will be located in the Colorado Constitution or the Colorado revised statutes. To which section of the Colorado Constitution or the Colorado revised statutes do the proponents intend to add the language in section six of the proposed initiative?
Section 6 now reads in Colorado Revised Statutes 29-2-105, amending 1DIC. That is where that will be located, and that's in the amended version.
E. Section 6-3 of the proposed initiative allows a local government that previously pledged sales or use tax revenues derived from food to secure bonded indebtedness to continue to impose and collect such tax solely to the extent necessary to satisfy scheduled principal and interest payments on that indebtedness. 1. How long is a local government expected to practically implement this provision?
Well, with bondholders, audits, we expect that should not be a problem, but within the amended version, it does allow within a 90-day period following the full payment of the bond. So it is giving a window for them to secure that audit and know that, yes, we should cease that. We must cease the taxation on the sales or use tax on food.
Okay.
Two, is the local government required to continuously calculate and adjust the tax rate on food to exactly match the debt obligation, or are they expected to collect the tax at the normal rate until the debt amount is reached and then abruptly cease collection for the remainder of the year?
We do not intend to do a prorated type of a formula that they have to calculate to pay as normal, and then now this 90-day window that is allowing them to close out the books, close out the loan.
Three, who is responsible for overseeing and enforcing that the tax collected does not exceed the amount solely necessary for the scheduled payments?
Well, I would put that upon the taxing agencies, chief financial officer, outside auditors, whatever that may mean, along with being a bond, any third party that would be involved in that transaction. But as to who is enforcing it, there is no enforcement part within this food tax thing. So we are dependent on the employees or elected officials within those bodies. And ultimately, if there's any challenges, I would say it's a taxpayer enforcement issue.
Okay. C, the heading for Section 6 of the proposed initiative states that the section includes an automatic sunset. What is an automatic sunset? Which subsection in 6 includes the automatic sunset?
So that then is revised. That is now reading 39-26-7, and I'm not sure the best section to put that, but the protection of the existing bond obligations and a limitation on continued collection. And then that describes roughly the 90 days that's been put into that to close it out.
Okay.
Final question. What fiscal or other impacts may result from the enactment of the proposed initiative on state and local governments in Colorado? To the extent that the enactment of the proposed initiative leads to significant loss of state and local government revenue currently used to fund essential services, how do the proponents anticipate the state and local governments will replace this revenue?
With this question, I would start by saying the economics of it basically, having studied food tax repeal for some time, is that we have a benefit for the citizens of roughly 10 days of groceries in a year. if they're not spending the money on sales tax or occasionally use tax on food, and I shouldn't say grocery's food, that they're spending on something else that likely has sales tax also going to government. So while you may be going down, especially those who have a tighter income, is it going to savings or is it buying another necessary thing? So we got that scale that yeah it less of the group I mean I grew up with a we had a grocery envelope and that what you got for a month But when you aren spending as much there then you spending in another envelope and the government is still receiving revenues but on the other end of this too we are reducing government expenditures that are present right now in my opinion where there are a variety of ways that government is giving out subsidies in food products so not only do we have the revenue question of perhaps less on sales tax at king supers but more at ace hardware to fix the sink whatever may be Secondly, you have the government, we hope, reducing subsidies because everybody's keeping more money putting actual food on the table versus part of that going to sales or use tax.
Do you have anything you want to add?
I know you're passionate about this part. You said it well.
People will spend the money other places as well. and yeah I mean we do have the under Tabor you know state and local governments can always ask for additional tax revenue from other avenues as well if it's not coming from food so they can potentially propose some other tax increase if necessary but hopefully they're saving enough money and people have enough money saved or they can spend it other places in the economy
That brings us to the end of that. Would you like us to walk you through the technical comments outlined in the memorandum, or do you have any questions on those?
I think much of that has been taken care of with the repeal and reenactments, along with the helpful, thank you very much, formatting. Also now downloaded the 712, 14, or 700 page legislative drafting manual. So I hope I'm on the diversion.
That's a lot of at night time reading there. But I'll put you to sleep. Unless you're fascinated with it. Actually, it is fascinating.
But anyway, trying to take care of that. So hopefully comments and everything and especially where these things should be inserted. One question. With the protection of the Section 7, oh actually my section's now well this is the protection of the bond I've left that with a to go into 39-26-7 blank blank
is there do we have to necessarily insert that or can staff recommend once we get to that point where it would be inserted does it have to be defined or can be inserted in the best drafting manual position with a recommendation?
I think to the extent that you can indicate what your intent is, where you would like it to go, that way your intent can be more easily followed. Okay.
So the more specific you can be, the more easily we can know what your intent is.
Okay. So that was probably the only technical comment or question I had. Excuse me.
I think that was very helpful in getting the document.
All right, great. So then those are the comments in this memorandum. Do you have any other further comments or remarks you'd like to make for the record?
Not on 274 Let move on to 275 The purpose is stated in the memorandum dated March 18th 2026
Do we have to read the whole thing again? Or do we not have to do that? Is it a combined memorandum or is it?
They're separate.
I think we go through for this for 275 again. Okay. Yeah. Okay. Yeah, I can do it.
The purpose is...
Oh, I think because it's a separate memo, don't we have to do this whole preamble thing again? Oh, I thought we didn't have to do the introduction twice. Okay, I defer to you. But I... Okay.
We could do it for safety.
All right. Okay.
Section 140.1051 of the Colorado Resby Statutes requires the directors of legislative council staff on the Office of Legislative Legal Services to review and comment on initiative petition for proposed laws and amendments to the Colorado Constitution. We hereby submit our comments and questions to you regarding the appended proposed initiative. The purpose of the statutory requirement of the directors of legislative council staff and the Office of Legislative Legal Services is to provide comments and questions intended to aid the designated representatives and proponents they represent in determining the language of their proposals and avail the public of the contents of the proposal. Our first objective is to be sure we understand your intended purposes of the proposal. We hope that the comments and questions in this memorandum provide a basis of discussion and understanding of the proposal. Discussion between the designated representatives and their legal representatives and employees of the Legislative Council staff and Office of Legislative Legal Services is encouraged during review and comment meetings, but comments or discussions from anyone else is not permitted. The proposed initiative 2025-26, number 275, was submitted by the same designated representative as part of the group related to the proposed initiatives, including proposed initiatives 2025-26, number 274. The comments and questions raised in this memorandum do not include comments and questions that were addressed in the memorandum for proposed initiative 2025-26274, except as necessary to fully understand the proposed initiative 2025-26. Comments and questions addressed in that memorandum may also be relevant, and those questions and comments are considered part of this memorandum.
All right. Okay. Now we will start with the purposes. We don't need to do intros again or you want those? No, I don't.
Okay.
Okay.
The purposes for proposed initiative 2025-26 number 275. The major purposes of proposed amendments to the Colorado revised statutes appear to be to one, make findings and declarations of the people of the state of Colorado. 2. Eliminate state sales tax on food for immediate consumption. 3. Define food for immediate consumption as food or drink intended for human consumption that is sold in a ready-to-eat or ready-to-drink form and is ordinarily consumed at or shortly after the point of sale. 4. Exclude alcohol beverages from the definition of food for immediate consumption. 5. Specify that cover charges shall be included as part of the amount paid for alcohol beverages. 6 Pre municipalities counties cities and counties homeroom municipalities and special districts from imposing or collecting any sales tax use tax fee or other governmental assessment measured by the sale or purchase of food for immediate consumption 7. Allow reasonable regulatory licensing or inspection fees on food establishments if imposed solely to recover the cost of administering a regulatory program. 8. Protect existing bonded indentedness lawfully authorized prior to January 1, 2028 by allowing local governments to continue collecting sales and use tax on food for immediate consumption solely to satisfy scheduled principal and interest payments and 9. Prohibit any bonded indentedness issued on or after January 1, 2028 from pledging revenue derived from the sale of food for immediate consumption. one phrase that is throughout this is food for immediate consumption and based upon the good
questions that is now being framed as food sold in a ready-to-eat or ready-to-drink form so i would say that that could be substituted versus immediate which is i'm getting it i'm eating it right away we were speaking about prepared food so in agreement with that part which affects several parts and again on point number five which about the cover charges the intent was not to affect cover charges or taxes on alcohol beverages besides that that is correct I will actually I'm going to clarify one more thing because it will be part of this but while this said home rule counties cities and counties home rural municipalities this is also for the few home rural county also applicable okay it's covering all districts separate schools are never mentioned in here
We'll go on to the substantive comments and questions outlined in the memory of them.
Part 1. Article 5, Section 155 of the Colorado Constitution requires all proposed initiatives to have a single subject. What is the single subject proposed initiative?
To eliminate sales or use tax on food sold in ready-to-eat or ready-to-drink form.
Two, the following comments and questions relate to Section 2 of the proposed initiative, which modifies the definition of food for the purpose of state sales tax, as it is currently defined in Section 3926102.4.5 CRS, to define food for immediate consumption. A. The proposed initiative defines food for immediate consumption as food or drink that is ordinarily consumed at or shortly after the point of sale. What time frame constitutes shortly after the point of sale? If a person purchases a ready-to-eat sandwich at a grocery store at 7 a.m. intending to eat the sandwich for lunch at noon, is the sandwich consumed shortly after the point of sale?
We hope we have cleared that up with the rephrasing to sold in a ready-to-eat or ready-to-drink form, which would apply even if they eat it out of the refrigerator a day later and still in its 7-Eleven wrapper or whatever.
B. The proposed definition of food for immediate consumption explicitly excludes alcohol beverages. However, it does not explicitly exclude other consumable items that are regulated or taxed differently, such as edible marijuana products, dietary supplements, or liquid medications. Because these items can be sold in a ready-to-eat or ready-to-drink form, is it the proponent's intent that they be
exempt from sales taxation under this initiative. It is not our intent to remove from taxation edible marijuana products, dietary supplements, or liquid medications as in the examples given.
C. The proposed initiative states that in determining whether food is for immediate consumption, no inference shall be drawn from the type of vendor, the location of the product within a store, or the manner in which the product is marketed. If no inference can be drawn from the type of vendor, the location of the product in the store, or their manner in which the product is marketed, how will retailers and the Department of Revenue determine which ready-to-eat items meet the criteria of being ordinarily consumed at or shortly after the point of sale?
Well, hopefully we've cleared that up because we're using the prepared food. And that's my generic term for all those other words that I keep saying. Yeah.
Okay. Question 3. The following comments and questions relate to Section 4 of the proposed initiative, which amends Section 3926-707-1A of the Colorado Revised Statutes to state that sales of food for immediate consumption are exempt from taxation under the provisions of Part 1 of this article. Part A. Part 1, Article 26 of Title 39 concerns the state sales tax, whereas Part 2 concerns the state use tax. Is it the proponent's intent that food for immediate consumption remains subject to the state use tax?
It is our intent that food prepared and ready to eat or ready to drink form is exempt from sales and use tax. Therefore, that correction has been made in the amended copy to conform with what the legislative intent had stated that this eliminates sales and use tax.
B. Well, Section 5.1 of the proposed initiative prohibits local governments from collecting use tax on these items. Why is the sales use tax exemption omitted in Section 4?
That was overlooked and has now been remedied.
Before we go to four, I have a quick question about ready to eat. As you have amended, it sounds like you have changed the way you're phrasing that. So there are some packaged foods that can be eaten right away. Like I'm thinking of like a candy bar or something like that. Is it your intent that if you can basically unwrap it and eat it, it's ready to eat? I'm just wondering what the distinction is between food and ready-to-eat food. Does it have to have been prepared in some way, like the sandwich example that we discussed earlier?
It is our intent. There's no difference between a wrapped, processed, prepared type of a food item. that is to be included whether it's so the i think you're trying to narrow down is prepared what's prepared is that well i guess i'm trying to make a distinction between what is a prepared
food that's ready to eat or drink which i think was what you said you're and what is just a food
um well it's it's defined in the definitions down to it I believe 39 26 104 and double check we are and well and I and I brought up the candy bar example because I believe that candy is taxed um correct and so that is where I'll say ultimately our goal is to do 274 and we take care of all of these problems where this this is candy even those papayas you know it's prepared ready to eat because it has sugar on it my understanding is it's candy so with us doing a narrow repeal it is not ideal because it leaves the popping candy in 1.5 which in our 274 were striking, it's going to leave a gap of things that are taxed. Okay.
Because we're saying, basically, the frozen chicken is not taxed.
The deli chicken is taxed. Under current law. Under current law in Colorado. So we're taking care of these prepared foods.
And you're asking, basically, is there a gap that would still exist with a thing like a candy bar?
Yes, it would in R275. That's why not the ideal scenario.
Okay. Okay.
I just want to tell you. And I'll give another example, which would be, I would be very frank, one of the disturbing parts of when these changes went through was fruit juice as an example. Fruit juice is dependent on whether it has more than 50% fruit juice in it.
Okay.
If it only has 30% apple juice with only 38% apple juice, that's considered pop right now. that it gets taxed at the grocery. That would leave, see, there's the whole pop and candy definition. So it leaves gaps, I guess is what I'm going to say. That's, again, why it's not our ideal.
Okay. All right. Thank you.
I just thought of that as we were talking. We are trying, not only for the consumers repealing, we're trying to simplify the system because it is complex. the grocers having to deal with this, and you've got a convenience store opener off owner who may be defining things differently. That's why we want the tax cut.
Okay. All right. Question four. Section six of the proposed initiative protects existing bonded obligations that rely on sales or use tax revenues derived from food for immediate consumption. Initiative 2025-26, number 274, which was submitted with this proposed initiative, includes a similar protection. However, the language between the two initiatives varies slightly. Were those differences intentional? If so, how are the protections provided in Section 6 of this proposed initiative different from the protections provided in proposed initiative number 274?
275 has now been more aligned with 274. The original starting point was State Representative Hugh McKeon's bill from several years ago in repealing. So there was variation there that's now been matched more with 274 in the amended.
Same question as before. What fiscal or other impacts may result from the enactment of the proposed initiative on the state and local governments in Colorado? Because many municipalities rely heavily on sales tax generated by restaurants, cafes, and other establishments that sell food for immediate consumption, How do the proponents anticipate local governments will manage the loss of revenue used to fund municipal services?
Saying that when a household is spending less on grocery taxes on food very good chance that they are buying something that would also produce sales tax but not food And again, while we have two different parts of the scale there, grocery tax going down and how much somebody paid, increasing on something else they've paid. But on the other hand, the government expenditures, we hope to reduce subsidies to those especially in need. what money they do have to pay for food is stretched further because it's not going to the tax. So whether it's less services required by the government, less support, maybe more self-sufficiency, that is also part of the purpose. Would you like us to also walk through the technical comments outlined in the memorandum, or do you have any questions on those? Those are
fairly self-explanatory, very helpful. Thank you. No, I don't think we need to go through those. Great. Then those are all the comments in the memorandum. Do you have any further comments or additional remarks you would like to make for the record?
No, I don't have any.
Okay. In that case, the hearing for initiative 274 and 275 is adjourned.
Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you Thank you. . . Thank you. Thank you Thank you. Thank you.