colorado legal marijuana sales
Marijuana Business News

Colorado Will Lower Marijuana Tax Rate

colorado legal marijuana salesThe price of legal recreational marijuana in a state will largely determine the extend of the effect on the marijuana black market in that state. In a state like Washington, where the price for marijuana is still very high, the black market will never completely go away. That was a big reason why Oregon’s Measure 91 proposed such a low tax rate on legal recreational marijuana sales. The initiative called for a flat tax rate of $35 an ounce. Oregon legislators are trying to go against the will of the people by changing the original tax rate to a sales tax, and allowing cities to impose their own taxes on marijuana sales. All of those taxes will add up, raise the cost of legal marijuana, and will help the ensure that the black market stays around for a long time.

This is something that Colorado is realizing. Colorado has had a 10% tax rate on legal recreational marijuana sales since sales began at the beginning of 2014. That tax rate will lower in 2017. Per The Joint Blog:

Colorado Governor John Hickenlooper signed into law Thursday a bill that will permanently cut the state’s tax on recreational cannabis sales, in addition to establishing a one day cannabis tax-break.

The tax cut, from 10% to 8%, will go into effect in early 2017. Proponents of the move believe it will lower the price of cannabis which will help the legal cannabis market compete with the black-market.

The proposal also establishes a one day cannabis tax break, or what some call a tax holiday. On September 16th of this year, cannabis sales won’t be subject to the state’s 10% sales tax. This is due to what Governor Hickenlooper, who is publicly opposed to legalization, calls a “fiscal glitch” with the constitutional.

It will be interesting to see what a 20% reduction in sales tax will have on overall marijuana industry tax numbers. I would assume that the growth of the industry in Colorado in 2017 will more than offset any reduction in taxes generated. I’d like to see the State of Washington follow suit by lowering its tax rate on marijuana, and by much more than 20%. If that doesn’t happen, Washington’s industry will never reach its full potential.

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  • Bill

    I live in Washington State the tax rate on marijuana is ridiculous it is way too high if they lower it the black market will not survive so I am hoping that they reduce the tax rate I just paid $50 for 4 grams which is totally ridiculous even though it was great pot I will not pay that price again at least they let you grow your own but it used to be 15 plants now it is down to three plants and it’s so hard to get seeds I don’t understand why they won’t allow seeds in America ?

  • Taxes are always a good excuse to kill people. Eric Garner?

    Every tax, every regulation comes with it an army of bureaucrats and behind that an army (with guns) of enforcers.

    No more taxed or regulated than tomatoes.

    • Bongstar420

      Whats wrong with it aside from your opinion?

      • Enforcer is a job title usually found in criminal mobs. I understand government might need some. The fewer the better.

        • Bongstar420

          So when you agree to a trade and the other party collects but doesn’t follow through on their end of the bargain, you do what again?

          You still clarify how its wrong aside from the fact that it is your opinion that its wrong..how is it wrong, independent of your opinion?

          • You are usually a flawed analogy. In your analogy you are talking about two hypothetically willing participants. But taxation is not voluntary; it is money taken from people under the threat of force. It is ethically akin to theft.

  • Bongstar420

    $35 is on the grower…that inflates the price more than 10% on on the consumer.

    $35 is approximately 30% of the average wholesale price growers get through HB 3460…Its 60% if you are talkin outs.

  • been there

    As long as the “black market” can (and does) bring cannabis to market at a cost to them under $50/lb, they will continue to thrive.

  • The reason for the tax holiday is simple; the projected income from cannabis taxes will push Colorado over a constitutional maximum amount of surplus which under the constitution must be refunded to the taxpayers. However the amount is not far over the maximum; it is just enough to trigger the law and will force the state to send a few bucks to every taxpayer. This is a lot of expense for a lot of very small checks, so they are going to do the tax holiday thing instead in an effort to be just below the maximum instead of just above it. This way the tax savings will be enjoyed by (approximately) the same people who were responsible for the surplus in the first place and the state avoids the nightmare of sending out all those checks.

  • Jade

    Why did our property taxes go up the last two years?