Colorado to zero-rate marijuana for one day on September 16

As an unexpected result of the success of dispensaries in Colorado, the state will exempt marijuana from sales tax for one day, on September 16.

The Colorado Constitution has a complicated system of tax restrictions. According to a 1992 law, the Taxpayer Bill of Rights or TABOR, state revenue from a new tax must be tied to inflation and population growth, and is therefore estimated and set by Colorado. Beyond that, the state may either retain the funds by having this decision approved via referendum or redistribute the surplus to taxpayers. Furthermore, this requirement is valid for only one year.

In this case, economists had projected cannabis tax revenue for 2014 at 70 million $. It ultimately came in at $58 million but still exceeds Colorado’s cap. Colorado will therefore have to ask its taxpayers via a referendum whether it can keep its taxes, but must comply with another odd state requirement: a one-day tax holiday. The legislature has therefore decided to implement a Cannabis Tax-Free Day.

This is a rather unusual procedure, especially for a state that has previously rejected this type of program for items such as school supplies or energy-efficient appliances, which can benefit broader segments of the population than the marijuana smokers. Tax analysts estimate that Colorado will forgo $3 million or $4 million as a result.

The tax refund date was set for September 16, the day after the state’s financial statements for the previous fiscal year were certified. The marijuana However, it will not be completely tax-free: a tax of 2.9% will still apply. This corresponds to the sales tax, and local taxes may also be collected. Compared to the usual 25% (10% in sales tax and 15% in excise tax), the coffeeshops They expect an increase in foot traffic at their clinic and are even planning special sales for that day.

Colorado voters will decide in November whether the state should keep the cannabis-related taxes. If citizens vote “no” in the referendum, the sales tax will drop from 10% to 0.1% for six months. And $20 million will go back into the pockets of cannabis producers, who pay this tax as part of the excise tax. Only consumers and producers will benefit from this redistribution, contrary to what has been widely reported (the figure of 7.63$ refunded to each taxpayer had been widely publicized).

The cannabis revenue for the first five months of 2015 are estimated at 44 million $, compared to just 25 million for the first five months of 2014. The increase is largely due to the opening of new stores. Colorado now has 380 recreational dispensaries and 480 licensed cannabis producers.