An accounting error is paying off for marijuana users in Colorado, where a quirk in the law has prompted the U.S. state to suspend most taxes on recreational cannabis for the day.
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On top of the regular 2.9 % tax on all pot sales, Colorado also reaps a 10% boost to their bottom line with a special sales tax on retail marijuana and another 15% on wholesale marijuana transfers.
Retailers enjoyed bumper crowds yesterday (Wednesday) and have been giving various deals to entice shoppers before taxes reverted to normal on Thursday.
The report does not draw conclusions about the positive or negative impact of recreational and medical marijuana usage, both of which are legal in Colorado.
At a news conference earlier this summer, Colorado’s Democratic governor described the consequences on marijuana sales taxes as a “fiscal glitch” and a part of the “magic of living in Colorado.”
Colorado pot growers rejoiced when the state lifted taxes on recreational pot, saving them thousands of dollars while its consumers saved some bucks.
Colorado legalized, regulated and taxed weed after voters in the state approved a ballot initiative in 2012 to end the prohibition.
The pot tax holiday is the result of a combination of a constitutional amendment called the Taxpayer Bill of Rights (TABOR) passed in 1992, and Proposition AA, which voters passed in 2013. Past year Colorado made $70 million off of weed-related taxes compared to $42 million off of alcohol taxes, mainly due to the fact that recreational marijuana is taxed much heavier than alcohol. Alcohol is taxed by volume, ranging from 8 cents a gallon for beer to $2.28 a gallon for liquor, plus sales taxes. Westword.com has a comprehensive list of where you can and cannot legally purchase cannabis in the Centenniel State, if you care to take advantage of the state tax holiday.
Ahead of that vote, state tax analysts miscalculated overall state revenue for 2014. Further clarifying, Tvert noted, “This will be the one day out of the year when the state won’t generate significant revenue”.
These figures do not include standard state sales taxes or any local taxes.
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“I wouldn’t read too much into one state’s experience”, Mr. Rees told the Associated Press.
