Colorado Marijuana Taxes Helping the Bottom Line

In Denver, state legislators are probably thinking, "Why didn't we think of this earlier?" The state of Colorado's retail marijuana sales (separate from medical marijuana sales) in January alone generated more than $400,000 in the regular 2.9 percent sales tax and more than $1 million in the special 10 percent additional retail marijuana tax. That's just the beginning of the money-marijuana connection, and no doubt other states will be looking at the Colorado model. Denver's nickname as the "Mile-High City" is taking on a whole new meaning.

The Colorado Department of Revenue's Division of Taxation has posted a page dedicated to sales and excise taxes on marijuana. As noted above, consumers will pay at least a 12.9 percent sales tax—plus any local taxes. The filing requirements the state imposes on retailers are simple enough: "The sales tax must be separately stated on the receipt as with any other purchase of tangible personal property," says Colorado guidance. "There are no unique rules for retail marijuana regarding the invoice/receipt to the customer."

However, there is naturally an extra form: The regular sales tax is filed on a standard sales tax form, but the 10 percent extra tax is filed on a Retail Marijuana Sales Tax Return form that allows the government to keep close track of sales.

That's just the sales tax. The state also hits farmers with a 15 percent excise tax. It is imposed once, on the first sale or transfer from a retail marijuana cultivation facility to a retail marijuana store, for example. The current market rates for imposing this excise tax are $1,876 for flowers, $296 for trim, and $9 for immature plants. Those cultivating marijuana must file retail marijuana excise tax returns online every month.

And where is all that money going? Colorado is giving 15 percent of the 10 percent special sales tax to local governments, noting that its calculation will be based on the amount of retail marijuana sales taxes in the local jurisdiction. This is similar to the state's cigarette tax policy. In short, the more you smoke, the more you get.

And apparently unaware of the irony, the state is planning to give $40 million of the excise taxes to public schools.

Look for Colorado, and other states, to start seeing a marijuana tax as more than a windfall but as a part of government budgets. As attorney and "Tax Girl" blogger Kelly Phillips Erb says, "Here's the reality: forget marijuana, it's the tax dollars that are addictive."


You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.