Colorado Marijuana Taxes Helping the Bottom Line | AccountingWEB

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."


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