Is there anything better than having legal marijuana at your disposal? Coloradans just discovered the easy way that there is, in fact, tax-free legal marijuana.
Colorado’s recreational marijuana tax was temporarily suspended due to a snafu in state legislation. Sept. 16 in particular. Buyers saved around $20 on a mid-grade ounce selling for $200 before taxes for one day – only one day. And vendors were bracing themselves for a stampede.
Colorado’s marijuana tax regulations resulted in a one-time tax break. It was a one-of-a-kind occurrence in a state that routinely rejects sales tax breaks for other items. Officials estimate that the cannabis holiday will cost the state $3 million to $4 million.
Cheri Hackett, the proprietor of Botanacare, a dispensary in the Denver suburbs, said, “At first, I couldn’t believe we were doing this.” “Once our lawyer stated, ‘No, we’re doing this,’ we began preparing. We estimate that there will be a large crowd.”
Excess tax revenue may be repaid.
In 2012, Colorado voters approved the recreational use of marijuana, and they went back to the polls a year later and passed a new, two-tiered 25% sales tax on legal cannabis. However, there was a catch: if the state brought in more revenue than was predicted when the law was passed in 2013, any taxes would have to be postponed and repaid.
Voters were told at the time that the cannabis tax would bring in around $70 million in 2014. Although actual revenue fell short of estimates, overall tax revenues for the year exceeded expectations, requiring state officials to seek voter approval to keep the additional funds. As the law requires, they announced a one-day tax vacation, essentially lowering the rate to zero.
For the day, not all taxes were waived, and customers were still required to pay the state’s usual 2.9 percent sales tax, as well as local levies and medicinal marijuana charges.
Dispensaries should expect large numbers.
Business owners were getting ready for a busy day. They planned to store more pot in anticipation of large crowds, but they had to be careful not to overstock so much that they risked losing their one-day wholesale tax waiver.
The Associated Press reported that Ryan Fox, the owner of two Denver dispensaries and a wholesale growing company, expected a windfall on Sept. 16.
“Our expectations are high, and we’ll do everything we can to visit as many clients as possible,” Fox said.
Voters will determine whether or not to keep the increased tax revenue in November. The initial marijuana tax bill and legalization were both passed by large margins, and officials say they’re optimistic that voters will allow them to reinvest the extra funds in state and municipal projects.
Because the 2013 law limited statewide reimbursements to the first year of the tax, the holiday shouldn’t be repeated next year. Surpluses in subsequent years will similarly stay with the government if voters authorize the state to keep the money.