Cannabis, Colorado, and Taxes

Ben Franklin famously wrote in 1789, “in this world, nothing can be said to be certain, except death and taxes.” The ensuing 228 years have proven the Founding Father right, and nowhere is that adage truer than in the cannabis industry. For years before legalization, my friends and I would lament that marijuana wasn’t legal, and swore to one another we wouldn’t complain about high tax burdens were it to become legal. “Just legalize it and tax it,” was our mantra. Well, we got our wish, didn’t we? Now, those of us who wished so ardently for legalization have to put our money where our mouths are. Literally.

So, how much are Colorado’s cannabis consumers paying to legally buy herb?                                                  

It depends on where in the state you’re shopping. Let’s break it down with a little help from the Colorado Department of Revenue’s Taxation Division.

“When purchasing retail marijuana, the purchase is subject to the 10% state marijuana, 2.9% state sales tax plus any local sales taxes.”

That means that no matter where in Colorado you shop, you’re going to pay at least 12.9% tax on your cannabis purchase. Add to that 12.9% the local sales taxes which vary from city to city. In Denver, the total tax on retail cannabis purchases is 21.15%, but you’ll find different rates around the state. Steep, but to my mind, fair. Most of us who’ve lived with the alternative agree that the convenience of legally purchasing cannabis is well worth that cost.

Where does that money go? 

In 2016, cannabis sales in Colorado topped $1 billion, resulting in nearly $200 million in tax revenue for the state. That’s a lot of green. How is it distributed?

Amendment 64, which made retail cannabis sales legal in 2012, promised the first $40 million of cannabis taxes collected each year go to BEST – the Building Excellent Schools Today fund, which underwrites projects to renovate or replace deteriorating public schools.

The destination of the remaining $160 million is based on appropriations approved by the state Legislature. In fiscal year 2016 – 2017, almost $20 million went to the Department of Public Health and Environment to fund a number of different projects, $8.4 million went to the Department of Education for various programs and grants, and the Department of Agriculture received $3 million. The bulk of the remaining money was divvied up among cities and municipalities for discretionary programs.

The Green Solution® is a proud corporate citizen of Colorado, and we’re grateful for the opportunity to contribute to the welfare of our beautiful state with the tax revenue generated from our dispensaries.