Tax Refunds Could be a Benefit of Legalized Marijuana Sales
NEW YORK (MainStreet) Sales of recreational marijuana in Colorado have been much greater than originally estimated -- and that means big tax revenues for the state. In fact, perhaps too big. The state initially predicted $67 million in sales tax revenue would be generated during the first year of retail pot sales, but the Colorado Department of Revenue's latest estimate says receipts might be as high as $107 million.
That could mean Colorado residents will see a tax refund.
Legislators are wrestling with the consequences of the tax windfall, struggling to determine if any tax rebate should be issued to all state taxpayers, or just marijuana consumers who paid the sales tax. Lawmakers are also considering lowering the tax or having voters consider a measure to let the state keep the excess revenue.
The Colorado Taxpayer Bill of Rights (TABOR) limits legislative authority over tax revenues generated by the retail marijuana industry to $67 million.
"Ultimately, one way or another, the people of this state are going to have a great say about how this extra money is spent," state Joint Budget Committee Chairwoman Crisanta Duran told Fox31 Denver. "We have to follow TABOR and either take the decision back to the people of Colorado and ask them to keep these dollars or we have to make a refund."
Colorado collected more than $3.5 million in sales tax revenue and fees from both recreational and medicinal marijuana sales in January alone. Of that total, $2 million came from recreational sales.
According to the state's Department of Revenue website all sales of medical marijuana, medical marijuana-infused products, retail marijuana, and retail marijuana-infused products are subject to sales tax. Medical marijuana and medical marijuana-infused products are charged a 2.9% state sales tax as well as additional local sales taxes. Purchases of retail marijuana and retail marijuana-infused products are charged the 2.9% state sales tax, any local sales taxes and an additional 10% state marijuana sales tax.
--Written by Hal M. Bundrick for MainStreet