Things To Know about why Colorado is suspending pot taxes
Sep. 09, 2015
DENVER (AP) — Colorado is waiving some taxes on recreational marijuana on Sept. 16. A quirk in state law is forcing the one-day tax holiday. Here are some things to know about why Colorado is tapping the brakes on recreational pot taxes:
BLAME (OR THANK) THE CONSTITUTION
Colorado has complicated tax-and-spending restrictions in its state constitution. The restrictions require new taxes to win voter approval and those new taxes to be waived and refunded to voters if overall tax collections exceed state projections.
WHY SEPT. 16
Colorado's fiscal year ends June 30, and certification of its previous year's tax collection is final on Sept. 15. So that's when the tax-waiver requirement takes effect. Taxes reset to normal on Sept. 17.
POT WON'T BE COMPLETELY UNTAXED
The waiver applies to recreational pot taxes approved by voters in 2013 — a 10 percent sales tax and a 15 percent excise tax. The state's underlying 2.9 percent sales tax remains in effect, and local add-on taxes may still be collected, too.
HOW MUCH IT WILL COST
Colorado's fiscal analysts say the state will forego between $3 million and $4 million that day. But the analysts point out that they're only guessing how much tax-free pot will be sold that day. Their only reference point is the black market, which is difficult to assess.
Voters will decide in November whether to keep the $58 million collected last year from the recreational pot taxes. If voters say no, sales taxes will drop from 10 percent to 0.1 percent for six months. Another $20 million or so would go directly back to pot growers who paid it through excise taxes.