In an effort to balance out the state’s influx of cannabis tax revenue, Colorado plans to eliminate special taxes on recreational marijuana products for a single day later this month. Reports indicate that this movement in tax relief is scheduled for September 16, in which all recreational dispensaries will simply charge customers the standard state sales tax, but none of the other taxes normally associated with the purchase of cannabis will apply.
Although this deal is somewhat unusual, especially considering that the state has never viewed tax-free holidays in a positive light, officials have found themselves in conundrum in regards to the taxes they have collected from cannabis industry thus far. Officials say that a one-day tax break was the simplest solution to remaining in compliance with the law.
When voters approved the taxes attached to recreational cannabis sales, it was written in the law that all new taxes would need to be refunded or waived if what the state accumulated was more than projected. In 2014, around $70 million was expected to come filtering into the coffers. That figure ended up being closer to $60 million, but the total haul is now forcing the state to make some paybacks.
Suspending taxes for a single day will cost Colorado around $3 million to $4 million, according to The Associated Press.
On September 16, patrons of Colorado’s cannabis market will not be forced to cough up the collective 25 percent special tax on recreational weed. Instead, only the 2.9 percent sales tax will be included. The sale of medical marijuana will remain unchanged.
For the dispensaries affected by the coming tax break, they are expecting larger crowds, putting them in a position to work diligently to ensure there are plenty of products on hand to distribute throughout the day. However, if these places stock too much inventory, they forfeit the 15 percent tax break provided by the state on wholesale cannabis.
This situation is sort of a once in a lifetime deal. Tax refunds are only mandated in the new tax’s inaugural year. Voters will decide what happens to pot taxes in November. The tax-free holiday could save customers somewhere between $20-50 per ounce depending on the grade.
Are you going to take advantage of the tax-free cannabis sales in Colorado? Tell us about what you plan to buy.