Avalara Taxrates > Blog > Sales Tax News > Colorado Approves Legalizing, Taxing Marijuana - Avalara

Colorado Approves Legalizing, Taxing Marijuana

  • Nov 9, 2012 | Gail Cole

On November 6, the people of Colorado voted to legalize recreational marijuana. More than 54% of voters said yes to Amendment 64, which declares "that the use of marijuana should be legal for persons twenty-one years of age or older and taxed in a manner similar to alcohol."

Amendment 64 not only legalizes marijuana, it also legitimizes the businesses that sell it. The amendment reads, "Legitimate, taxpaying business people, and not criminal actors, will conduct sales of marijuana." (Section IV). Individuals will be able to purchase up to an ounce of marijuana in regulated stores. Amendment 64 stipulates the following:

  • "'Retail Marijuana Store' means an entity licensed to purchase marijuana from marijuana cultivation facilities and marijuana and marijuana products from marijuana product manufacturing facilities and to sell marijuana and marijuana products to consumers."
  • Persons involved in the sale of marijuana or marijuana products must have "a current, valid license to operate a retail marijuana store … [or act] in his or her capacity as an owner, employee or agent of a licensed retail marijuana store."
  • Individuals must show proof of age when purchasing marijuana.
  • Individuals must not drive when under the influence of marijuana.

Proponents of legalization say retail sales of marijuana will help fill state coffers and improve schools. Pursuant to Amendment 64:

 "The General Assembly shall enact an excise tax to be levied upon marijuana sold or otherwise transferred… at a rate not to exceed fifteen percent prior to January 1, 2017 and at a rate to be determined by the General Assembly thereafter… Provided, the first forty million dollars in revenue raised annually from any such excise tax shall be credited to the Public School Capital Construction Assistance Fund… ." (5, IX, d).

Opponents worry that legalization will "lead to costly legal battles and expensive new bureaucracies to regulate marijuana."

Colorado Attorney General John Suthers has a "strongly held belief that the 'legalization of marijuana on a state level is very bad public policy." Nonetheless, he has promised that his office "will move forward in assisting the pertinent executive branch agencies to implement this new provision in the Colorado Constitution."

United States Attorney General Eric Holder has yet to make a statement regarding Colorado's Amendment 64. However, Justice Department spokeswoman Nanda Chitre has said,

"The department's enforcement of the Controlled Substances Act remains unchanged. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule 1 controlled substance. We are reviewing ballot initiatives and have no additional comment at this time." 

Washington State also legalized the recreational use of marijuana on November 6, with the passage of Initiative 502. Seventeen states and the District of Columbia allow the medical use of marijuana: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maine, Michigan, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont and Washington. Maryland and Montana allow some use of marijuana for medical reasons, but do not allow dispensaries.

Get Free Tax Rate Tables

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.