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Colorado Lawmakers Move on Regulating Recreational Marijuana


 Colorado: Regulations on how marijuana can be advertised will surely follow.

When the legislative session concluded last Wednesday, Colorado lawmakers had cause to celebrate. Thanks to them, Colorado has become the first state in the nation to pass laws pertaining to the regulation of recreational marijuana.

One of the bills, HB 13-1317, “converts the medical marijuana enforcement division to the marijuana enforcement division and gives the division the authority to regulate medical marijuana and retail marijuana.” In essence, it “creates the regulatory framework for retail marijuana.” Think nuts and bolts.

The other bill, HB 13-1318, “imposes a sales tax and an excise tax on the sale of retail marijuana.” But wait, there's a caveat. Voters must approve the tax in a statewide election next November. Under Colorado’s Taxpayer’s Bill of Rights, neither the state nor local governments can raise tax rates without voter approval.

Sales Tax                                                 

Voters will be asked to approve a 10% sales tax, effective January 1, 2014, on retail marijuana or retail marijuana products purchased at a retail marijuana store. This tax would be in addition to the existing 2.9% state sales tax and any applicable local taxes. Once the tax is initially approved by voters, the general assembly would have the authority to reduce or increase the tax rate without further voter approval, provided it does not exceed a maximum rate of 15%.

Excise Tax

Voters will also be asked to approve the imposition of an excise tax, effective January 1, 2014, on “the sale or transfer of unprocessed retail marijuana by a retail marijuana cultivation facility to a retail marijuana store, retail marijuana product manufacturing facility, or another retail marijuana cultivation facility.” The rate would be "15% of the average market rate of unprocessed retail marijuana statewide on the date that it is sold or transferred.” As with the sales tax discussed above, the general assembly would have the right to lower that 15% rate and later raise it, provided it does not exceed the maximum rate of 15%.

Snapshot

Governor John Hickenlooper (D) has expressed his support for both bills and is expected to sign them into law once they make it to the top of the pile on his desk.

According to The Huffington Post, approximately 77% of Colorado voters approve of the proposed taxes. For supporters of recreational marijuana, that may be a good thing. As of yet, even the most vocal pot proponents are not offering to pay for advertisements in favor of the taxes.

Washington State

Meanwhile, in Washington State, the State Liquor Control Board is still sorting out details related to the legalization of recreational marijuana. The state has until December 2013 to implement new regulations.

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photo credit: Thomas Hawk via photopin cc


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.