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Colorado DOR Explains Sales Tax on Marijuana


 Like it or not, marijuana shops are now open for business in Colorado.

The Colorado Department of Revenue has published information about sales tax on marijuana. It reminds that in Colorado, “[a]ll sales of medical marijuana, medical marijuana products, retail marijuana, and retail marijuana products are subject to sales tax.” Retail sales of recreational marijuana in Colorado began on January 1, 2014.

Retail marijuana

Retail marijuana, or marijuana purchased for recreational use rather than medicinal purposes, is subject to the following:

  • The general 2.9% state sales tax;
  • Any local sales taxes; and
  • An additional 10% state sales tax.

In addition, cities and counties may choose to impose an extra tax on sales of retail marijuana. These taxes “should be reported and remitted directly to that city or county.”

There are no exemptions for retail marijuana.

Sales of retail marijuana and retail marijuana products should be reported monthly on a Retail Sales Tax Return and on a Retail Marijuana Sales Tax Returns. Both are filed electronically through Revenue Online.

Medical marijuana

Medical marijuana is subject to the following:

  • The general 2.9% state sales tax; and
  • Any local sales taxes.

Patients issued a registry card with a tax-exempt status notation from the Colorado Department of Public Health and Environment may purchase medical marijuana exempt from sales tax.

Sales of medical marijuana, medical marijuana-infused products and accessories should be reported on the Retail Sales Tax Return, which may be filed electronically through Revenue Online.

Additional in information is available at the Colorado Department of Revenue, FYI Sales #93. Click here and then the link to Sales #93.

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photo credit: Karl Hab via photopin cc


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.