Colorado Collects $32 Million in Hemp Taxes
Colorado's tax department is raking in the dough from marijuana sales this year, collecting $32 million from all sources through June.
Colorado's marijuana tax has a structure where it not only taxes the market rate of marijuana, but also levies additional state and local taxes.
The first tax is a 15 percent excise tax on the "average market rate" of marijuana sold, the second smaller tax is a 10 percent state tax on marijuana retail sales, and then there's an additional state sales tax of 2.9 percent.
This doesn't include local sales taxes in cities such as Denver, where taxes currently stand at 3.5 percent.
The Tax Foundation breaks down the numbers in this easy-to-read example:
When these taxes are added up, in Denver for example, a $30 eighth of pot (1/8 oz.) will have about $8.59 in taxes tacked onto it, or about a 29 percent overall tax rate. (By comparison, the equivalent tax on cigarettes is about 31 percent and on beer only about 8 percent.)
Colorado isn't the only state with new marijuana taxes, however.
Washington State has raked in $3.8 million in sales and $1.8 million in tax revenue in 2014. According to Moody's, the effective tax rate is 44 percent.
Starting November 4, other states, such as Alaska, Oregon, and the District of Columbia will be joining the marijuana tax bandwagon.
Nevada Cannabis Industry Association head Joe Brenzy said that many of these ballot initiatives are just the beginning.
The Tax Foundation reported that Brenzy told legislators at the Council of State Governments annual meeting that ballot initiatives are coming to 12 additional states in order to legalize and tax hemp.
State governments: be prepared to gird your loins for increased regulation.