Colorado converts percentage tax base to weight!

Unable to figure out a transfer price for a Constitutionally permitted 15 percent wholesale tax  when vertical integration forbids the existence of a wholesaler, Colorado has substituted a weight based tax.  Wow.

The excise tax is calculated by multiplying the quantity of retail marijuana product by the average market rate at the time, then multiplying by the 15% (excise tax rate). For example: ABC cultivator transfers 3 pounds of flower, 5 pounds of trim and 8 plants to ABC store. At the time of transfer the average market rates are:

$1,876 for Flower

$296 for Trim

$9 per Immature plant

3 lbs. of flower  x $1,876  = $5,628

5 lbs. of trim      x $296   = $1,480

8 plants             x $9      = $72____

$7,180 x .015 = $1,077 in retail marijuana excise tax due

Here is the official document:

CO early methodology for weight late 2013, or http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251923675647&ssbinary=true

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

8 thoughts on “Colorado converts percentage tax base to weight!”

  1. So, uh, let me see if I can wrap my head around this. Won’t this have the effect of encouraging low-weight, high-potency, high-THC products like hash oil and concentrates?

    And, mutatis mutandis, won’t this discourage the bulkier, less processed, more CBD-laden, and less potent cannabis plant matter?

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