Colorado’s bud tax $0.61/gram — Updated 12:53 p.m. July 13, 2015

Colorado’s so-called-but-not-really 15 percent producer tax on non-medical cannabis, starting July 1, is 61 cents a gram for bud, and 10 cents a gram for trim.  Colorado actually taxes cannabis at the producer level by weight, though its Constitution requires a 15-percent excise tax at the producer level.  (It’s disheartening when reports overlook the actual tax method, though many do, even now.)  This weight tax is supposed to reflect previous prices. Since the weight tax has reached its all-time low, previous prices have, too, the State indicates.

Those per-gram numbers are calculated from non-metric numbers in the chart below, which comes from the state.  You take 15 percent of the “Rate,” and divide by 453.592, the number of grams in a pound. Colorado’s tax on bud started at 62 cents, rose briefly to 66 cents, and now is at 61 cents through the end of 2015.

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The Average Market Rate will be included in the Retail Marijuana Excise Tax Return and can be used to calculate tax due when filing.

July 1, 2015 through December 31, 2015

Retail Flower Rate $1,868
Retail Trim $370
Retail Immature Plant $8

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Prior Periods

January 1, 2015 through June 30, 2015

Retail Flower Rate $2,007/ pound
Retail Trim $364/ pound
Retail Immature Plant $9/ plant

January 1, 2014 through June 30, 2014

Retail Flower Rate $1,876/ pound
Retail Trim $296/ pound
Retail Immature Plant $9/ plant

July 1, 2014 through December 31, 2014

Retail Flower Rate $1,876/ pound
Retail Trim $296/ pound
Retail Immature Plant $9/ plant

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The chart above comes from here, or https://www.colorado.gov/pacific/tax/marijuana-taxes-file.

Colorado’s latest methodology is here, or at https://www.colorado.gov/pacific/sites/default/files/AverageMarketRate.pdf.

The weight tax is a de facto adjustment to the difficulty or impossibility of assessing a percentage-based producer tax when much of the industry is vertically integrated, as discussed frequently elsewhere on this blog, for instance at https://newrevenue.org/2014/08/30/colorado-freezes-marijuana-tax-rates/ and https://newrevenue.org/2015/05/06/how-colorados-weight-base-works/#more-3676.

This weight tax is in addition to Colorado’s separate retail tax, 10 percent for non-medical only.  Standard sales taxes apply to both medical and non-medical, with a means-test exemption (see below) for medical.  There’s a 2.9% state sales tax plus local sales taxes (3.65% in Denver).  And some localities have separate ad valorem cannabis excises.  Denver’s is 3.5%.

For medical, Denver’s web site, http://www.denvergov.org/Portals/571/documents/TaxGuide/Marijuana-Medical_and_Retail.pdf, has this:

“The State of Colorado offers an exemption from state sales tax for patients that are issued a registry card that has a tax-exempt status notation from the Colorado Department of Public Health and Environment (CDPHE). The tax-exempt status is based on income (contact the Colorado Department of Public Health and Environment or the Colorado Department of Revenue for specific information).

“The City and County of Denver, unlike the State of Colorado, has no exemption from Denver sales tax for the sale of medical marijuana and medical marijuana products. As a result, Denver sales tax must be charged on the sale of all medical marijuana and medical marijuana products, even for purchases by a person with a Colorado tax-exempt status notation on their registry card.”

For non-medical (called “retail” in Colorado), Denver’s web site has this:

“All retail marijuana and retail marijuana products sold in Denver are subject to the general sales tax rate of 3.65%, as well as a special sales tax rate of 3.5%, for a combined sales tax rate of 7.15%.”

Thanks to Dale Gieringer for pointing out some unclear points before the update.

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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.

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