Beyond Bud-Trim

Colorado now has seven categories of marijuana to weigh in its de facto weight-based marijuana tax. Wet bud and wet trim are to have different tax rates per gram than dry bud and dry trim. And there are completely new categories of wet and dry “whole plant”

Here’s the language:

(22)  “Wet” refers to Retail Marijuana that is not dried or cured. This term includes Whole Plants, Bud and Trim. With respect to any Wet Retail Marijuana, whether or not the marijuana is sold or Transferred before or after being trimmed, the plant material to be sold or Transferred must be weighed within 6 hours of the plant being harvested, and tax must be paid on that weight.

(23)  “Whole Plant” means a Retail Marijuana plant that is cut off just above the roots and not trimmed. The weight of the whole plant includes all bud, leaves, stems, and stalk. The Department treats 55% of the weight of a Whole Pant as Bud, 30% of the weight of the Whole Plant as Trim, and 15% of the weight of the Whole Plant as waste. These percentages are calculated into the Average Market Rate. The percentage treated as waste is not subject to the Retail Marijuana Excise Tax.

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(2)  “Average Market Rate” shall have the same meaning as defined in subsection 39-28.8-101(1), C.R.S., and shall be calculated pursuant to Department Rule 39-28.8.302.1(2) in the following categories:

  1. (a)  Dry Bud
  2. (b)  Dry Trim
  3. (c)  Dry Whole Plant
  4. (d)  Immature Plant
  5. (e)  Wet Bud
  6. (f)  Wet Trim
  7. (g)  Wet Whole Plant

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Background:

Can the bud-trim line hold? That was an early question – worrying that at the margin, taxpayers would put a little bud, that should be high-taxed, into the trim pile, making it low-taxed. That links to videos of trimming by hand and by machine.

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Then testing expert Rosemary Habib wrote this:

My first impression is, yes it could be more economical to move lesser buds over into the trim pile.  A lot of that depends on the market.  In some markets small buds are desired by the consumer, for less mold and easier utility.  Under that pressure, it might still be beneficial to sell smaller buds as is.  There is also a market for big boutique buds, the ones that look like the ‘bud porn’ you see in trade magazines.  Those larger buds will always go directly to sale as bud. Additionally, if there is some kind of hiccup in production, some plants could produce some seeds and those wouldn’t be viable for sale in the bud market. So there a number of pressures besides taxes that move the line between bud and trim.

The difference in weight between a closely manicured bud and a shaggy bud is miniscule.  It is purely a consumer preference, so they FEEL they are getting the most bang for their buck. Like with any farmer, the prettiest product goes to market and the stuff with the bumps, or mars, or weird shapes goes to the farmer’s family OR to the cannery (or applesauce maker, etc). They know it’s just as good, it’s just not as pretty.

Not all large producers use machine trimming.  I can’t even say a majority do.  Once you have trained trimmers, you can get at least a pound of trimmed bud a day from them.  At $15/hr, that’s $120/dry pound for trimming.

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And here is a look at businesses that use bud not to sell for smoking, but for making concentrates.

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OK, Colorado says per pound, but that’s the same as per gram.  Colorado regs are at https://www.colorado.gov/pacific/sites/default/files/39-28.8-101Definitionsredline.pdf.

 

 

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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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