Don’t be misled: Colorado still taxes cultivators by weight

A document submitted to Vermont’s Senate Finance Committee misleadingly says “Colorado began with a cultivator tax, which was eliminated on September 16, 2015.” Yes, it was eliminated —  but only for that one day, as part of Colorado’s strange marijuana tax holiday, mandated by the state’s Taxpayer Bill of Rights. The cultivator tax came back — on September 17.  It’s working.

And that tax is in fact imposed on weight, not percentage of price.

Here’s how Colorado implements its marijuana tax based on weight.  Many, many growers have to pay that tax, so it needs to be simple — and to be verifiable.

Before a license is issued, inspectors check the grower’s scale. Growers can’t send product out without a “manifest,” a piece of paper that lists who is driving, what kind of car, and what packages are on board the transporting vehicle. There’s a form for that. All product is sealed in tamper proof containers with zip-ties.  No container can hold more than a pound.

The Department of Revenue threatens spot inspections of scales, too.  And the Department reacts if it gets a lead about questionable business.

Yes, Colorado’s Constitution calls for a 15-percent producer tax, but they couldn’t make that work with vertically integrated producers, so they collect tax by weight – even for arm’s-length sales!  More here.

Here’s the whole quote from that submission:

“The black market should be suppressed as wholesale costs per pound for cultivators should not exceed $1200. Colorado began with a cultivator tax, which was eliminated on September 16, 2015. Colorado taxes marijuana on the retail level at 15% and allows local municipalities to collect an additional 2.9%.”

 

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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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