Kelly Phillips Erb
forbes.com
March 11, 2014
They say crime pays? Not exactly. Legalize a former crime and tax it and it really pays.
Just ask Colorado. Perhaps not so awkwardly labeled the “Highest State,” Colorado pulled in $2 million in taxes related to the sale of recreational marijuana…in January 2014 alone. Combined with taxes on sales from medicinal marijuana, the state pulled in nearly $3.5 million in pot-related tax revenue. If that trend continues, the state will see more than $40 million in additional tax dollars in 2014. To put that in perspective, that’s approximately 1% of the total annual budgets for Delaware, South Dakota, Montana or West Virginia.
There are a couple of layers of tax in place on the sale of marijuana. To begin with, there’s a 10% state sales tax imposed on retail marijuana and marijuana products on top of 2.9% in existing state sales tax (this is in addition to any local sales tax). As with other taxable products in Colorado, the tax is on the final consumer and cannot be included in the advertised price. Together with local sales taxes and special taxes, the tax imposed on consumers in Denver on the purchase of marijuana can reach as high as 21.12% (downloads as a pdf). Denver County accounted for more than half of all medicinal and recreational marijuana related sales tax revenue, while outside of the capital, taxes can be closer to 13%. No matter the level of tax, sales were pretty healthy statewide, with $14.02 million worth of recreational pot sold.
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