Colorado voters approved the legal use of marijuana for MEDICAL use in 2000 (Amendment 20, 54% approval) and for RECREATIONAL use in 2012 (Amendment 64, 55% approval). Three distinct taxes apply differently to medical and recreational marijuana:
- MEDICAL marijuana is subject to the state’s 2.9% SALES tax.
- RECREATIONAL marijuana is subject to TWO taxes:
- an EXCISE tax of 15%, AND
- a SPECIAL SALES tax of 15%.
Total marijuana tax revenue in FY 2016-17 amounted to $211.1 million and was distributed to four state cash funds, the General Fund, and local governments that allow the sale of retail marijuana.
(NOTE: While voters approved that these funds be used for “education, enforcement and research” related to marijuana use, the use of most of these funds is not restricted in the constitution and therefore can technically be used for whatever purpose the legislature deems most appropriate …although redirecting these funds for other uses may be challenged legally and therefore may be practically unfeasible.)
GENERAL SALES TAX = 2.9%
FY 2016-17 = $40.9 million
State sales tax revenue collected on Medical marijuana (and on non-marijuana products sold in Retail marijuana stores) is deposited in the Marijuana Tax Cash Fund.
SPECIAL SALES TAX = 15%
FY 2016-17 = $98.3 million
Revenue from the special sales tax is shared between the state (90%) and those local governments that permit sales of retail marijuana governments (10%). Starting in FY 2018-19, the state’s share is distributed as follows:
- 15.56% of the state share is retained in the General Fund;
- 12.59% of the state share is deposited into the State Public School Fund; and
- 71.85% of the state share is deposited into the Marijuana Tax Cash Fund.
EXCISE TAX = 15%
FY 2016-17 = $71.9 million
The first $40 million of excise tax revenue each year is constitutionally dedicated to school construction and deposited into the Building Excellent Schools Today (BEST) fund. Anything over $40 million per year is deposited in the Public School Fund.