September 16th is the day when the state of Colorado is on marijuana tax vacation.
It might sound like a joke, but it’s not. It’s constitutionally serious. A mix of law quirks and provisions in Colorado’s constitution prompted the state to announce marijuana tax vacation.
For one day, taxes on recreational marijuana are being suspended. The break is the result of underestimating the state tax collections during the previous year. As the constitution of the state stipulates, this prompts the suspension of new taxes being collected until voters approve them.
The current marijuana taxing system has been approved by Colorado voters in 2013, one year following the legalization of recreational marijuana. The marijuana tax vacation is welcomed by owners of dispensaries across Colorado, although it must be met with precaution.
Cheri Hackett, the owner of one such pot dispensary in Northglenn, Denver stated:
“At first I was in disbelief we were doing this. Once our lawyer said, no, we really are doing this, we started getting ready. We’re thinking there will be huge crowds”.
Under the provisions of Colorado’s Taxpayer Bill of Rights, any new taxes need to be approved by voters. In 2013, taxing marijuana with 25 percent overall was a measure approved by voting. However, under state law, if the taxes collected exceed the projections presented to voters at the time of the vote, the state is obligated to waive new taxes and refund them.
Marijuana taxes were projected at 70 million dollars for 2014. The overall collected taxes reached 58 million dollars. Yet, due to the fact that overall tax collections were above the projections, the state is now asking the voters if it may keep the money thus collected. As taxes need to revert to zero before new ones are voted upon, the one-day pot tax waiver was issued.
The 2.9 percent tax is still standing, as well as local taxes imposed by the county or the city where the dispensary is located. Still, a 25 percent tax waiver is expected to drive massive crowds to the recreational marijuana counters.
The marijuana tax vacation was signed into law by Colorado Governor John Hickenlooper on June 4th. September 16th is the day when the fiscal year books are finalized. Nothing more convenient for the pot businesses and their customers.
Marijuana Policy Project, an advocacy group working hard for pot legalization sees the holiday as a well-deserved break for pot consumers who, compared to those who buy alcohol carry a much heavier tax.
Come Thursday, pot taxes revert to 25 percent statewide. In November, Colorado voters must decide whether they allow the state to keep the taxes collected. As for the approval of new taxes, state officials are confident they will meet no opposition from voters.
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