Did you know that Colorado is having one tax-free day of cannabis sales? That's right, due to a quirk in the Colorado constitution, there will be one full day of exemption from the 10 percent special sales tax on September 16.
Recreational retailers will also be exempt from the 15 percent tax on recreational transfers, which makes for a slightly awkward predicament. They want to make sure they have plenty of stock to provide for what will likely prove to be an overwhelming demand from the general public, but if they stock too much, they won’t benefit from the waive on excise tax they normally pay for wholesale product. According to a fiscal statement from the Colorado Legislative Council Staff, the state stands to lose about $100,000 from waiving the taxes for a day.
The reason for the tax break is due to the Colorado Tax Payer’s Bill of Rights, which requires voter approval for all new taxes. Luckily for the new tax law, voters approved the 25 percent tax in 2013, a year after legalization. However, the law also requires that any new taxes be waived and refunded if overall state collections are higher than the projections given to voters during the approval process.
The projections for tax collections in the first year of recreational legalization was $70 million, but Colorado didn’t quite hit the mark, earning $58 million. Overall tax collections in the year exceeded projections, so Colorado must ask for voters' permission to keep the money. In an attempt to revert the taxes back down to zero, lawmakers compromised with the one-day tax waiver.
The prices won’t be completely tax-exempt, but from a customer standpoint, 2.9 percent sales tax is miniscule compared to the normal rate and should put a sizeable dent in your total at checkout.
If you'll be in Colorado and are looking forward to some mostly tax-free shopping, check out our Colorado Leafly List to find the top-rated cannabis shops in your area so you can take advantage of the savings!
