Colorado residents may be seeing the benefits of their state’s new marijuana laws in the form of financial support soon, according to state tax laws.
When the state’s marijuana laws were created, it was decided that the money from the sale of state – sanctioned marijuana would go towards state schooling system – however, there is a constitutional limit on the amount of money the state can raise through taxes before giving something back to state residents.
In the last year, over 50 million dollars was raised in recreational marijuana taxes – enough that Colorado residents may soon see a share of that money, something which is surprising most consumers.
While some say they have no problem with the marijuana taxes, others feel that the taxes – 30 percent or more on the sale of marijuana in Colorado, depending on the jurisdiction – are too high, and the state is obligated to give back.
Since a state constitutional amendment in 1992, Colorado has been required to issue a refund to taxpayers whenever they collect more in taxes than they’re allowed – an amount determined by a formula based on inflation and population growth. However, it’s relatively uncommon that it actually comes to this; in the 23 years since the amendment was put in place, refunds have only been issued a total of six times.
When marijuana was legalized in 2012, Colorado voters decided on a 15 percent excise tax – to fund state schools – and an additional 10 percent sales tax, for lawmakers to spend at their discretion. Now, the state is set to take in about 50 million in taxes this year from the sale of recreational marijuana alone, and with the economy improving and other tax collections growing faster, the state of Colorado is facing the reality of issuing a refund to residents that could amount to over 30 million dollars.
Democratic State Senator Pat Steadman writes that the situation is “just absurd”, a sentiment which is shared by Colorado’s now thriving marijuana industry. Many industry groups are avoiding taking a stance on whether or not to issue a refund, despite having campaigned in favour of the taxes.
A representative of the Denver-based Marijuana Industry Group, Mike Elliot says MIG isn’t pushing for lower taxes – but lawmakers seem to be considering that as an option anyway. This course of action would require a state-wide vote, however, and there is little time for lawmakers to hammer out a plan. The final tax estimates, which determine how much of a refund each Colorado resident will get, are due in March.
While there is some confusion about how to get the refund to taxpayers – previous refunds have generally been paid through income tax returns, but in this case, lawmakers need to figure out if the money would go to all taxpayers or just those who purchased marijuana in the last year – most seem confident that the refund mechanism ultimately doesn’t matter, because it’s unlikely that voters would not approve marijuana taxes a third time, in the event that the issue does make it to the polls.