Marijuana Tax Bill Calling For A 25 Percent Tax On Legal Weed Passes In Colorado House

Washington state has a proposed law that will allow adults to possess up to one ounce of marijuana under government control a
Washington state has a proposed law that will allow adults to possess up to one ounce of marijuana under government control and taxation. (Dean J. Koepfler/Tacoma News Tribune/MCT via Getty Images)

Buyers of recreational marijuana in Colorado could pay a 25 percent tax on their legal weed if voters approve of the rates that state lawmakers have proposed in a bill that passed the House, Tuesday.

House Bill 1318, which proposes an excise tax rate of 15 percent along with a special sales tax rate of 10 percent -- down from the initial proposed sales tax rate of 15 percent -- was passed in the House 37-27 on a party line vote.

The bill now moves on to the Senate where House Bill 1317, the regulatory framework for marijuana sales bill which already passed the House on Monday, has already been introduced.

That 25 percent total tax rate would be added to Colorado's state tax of 2.9 percent and any local county taxes that may apply -- in Denver the total local and state taxes on food and beverage sales is 8 percent meaning consumers in Mile High City would pay 33 percent in taxes on the purchase of a marijuana product.

Mason Tvert, one of the backers of Amendement 64 and current communications director at Marijuana Policy Project, told The Huffington Post that proponents of A64 support the 15/10 tax rate proposed:

This is a sensible tax that has been designed to cover the regulatory needs of the system. We are fully supportive of the 15/10 version of 1318 approved by the House, although it would be nice if the 10 percent were locked in for two years. We hope members of the Senate will give strong consideration to doing that and ensuring this new legal marijuana market has an adequate opportunity to establish itself and eliminate the underground market.

Colorado's Taxpayers' Bill of Rights requires that Coloradans vote on any tax increases so they will be asked to weigh in on the 15 percent excise tax and 10 percent sales tax on this November's ballot. The Associated Press's Kristen Wyatt reported that some state lawmakers fear that voters will reject one or both of the tax proposals leaving the state stuck with the tab for enforcing pot sales but without the budget to pay for it.

Amendment 64 states that the first $40 million raised from the 15 percent excise tax would go to to school construction. And although many voters who supported A64 did so because it could raise money for schools, lawmakers are concerned that even fans of that excise tax rate and the use of its revenue could be turned off by a total tax rate that would exceed 30 percent.

7News reported that dispensary owners are worried that the increased taxes will raise the price of pot to such a degree that buyers would be forced to purchase pot on the black market. Shop owners also said that they pay large licensing and other fees to run their businesses already which should be the revenue that the state uses to fund enforcement.

It could also simply pull marijuana users out of the buying market where they could be heavily taxed and into the home-growing market where the taxes would apply for the initial plants and supplies but from then on out, growers would have their own tax-free product for personal use. Amendment 64 allows adults 21 and over to grow up to six plants at home, with only three of those plants flowering at a given time.

Although Coloradans are known to reject increased taxes when it comes to even popular state services -- take K-12 education improvement, for example -- when it comes to legal marijuana, state voters appear to be ready to buck that trend.

According to a recent survey from Public Policy Polling, 77 percent of Colorado voters support the 15 percent excise tax -- which Amendment 64 calls for and which is earmarked for public school construction -- as well as an additional 10 percent sales tax to cover the cost of regulating recreational marijuana sales. Only 18 percent of those surveyed were opposed to increased taxes on legal pot sales. The survey of 900 registered Colorado voters was conducted by Public Policy Polling from April 15-16.

In a statement, Amendment 64 backers said that state officials have told them that the cost to the state to enforce recreational marijuana regulations would not be greater than $30 million and said that the proposed 25 percent in taxes would still likely yield more than $60 million.

Colorado voters passed Amendment 64 last November making the limited sale, possession and growing of marijuana for recreational purposes legal for adults 21 and over. A64 states that adults can possess up to an ounce of pot, can grow as many as six marijuana plants at home (with only three flowering at any given time), but that home-grown marijuana can only be for personal use and cannot be sold, however, adults can gift one another up to an ounce of pot.