Sales Tax Holiday for Marijuana Raises Questions in Colorado

Everybody loves a bargain. In order to help spur the local economy and help families in need of some extra savings to make ends meets, states across the country will announce one weekend or even a single day where there will be no sales tax on a majority of items. There are of course more expensive and luxury items that are not tax free under the annual tax holiday. For example, it is generally a rule that you could not purchase a car on the tax holiday to save thousands of dollars in sales tax.

According to a recent news article from The Cannabist, despite a large number of exceptions to Colorado’s tax holiday weekend, marijuana in not subject to sales tax, and this is expected to cost the state a lot of money in lost revenue. This is the same state that is famous for not allowing school supplies, energy efficient appliances and other essentials like clothing from being sold without levying a sales tax.

When one dispensary manager interviewed for the article first heard about tax free cannabis weekend, she said should could not believe they were actually supposed to sell cannabis without any sales tax. She called her lawyer, and her lawyer apparently confirmed that marijuana and cannabis products were covered under the Colorado tax holiday weekend. She and other marijuana store owners are expecting huge crowds that weekend and are ordering more inventory, since tax on marijuana is around 25 percent.

As our Orange County medical marijuana industry attorneys can explain, having a lawyer who regular represents people with medical marijuana issues on retainer can significantly reduce the risks of running into legal trouble and can actually save your business a lot of money in the long run. It is often better (and cheaper) to make sure things are done right in the first place, than having to circle back and fix past mistakes to get out of trouble.

The reason marijuana products are covered by the tax holiday is because a state taxpayer’s bill of rights law requires taxes be refunded if the actual amount collected is in excess of the estimates presented to voters when they approved a new tax. The voters agreed to the 25 percent tax on marijuana but were told how much money would be raised in a year. Since the actual numbers far exceeded what was estimated, a refund is owned, and the tax holiday is a method by which refunds are paid.

Many lawmakers are not happy that marijuana will be covered under the tax holiday and say that that it will cost the state millions in tax revenue. While these numbers seem a bit of an exaggeration, given that we are talking about one weekend, it does show how profitable legalized marijuana can be to a state. It should be noted that, while the marijuana will not be subject to the standard sales tax, it will subject to the roughly 3 percent tax assessed on all marijuana products and medical marijuana prescriptions.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:
Get ready for the one-day tax holiday on Colorado marijuana, September 9, 2015, The Cannabist, by Kristen Wyatt
More Blog Entries:
Four Competing California Marijuana Legalization Proposals, April 3, 2015, Los Angeles Marijuana Lawyer Blog