Taxes from the sale of legal marijuana might not provide Colorado with the financial windfall lawmakers had hoped, thanks to the state’s constitutionally-mandated requirement to refund excess taxes.
The buzz kill came in the form of a memo from the Office of Legal Services to the Joint Budget Committee, which said that if Colorado collects more than $67 million in revenue from pot sales, the overage is required to be refunded to taxpayers under the Taxpayer Bill of Rights (TABOR). The memo was first reported by Denver’s Fox 31.
Voters, who approved marijuana’s taxing structure in last year’s election, were told that revenue would be $67 million in a state analysis of projected revenue. The most recent forecast is that Colorado will collect $107 million in revenue after the first year.
The only way the state will be able to spend the extra money is if voters allow it. Fox 31 reported that lawmakers are already discussing a 2014 ballot item asking for permission to keep and spend the overage.
“Ultimately, one way or another, the people of this state are going to have a great say about how this extra money is spent,” JBC chairwoman Cristina Duran told the station. “We have to follow TABOR and either take the decision back to the people of Colorado and ask them to keep these dollars or we have to make a refund.”
Whether it is ultimately necessary is hard to tell. Sales tax revenue figures from January released this week show that sales of recreational marijuana produced approximately $2 million in revenue. If the volume of marijuana sales doesn’t increase, year-end totals will fall far below the $67 million threshold.
But most expect the number to climb — only a small fraction of marijuana retailers expected by year’s end were open for business in January and the supply chain isn’t yet in full swing.
“It’s very difficult to figure out what the actual amount of marijuana tax revenue is going to be,” Duran told Fox 31.
The station noted that the legislature could lower taxes on marijuana to collect no more than $67 million, but that could impact the amount collected for school construction, which is to be funded, up to $40 million annually, from marijuana’s 15 percent excise tax.
The state could also go to court to argue that the excess tax revenue isn’t subject to TABOR, because the state made a good-faith effort to accurately predict revenue amounts, according to Fox 31.
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