Coloradans enjoyed Wednesday’s pot-tax holiday, even if understanding TABOR – the Taxpayer’s Bill of Rights which allowed for the tax-free day at recreational dispensaries – would make the most sober person feel stoned.
Last year’s revenue from recreational pot sales pushed the state’s total tax collection over an established cap. So voters will have to decide whether the state can keep that money or whether they want it back – according to TABOR.
Whenever refunds are triggered, tax rates get reset back to zero. Thus the pot-tax holiday.
Voters will decide what happens with the extra tax revenues in November.
Sales and excise tax were both knocked down to zero on Sept. 16 — the first day of the new fiscal year — but pot wasn’t totally tax free. The regular 3 percent state sales tax, medical marijuana tax and local pot tax all still applied.
Customers were, however, spared the 10 percent retail marijuana sales tax, and dispensaries saved the 15 percent excise tax normally paid to wholesalers.
Joe Redden stopped at the Green Depot on South Broadway after noticing the store’s sign out front. He bought an eighth, and saved $4 on his purchase.
“Marijuana is normally so expensive,” he said. “[The tax break] isn’t much, but it helps.”
Redden said he intends to spend the $4 he saved on cigarettes. He moved here from Kansas two years ago. Not for the pot, he laughs – but the timing was sure convenient.
Inside, floor manager Rick Rondeau remarked that the sign in front of the shop is inaccurate. It should say “mj” not “mmj,” he pointed out, because the tax holiday applies to the recreational side of things, not medical.
But the dispensary got the sign for free. “And hey! It works!” Rondeau said, nodding toward the stream of people flowing through the door.
“We matched a normal good day by 11 a.m.,” he said at 1 p.m.. “Next to 4/20, this is the best day of the year.”
The tax break isn’t just good for customers — it’s good for retailers.
With the excise tax temporarily suspended, shops could restock their shelves without having to pay 15 percent back to the state. Rondeau described the strategy to take advantage of that tax break as a balancing act: Green Depot wants to have enough product on its shelf to meet demand, but just enough to justify ordering more.
“You’ve got to time it right,” he explained. “We missed it by three or four days.”
Their most recent shipment wasn’t quite dry enough on Wednesday.
“The bigger guys don’t have that problem.”
The Green Solution is one of those bigger guys. With twelve locations in the Denver-Metro area, Green Solution didn’t do any advertising or offer any special promotions on Wednesday.
“Everyone else basically did it for us,” general manager at the Alameda branch Michael Evans said, citing the hype barrage on social media, T.V. and radio in the days leading up to the holiday.
For just one nugget plucked from the Internet buzz, here’s a video of rapper Snoop Dogg wishing the people of Colorado a happy tax holiday, via MERRY JANE.
[youtube id=”6lqSQM0PI8c” width=”620″ height=”360″]
“It was crazy this morning, died down a bit, then everyone came during their lunch hour,” Evans said. At around 4:30 p.m., when he spoke with The Colorado Independent, there were around five people waiting to flash their IDs and head into the store at any given moment.
Evans likened Wednesday to the first day anyone over 21 could walk into a well-lit retail establishment and walk out with something they used to buy from a guy on a street corner.
“Just the excitement level — it’s like it was two years ago.”
Voters decided pot should be regulated like alcohol in November 2012.
Amendment 64 stipulated that the first $40 million in tax revenue raised annually by recreational marijuana sales be devoted to school construction. The next year, voters approved the tax structure that exists today. The state predicted taxes specific to the recreational side would raise $70 million in 2014.
But that projection missed the mark — by a lot. In February, the Colorado Department of Revenue reported that the retail sales and excise tax brought in just under $44 million in 2014. Marijuana revenue alone didn’t trigger a refund under TABOR, but total tax collection exceeded the cap set by the 1992 law.
Now, voters will have two options come November: yes or no on Prop BB. A yes vote would let the state keep pot revenue, putting the first $40 million toward school construction, with the remainder going toward youth mentoring, agriculture, drug enforcement and addiction treatment. A no vote would mean that revenue gets refunded to taxpayers. $33 million would go to marijuana growers, retailers and consumers in the form of various tax breaks. The remaining $25 million would be divvied up among Colorado taxpayers. Checks that arrive in mailboxes across the state would range from $6 to $16, based on income levels.
Joanna Van Derlaan, a regular at the Green Solutions on Alameda, said she generally likes that some of the money she spends on pot goes toward education.
“It’s great that the state makes that money,” she said outside the store on Wednesday. She bought her usual — some smokable marijuana and some vapable oil — and saved around $40 in taxes.
“But for me today, this is great,” Van Derlaan said. She said she might use what she saved to take her son out to dinner.
Carlos Sanchez is a newlywed who moved to Denver’s Capitol Hill neighborhood recently. He rode his bike around to a couple pot shops Wednesday afternoon, but all his regular spots had huge lines, and he didn’t feel like waiting outside in the heat.
The Colorado Independent caught up with him at Alternative Medicine on Capitol Hill, which was packed but at least air conditioned.
Sanchez said he heard about the tax holiday on the popular online weed forum, Reddit.com/r/trees. Because he made a modest purchase, he saved only $3 or $4. Even still, he felt like those savings were important — not necessarily to him personally, but as a drop of a drop in the well.
For Sanchez, the lost revenue on Wednesday just highlights how much the state is raising during the other 364 days of the year.
In a fiscal note attached to HB 1367, the Colorado Legislative Council estimated the one day suspension of the retail sales tax would cost the state $100,000 in revenue it otherwise would’ve raked in, and $3.6 million from the excise tax. That excise tax estimate assumes producers will adjust their transfer schedule to take advantage of the one-day tax break — which, as Green Depot manager Rick Rondeau pointed out, is easier for larger chains, not so much the mom-and-pop shops.
The state raised a hair above $70 million from all marijuana-related taxes and fees in 2014, on top of nearly $19 million the year prior.
“If everyone’s talking about the money today, other states will realize this works, and it’s good,” Sanchez said.
Because he’s new to Colorado, Sanchez said he has to do more research before he votes on Prop BB in November.
He and his wife have recently begun thinking about starting a family.
“It’s crazy,” he said. “But we have to start looking at these issues. And the big thing is education, right? We need to know the schools will be good.”
Pot taxes resumed Thursday.
Photos by Nat Stein