Marijuana Taxes in Colorado — An Early Clue

COLORADO: Across America, lawmakers are eyeing tax revenue from legalized marijuana. Colorado and Washington are each officially expecting over $100 million annually in marijuana excise taxes. In a few days, the Colorado Department of Revenue is due to report how much marijuana tax was paid there for January, the first full month of recreational sales anywhere ever.

But the report on January collections will tell us next to nothing about what other states can expect, and only a little about Colorado. You can multiply January taxes by 12, but that won’t show annual marijuana revenue the state can count on from now on — for two reasons. First, the mature market will not resemble the start-up January market. Second, Colorado will start taxing some transactions that it exempted in January.

Start-up Uncertainties

In future months, Colorado’s industry will probably sell more grams of marijuana than it sold in January, but at lower prices. More grams will pull taxes up. Lower prices will push taxes down. It’s not clear where taxes will end up.

 

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