{"id":7152,"date":"2017-01-19T16:50:09","date_gmt":"2017-01-19T16:50:09","guid":{"rendered":"http:\/\/www.denverpost.com?p=2370513&amp;preview_id=2370513"},"modified":"2017-01-19T16:50:09","modified_gmt":"2017-01-19T16:50:09","slug":"tax-hike-what-it-could-mean-for-consumers-industry-in-colorado","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/tax-hike-what-it-could-mean-for-consumers-industry-in-colorado\/","title":{"rendered":"Tax hike: What it could mean for consumers, industry in Colorado"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/tax-hike-what-it-could-mean-for-consumers-industry-in-colorado\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"row\" id=\"sticky-outer\">\n<div class=\"large-11 small-12 columns\">\n<div class=\"entry-meta-date\">Published: Jan 19, 2017, 6:21 am \u2022 Updated: Jan 19, 2017, 6:23 am<span class=\"single-comments-link\"><a href=\"http:\/\/www.thecannabist.co\/2017\/01\/19\/colorado-marijuana-tax-hike\/71699\/#disqus_thread\" class=\"commentsNameLink\" \/><\/span><\/div>\n<p class=\"byline\">By <span class=\"author\"><a class=\"url fn n\" href=\"http:\/\/www.thecannabist.co\/author\/awallace\/\" rel=\"author\">Alicia Wallace<\/a><\/span><em>, The Cannabist Staff<\/em><\/p>\n<p>Cannabis consumers could be paying more Colorado marijuana tax come July 1. As with any proposed tax increase, the prospect has been met with some concern amid the news that one of the state\u2019s pot taxes would increase 50 percent. <\/p>\n<p>At issue is a <a href=\"http:\/\/www.thecannabist.co\/2017\/01\/17\/marijuana-tax-hike-colorado\/71591\/\"> proposal floated this week by Colorado Gov. John Hickenlooper<\/a> that would raise the special sales tax on recreational marijuana products to 12 percent on the date it was scheduled to drop to 8 percent from its current 10 percent. <\/p>\n<p>Unaffected would be the 15 percent excise tax on cultivators, the 2.9 percent standard state sales tax and any local sales taxes. <\/p>\n<p>\u201cSo the buyer won\u2019t be paying 50 percent more in (state) taxes,\u201d said Chris Stiffler, economist at the <a href=\"http:\/\/www.coloradofiscal.org\/\" target=\"_blank\">Colorado Fiscal Institute<\/a>. \u201cFor example, on a $20 pack of edibles, you\u2019re probably talking about another dollar in taxes.\u201d<\/p>\n<p>But what does this tax uptick mean when put in the broader context of Colorado\u2019s high-flying, record-setting marijuana industry? Here\u2019s a look at how this may play into factors such as supply and demand, black market pull, pricing, end costs and the state\u2019s short- and long-term fiscal strategies.<\/p>\n<h3>What\u2019s behind the proposed tax bump?<\/h3>\n<p>Hickenlooper is seeking a way to fill a $135.1 million gap in K-12 school funding, according to the proposal from the Colorado Office of State Planning and Budgeting. A hike from the scheduled 8 percent to 12 percent could net an additional $41.9 million for the state as it seeks to fill a $135.1 million gap in K-12 school funding, according to the proposal from the Colorado Office of State Planning and Budgeting. <\/p>\n<p>The Colorado Legislative Council <a href=\"http:\/\/www.thecannabist.co\/2016\/12\/22\/marijuana-sales-pot-taxes-colorado-estimates-projections\/69831\/\">previously projected marijuana tax revenue to be $193.9 million<\/a> for the fiscal year 2017-2018, which starts July 1. <\/p>\n<p>Separately, the 15 percent excise tax on wholesale marijuana transfers is earmarked for schools, with the first $40 million going to capital construction projects and any excess deposited into the public school fund. <\/p>\n<h3>Could this increase end up stifling sales in the legal industry?<\/h3>\n<p>The interplay between supply, demand, pricing and taxes <a href=\"http:\/\/www.thecannabist.co\/2016\/12\/22\/marijuana-sales-pot-taxes-colorado-estimates-projections\/69831\/\">is a delicate dance<\/a>. <\/p>\n<p>If taxes are too high, then regulated markets might not achieve the necessary pull from the black market. If they\u2019re too low, the benefits for state programs take some hits.<\/p>\n<p>If the special sales tax does end up climbing to 12 percent on July 1, it would represent a 2-percentage-point increase from what consumers are paying now. <\/p>\n<p>While it\u2019s not yet known what effect the other newly recreational-use states may have on Colorado, the cannabis industry here likely won\u2019t suffer a major blow from this proposed increase, Stiffler said.<\/p>\n<p>\u201cI don\u2019t see sales tapering off,\u201d he said. \u201cI see sales continuing their strong trajectory.\u201d<\/p>\n<h3>How would the proposed increase affect consumers at the cash register?<\/h3>\n<p>According to information provided from cannabis sales-tracking firm BDS Analytics, as of November 2016, the per-gram cost of flower was $5.57, edibles were $14.87 and concentrates were $26.30. <\/p>\n<p>For customers paying the standard 2.9 percent sales tax and the proposed 12 percent rate, that would mean a per-gram tax increase of 11 cents for flower, 30 cents for edibles and 53 cents for concentrates.<\/p>\n<h3>How high could this special sales tax go?<\/h3>\n<p>Under <a href=\"http:\/\/www.denverpost.com\/2013\/11\/05\/colorado-voters-approve-new-taxes-on-recreational-marijuana\/\">Proposition AA<\/a> \u2014 a 2013 measure establishing two new state taxes on marijuana \u2014 voters gave the state legislature the flexibility to increase or decrease the special sales tax and the wholesale excise tax so as neither exceeded 15 percent. <\/p>\n<h3>Could the funding gap be filled by increasing other \u201csin taxes?\u201d<\/h3>\n<p>Colorado\u2019s alcohol taxes are among the lowest in the nation, Stiffler said. The state\u2019s excise taxes on liquor ($2.28 per gallon), wine (28 cents per gallon) and beer (8 cents per gallon) all sit well below national averages of $3.75, 69 cents and 20 cents, respectively, according to <a href=\"http:\/\/taxfoundation.org\/blog\/how-high-are-beer-taxes-your-state-0\" target=\"_blank\">a breakdown from the Tax Policy Center<\/a>. <\/p>\n<p>While low taxes help to encourage flourishing craft beer and spirits markets, Stiffler said, there also could be perceived room for higher taxes. The hurdle there would be getting permission from voters to raise their taxes on beer, he said. <\/p>\n<p>So, considering voters already gave their blessing for potentially higher marijuana taxes, those are seen as an easy, quick source of additional revenue for the state, Stiffler said.<\/p>\n<div class=\"entry-meta-tags\">\n<div class=\"entry-tags\">Topics: <a href=\"http:\/\/www.thecannabist.co\/tag\/chris-stiffler\/\" rel=\"tag\">Chris Stiffler<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/colorado\/\" rel=\"tag\">Colorado<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/colorado-fiscal-institute\/\" rel=\"tag\">Colorado Fiscal Institute<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/colorado-marijuana\/\" rel=\"tag\">colorado marijuana<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/colorado-taxes\/\" rel=\"tag\">colorado taxes<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/data\/\" rel=\"tag\">data<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/john-hickenlooper\/\" rel=\"tag\">John Hickenlooper<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/marijuana-black-market\/\" rel=\"tag\">marijuana black market<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/marijuana-revenue\/\" rel=\"tag\">marijuana revenue<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/marijuana-taxes\/\" rel=\"tag\">marijuana taxes<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/pot-sales\/\" rel=\"tag\">pot sales<\/a>, <a href=\"http:\/\/www.thecannabist.co\/tag\/recreational-marijuana\/\" rel=\"tag\">recreational marijuana<\/a><\/div>\n<\/div>\n<div class=\"entry-meta-author\">\n<div class=\"authorimage\"><a class=\"url fn n\" href=\"http:\/\/www.thecannabist.co\/author\/awallace\/\" rel=\"author\"><img src=\"https:\/\/cannitrol.com\/blog\/\/wp-content\/uploads\/2017\/01\/tax-hike-what-it-could-mean-for-consumers-industry-in-colorado.jpg\" class=\"authormug\" \/><\/a><\/div>\n<p class=\"author-desc\">Alicia Wallace joined The Cannabist in July 2016, covering national marijuana policy and business. She contributes to the Denver Post&#8217;s beer industry coverage. In her 13 years as a business news reporter, her coverage has spanned the economy, Sports&#8230;<\/p>\n<\/div><\/div>\n<\/p><\/div>\n<p><!-- .row --> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>A look at how the Colorado marijuana tax hike may play into factors such as supply-and-demand, black market pull, pricing, end costs, and short- and long-term state fiscal strategies. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6811,6857,2097,77,6822,9,5019,441,1,3,2379,61,1736],"tags":[6816,6859,4665,2655,6824,5022,3015,4974],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/7152"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=7152"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/7152\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=7152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=7152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=7152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}