The suspension means customers won’t pay the state’s 10 per cent sales tax. There’s also a one-day break from the 15 per cent excise tax paid when cannabis is sold from the producer to the retailer.
The tax-free cannabis only lasts one day though, and residents can expect a return to 25 per cent tax Sept. 17. A 2.9 per cent sales tax, and local taxes, also still apply during the break.
Officials say the move could cost the state, and equally save taxpayers, $3–4 million.
The break on the sales tax would cut $20 off the price of a mid-grade ounce of cannabis in the Denver area, where they sold this summer sell for about $200, before tax.
Colorado’s Taxpayer’s Bill of Rights not only requires voter approval for new taxes, but says any new taxes should be waived and refunded if the overall collection amount exceeds projections given to voters when they first approved the new taxes. Because overall tax collection in 2014 exceeded projections, Colorado lawmakers had to decide how to refund voters their money. Their solution was one-day of tax-free cannabis for the state.
“At first I was in disbelief we were doing this,” said Denver-area dispensary owner Cheri Hackett. “Once our lawyer said, ‘No, we really are doing this,’ we started getting ready. We’re thinking there will be huge crowds.”
“Our hopes are high, and we’re going to push as hard as we can to see as many customers as we can,” said Ryan Fox, owner of two Denver dispensaries.
Colorado has 380 recreational dispensaries and 480 licensed recreational cannabis growers — up from a few dozen in the state’s first months of legalization. The state voted to legalize and regulate cannabis Nov. 6, 2012, with commercial sale to the general public beginning Jan. 1, 2014.