Tax-free kush day in Aurora, Colorado promises to be a hit with pot smokers

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AURORA | Shoppers at any of Aurora’s 14 recreational marijuana stores will be able to score more green for less Sept. 16, due to an idiosyncratic clause in the state constitution.

Pot shops across the city and Colorado will not charge customers the standard 10-percent sales tax during normal business hours on what could be the marijuana industry’s first and last tax holiday. Aurora will still charge its regular 5-percent city tax on weed despite the state markdowns, according to Robin Peterson, manager of the city’s Marijuana Enforcement Division.

The duty-free day was announced in June after Gov. John Hickenlooper signed a bill with a corresponding November ballot measure that will ask voters whether or not the state can keep taxes generated by marijuana sales. If passed, the measure would allow the state to allocate about $66 million for the general fund, school construction and marijuana awareness efforts. If voters reject the measure on Nov. 3, the sum will be returned to marijuana cultivators, retail stores and state taxpayers via income tax breaks.

The basis for a day free of state tariffs on weed is tethered to a subtle rule in Colorado’s Taxpayer Bill of Rights, which mandates that new taxes be voter-approved and that residents be refunded if the state rakes in more money during a fiscal year than originally forecasted. Colorado brought in about $270 million more than expected between July 2014 and June of this year, according to analyses conducted by legislative council staff. The TABOR oddity also requires any approved taxes — such as those on marijuana — be temporarily nullified 100 percent, which is what led to the single day of breaks. Legislative officials circled Sept. 16 for the tax holiday due to that being the first day they will have the audited revenue numbers for the past fiscal year from the state comptroller’s office.

The state estimates it could lose about $100,000 in sales tax revenue and more than $3 million in excise tax revenues because of the holiday. Pot cultivators and retailers are also exempt from the state’s 15-percent excise tax during the short recess, a financial quirk that officials have anticipated many stores will take advantage of.

However, Elan Nelson, head of business strategy and development for Medicine Man on South Havana Street in Aurora, said she expects that store to operate as normal during the respite. She said she expects a slight spike in sales as a result of promotions and heavy media attention regarding the savings.

“It’s an automatic 10 percent off basically, so I think we’ll see some more customers,” Nelson said.

 

The tax break is happening because Colorado underestimated overall state tax collections last year. Under the state constitution, the accounting error triggers an automatic suspension of any new taxes — in this case, the recreational marijuana taxes voters approved in 2013.

Retailers statewide are hoping for big crowds, rolling out doorbuster-style bargains to attract shoppers. The state had no estimate on how many shoppers might turn out.

The taxes revert to 25 percent on Thursday.

 

The pro-legalization Marijuana Policy Project lauded the sales tax holiday as “a much-deserved day off” for marijuana consumers, who carry a heavier tax burden than people who buy alcohol.

However, it’s far too soon to say how marijuana legalization has affected behavior when it comes to consuming intoxicants.

A University of Colorado-Denver economist who has studied how marijuana availability impacts alcohol consumption said the Colorado numbers don’t show much.

Economist Daniel Rees pointed out that beer sales growth didn’t keep up with population growth in the last year, estimated at about 1.7 percent between 2014 and 2015.

“I wouldn’t read too much into one state’s experience,” Rees said.

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Kristen Wyatt of the Associated Press contributed to this story

 

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Joe Hardhat
Joe Hardhat
6 years ago

The vast majority of potheads in Colorado have a medical marijuana license in order to save on taxes. Only the occasional user, and out of state tourists, buy recreational marijuana, so the impact of this tax holiday is minimal. See, TABOR works for everyone, even druggies.

The big push now is to get the feds to legitimize marijuana sales nationwide so that potheads can get medical marijuana through the Medicaid program. One question is whether the Medicaid copay will be the standard 3 bucks or will they make it more expensive.

withersteen
6 years ago
Reply to  Joe Hardhat

That is so not true. I, for instance, do not have a medical marijuana card. Yes, the impact of this tax holiday will probably be minimal- only a million or two in lost tax revenue. I’ll be voting in the future to retain these taxes.

Nice FUD on your Medicaid hopes,

ezaspie
ezaspie
6 years ago
Reply to  withersteen

“The state estimates it could lose about $100,000 in
sales tax revenue and more than $3 million in excise tax revenues
because of the holiday.”

Read the article guys. Also Joe just has high hopes his medicare will cover pot. Clean it up Joe.

withersteen
6 years ago
Reply to  ezaspie

I read it: I claim Short Term Memory Loss.