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Measure Details

Colorado Marijuana Excise Tax and Sales Tax

Colorado Ballot Measure - Proposition AA

Election: Nov. 5, 2013 (General)
Outcome: Passed

Categories:
Marijuana Legalization
K-12 Education
Taxes

Yes
902,181
(65.27%)

Argument For

No
479,992
(34.73%)

Argument Against

Summary

Subject to voter approval at the statewide election in November 2013, the bill imposes a sales tax and an excise tax on the sale of retail marijuana, which was legalized by section 16 of article XVIII of the state constitution.

Sales tax:
Beginning January 1, 2014, the bill imposes a tax of
15% on the sale of retail marijuana or retail marijuana products to a
consumer by a retail marijuana store. The tax imposed is in addition to the
2.9% state sales tax and any local government sales tax that is imposed
on the sale of all property and services pursuant to current law.
On or after January 1, 2014, the general assembly is authorized to
establish a rate that is lower than 15% by a bill enacted by the general
assembly and signed into law by the governor. After establishing a tax
rate that is lower that 15% the general assembly may increase the rate by
bill enacted by the general assembly and signed into law by the governor,
so long as the rate does not exceed 15%. An increase in the rate does not
require additional voter approval.

A retail marijuana store is required to add the tax imposed as a
separate and distinct item, and when added, the tax constitutes a part of
the total price of the retail marijuana or retail marijuana products
purchased. A retail marijuana store is required to collect and remit the tax
to the department in the same manner as the state sales tax is collected
and remitted to the department pursuant to current law.

Of the revenues collected pursuant to the 15% sales tax, 10% will
be distributed to each local government in the state that has one or more
retail marijuana stores within its boundaries. Each local government's
share of the revenues collected shall be apportioned according to the
percentage of retail marijuana and retail marijuana products sales tax
revenues collected by the department in the local government as
compared to the total retail marijuana and retail marijuana products sales
tax collections that may be allocated to all local governments in the state.
The remaining revenues shall be deposited in the marijuana cash fund and
appropriated as directed by the general assembly.

Excise tax:
Beginning January 1, 2014, the bill imposes a tax on
the sale or transfer of unprocessed retail marijuana by a retail marijuana
cultivation facility to a retail marijuana store, retail marijuana product
manufacturing facility, or another retail marijuana cultivation facility. The
amount of the tax is 15% of the average market rate of unprocessed retail
marijuana statewide on the date that it is sold or transferred, as
determined by the department, and the tax is imposed when a retail
marijuana cultivation facility sells or transfers unprocessed retail
marijuana to a retail marijuana store, a retail marijuana product
manufacturing facility or another retail marijuana cultivation facility.

On or after January 1, 2014, the general assembly is authorized to
establish a rate that is lower than 15% of the average market rate by a bill
enacted by the general assembly and signed into law by the governor.
After establishing a tax rate that is lower that 15% the general assembly
may increase the rate by bill enacted by the general assembly and signed
-2- HB13-1318 into law by the governor, so long as the rate does not exceed 15%. An
increase in the rate does not require additional voter approval.

The bill specifies that every retail marijuana cultivation facility is
required to keep certain records regarding the sale or transfer of
unprocessed retail marijuana and is required to collect and remit the tax
to the department.

As required by section 16 of article XVIII of the state constitution,
the bill specifies that the first $40 million received and collected in
payment of the excise tax on unprocessed retail marijuana shall be
transferred to the public school capital construction assistance fund
currently created in law. Any amount remaining after the transfer shall be
transferred to the marijuana cash fund.

Revenue and spending limitations:
The bill allows the state to collect and spend any revenues generated by the retail marijuana sales tax
and retail marijuana excise tax as voter approved revenue changes.
Submission of ballot questions by the secretary of state: The
bill requires the secretary of state to submit a ballot question at the
statewide election to be held in November 2013 asking the voters to:

! Allow the general assembly to impose a retail marijuana
sales tax at a rate not to exceed 15% of the sale of retail
marijuana and retail marijuana products;

! Allow the general assembly to impose a retail excise tax at
a rate not to exceed 15% of the average market rate of
unprocessed retail marijuana on unprocessed retail
marijuana at the time when a retail marijuana cultivation
facility sells or transfers retail marijuana to a retail
marijuana product manufacturing facility, a retail marijuana
store, or another retail marijuana cultivation facility;

! Allow the general assembly to decrease or increase the rate
of either tax without further voter approval so long as the
rate does not exceed 15% for either tax; and

! Allow any additional tax revenue to be collected and spent
notwithstanding any limitations in TABOR or any other
law.

Marijuana cash fund:
The bill changes the name of the existing medical marijuana license cash fund to the marijuana cash fund.
The bill specifies that the sale of marijuana or marijuana products
by a medical marijuana center to a consumer and the sale or transfer of
unprocessed marijuana by a marijuana cultivation facility to a medical
marijuana center are not subject to either tax. The department of revenue
(department) is required to promulgate rules for the implementation of both taxes.

Measure Text

Shall State Taxes be increased by $70,000,000 annually in the first full fiscal year and by such amounts as are raised annually thereafter by imposing an excise tax of 15% when unprocessed retail marijuana is first sold or transferred by a retail marijuana cultivation facility with the first $40,000,000 of tax revenues being used for public school capital construction as required by the state Constitution, and by imposing an additional sales tax of 10% on the sale of retail marijuana and retail marijuana products with the tax revenues being used to fund the enforcement of regulations on the retail marijuana industry and other costs related to the implementation of the use and regulation of retail marijuana as approved by the voters, with the rate of either or both taxes being allowed to b decreased or increased without further voter approval so long as the rate of either tax does not exceed 15%, and with the resulting tax revenue being allowed to be collected and spent notwithstanding any limitations provided by law?

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