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Colorado Voters Approve Ballot to Tax Legal Marijuana Sales

DENVER — Colorado voters approved a historic statewide ballot measure on Tuesday to establish taxes on legal marijuana wholesale and retail sales. The Denver Post called the election with Proposition AA ahead 65-35 with 65% of precincts reporting. Retail marijuana sales are scheduled to begin on January 1 in localities throughout Colorado, including the state’s largest city, Denver, and they will begin in other cities throughout 2014.

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Proposition AA was referred to the ballot by the Colorado General Assembly in accordance with Amendment 64, the initiative approved by state voters in 2012 to regulate marijuana like alcohol.

“Colorado is demonstrating to the rest of the nation that it is possible to end marijuana prohibition and successfully regulate marijuana like alcohol,” said Mason Tvert, director of communications for the Marijuana Policy Project (MPP), which supported Proposition AA and was the largest financial backer of the Amendment 64 campaign in 2012. “It is only a matter of time before voters and lawmakers in other states recognize the benefits and adopt similar policies.”
Proposition AA creates a 15% excise tax on wholesale sale of marijuana for adult use (e.g. between a cultivation facility and a retail store), of which the first $40 million raised annually will be directed toward the state’s public school construction program. Proposition AA also establishes a 10% special sales tax on retail marijuana sales, which will be applied in addition to standard state and local sales taxes.
“Passage of this measure underscores the benefits of taxing and regulating marijuana sales instead of forcing them into the underground market,” Tvert said. “Instead of benefitting drug cartels, marijuana sales will generate tens of millions of dollars annually for the state’s public school construction program.”
Colorado Legislative Council staff estimate that Proposition AA will generate $27.5 million in annual excise tax revenue and $39.5 million in annual state sales tax revenue (with $6 million of that sales tax revenue directed back to localities). The revenue from the new 10% state sales tax will be used to fund the regulatory structure (including enforcement of the laws for the testing, tracking, and labeling of retail marijuana and measures to prevent the diversion of retail marijuana to individuals under 21 years old).
MPP plans to work with local and national allies to pass measures to regulate and tax marijuana like alcohol in 13 more states by 2017. It is currently supporting a petition drive led by Alaska activists to place an initiative on the August 2014 ballot, and it will work to pass voter initiatives in Arizona, California, Maine, Massachusetts, Montana, and Nevada in the 2016 election. MPP is participating in lobbying and grassroots-organizing efforts to pass bills in the Delaware, Hawaii, Maryland, New Hampshire, Rhode Island, and Vermont state legislatures.