Will Colorado refund the state's marijuana smokers?(Read article summary)
Under Colorado state law, excess revenue from new taxes must be refunded after the first year of the tax. Now roughly $30 million in marijuana revenue could be subject to be returned to Coloradans.
Recreational marijuana use has been legal for more than 13 months in Colorado.
In that time, sales have raised over $50 million for the state, according to Complex.com. Amendment 64, which legalized recreational marijuana in the state stipulated the first $40 million would be set aside to for schools.
However, according to Rolling Stone, the surplus tax revenue from the sale of marijuana is roughly $30 million. Under state law this means that adult Coloradans are now entitled to a $7.63 refund, which would likely be in the form of a tax-break on recreational marijuana the following year.
The state of Colorado has a law on the books titled the Taxpayers' Bill of Rights, or TABOR, which was a voter-sponsored amendment that passed in 1992, according to the state's treasurer's office. Under TABOR each time a new tax is added in the state through a ballot initiative, the state must provide estimates as to how much revenue the new tax expects to raise, as well as an estimate for what the new tax's effect will be on total revenue. If either the new tax or total revenue exceeds what the estimates were in the first year of the new tax, it triggers an automatic refund of the non-earmarked revenue to the taxpayers. The law has returned some $2.2 billion to the people of Colorado over the years, according to the state's treasure's office.
A portion of the marijuana tax revenue is likely to be refunded because lawmakers projected total state revenue to be a hair over $12 billion and over-shot by $200 million, according to the Colorado Fiscal Institute. In this case, after the $40 million was set aside for Colorado schools, more than $30 million in marijuana revenue was still unallocated.
Rolling Stone reports that state lawmakers are now looking for ways to put the excess tax revenue genie back in the bottle. Under TABOR, in order to make the pot funds ineligible for taxpayer refunds, it would take another ballot initiative that taxpayers would have to approve.
However, not all Coloradans are in favor of giving the government their excess tax money back, seeing how the non-medicinal marijuana consumers are paying a 30 percent tax on sales.
“I don't care if they write me a check, or refund it in my taxes, or just give me a free joint next time I come in,” Aurora, Colo. resident David Huff told the Associated Press. “The taxes are too high, and they should give it back."
Colorado’s windfall hasn't gone unnoticed by other states. After Colorado and Washington state, Oregon and Alaska became the next two states to legalize marijuana with ballot measures passing last year. In Alaska, the law goes into effect on Feb. 24 and Oregonians can buy legal pot on July 15, according to the Marijuana Policy Project.
Oregon stands to earn $50 to $100 million in annual tax revenue and Alaska could bring in up to $20 million, according to NerdWallet, who calculated what each state could potentially earn if they were to legalize marijuana.
Washington, D.C., voters approved legal marijuana but Congress, which controls the city’s checkbook, has worked to undermine the ballot measure, according to the Washington Post. Washington city councilors are protesting the move and have submitted their grievances to Capitol Hill for a 30 day Congressional review, according to the Marijuana Policy Project.
[Editor's note: The original story incorrectly stated how taxpayers would be reimbursed. A fuller explanation of the Colorado Taxpayers Bill of Rights (TABOR) has been added in order to clarify the revenue and "refund" calculations.]