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1 Joseph Henchman, Taxing Marijuana: The Washington and Colorado Experience 1 (2014)

handle is hein.taxfoundation/taxfaab0001 and id is 1 raw text is: Tm @Taxing Marijuana: The Washington FOUNDATION and Colorado Experience FISCAL By Joseph Henchman FACT Vice President, Legal & State Projects Aug. 2014 No. 437 Key Findings Because marijuana can be purchased as a cigarette, an edible, a liquid, or vapor, all with a wide variety of concentrations, a specific excise tax is untenable. * Colorado collects tax revenue from marijuana sales through a 15 percent excise based tax on the average wholesale market rate; a 10 percent state tax on retail marijuana sales; a state sales tax of 2.9 percent; varied local sales taxes; and local marijuana taxes such as a 3.5 percent tax in Denver. * Washington State collects tax revenue from marijuana sales through a 25 percent tax on producer sales to processors; a 25 percent tax on processor sales to retailers; a 25 percent tax on retailer sales to customers; a state Business & Occupation (B&O) gross receipts tax; a state sales tax of 6.5 percent; and varied local sales taxes. The total effective tax rate to be about 44 percent. * Tax collections in Colorado have fallen short of projected revenue estimates, whereas collections in Washington have fallen within the wide range of project revenue estimates. * Colorado's marijuana revenue shortfall is due to incorrect projections about the switch from lower-taxed medical marijuana to higher-taxed retail marijuana by consumers. * States with possible upcoming ballot initiatives should take note of effective and ineffective methods of taxing marijuana as the issue is likely to expand.