Marijuana Tax | Information for Local Governments
Local Retail Marijuana Taxes
Please note that local jurisdictions may impose and collect their own sales and/or excise tax on retail marijuana. However, it is the responsibility of the local jurisdiction to collect, administer and enforce that local tax. Your local retail marijuana sales tax will not be collected and administered by the Colorado Department of Revenue, even if the department collects your other general sales taxes. See §39-28.8-203(1)(a)(VI) C.R.S.
How Marijuana Tax Revenue is Distributed to Local Governments
Retail Sales Tax
Local governments will receive 10% of the 15% retail marijuana state sales tax. The 10% will be divided among local governments. The calculation will be based on the amount of retail marijuana sales taxes in the local jurisdiction. The city or town share will be apportioned according to the percentage of retail marijuana sales tax revenues collected by the Department of Revenue within the boundaries of the city or town. Counties will not receive any retail marijuana sales tax revenue, unless there is a retail marijuana store in an unincorporated area. The distribution will be monthly. This is similar to cigarette tax distributions to local governments. Please note that since the distribution is based on a percentage of retail marijuana sales tax revenue collected within the boundaries of a city, town, or unincorporated area of a county versus the total retail marijuana sales tax revenues collected, the monthly percentage to each eligible jurisdiction is not a static amount, but will vary based on total retail marijuana sales tax revenues and the amount of retail marijuana sales tax collected in each jurisdiction. For information on marijuana tax collections and retail marijuana sales tax distributions of local governments, see Colorado Marijuana Tax Data.
The 15% retail marijuana excise tax goes to Colorado public school construction. The excise tax is remitted by the retail marijuana cultivation facility on the first sale or transfer of retail marijuana to any retail marijuana store or retail marijuana products manufacturer. With the excise tax, the first $40 million in retail marijuana excise tax revenue collected annually will go to public school construction. Any revenue above that will be transferred to the Public School Fund.
Pursuant to the Department’s Regulation §39-21-113, “every tax return and all information therein contained together with correspondence, papers, affidavits, assessments, protests, and hearings thereon are secret and confidential and no information relating thereto can be disclosed except by the direction of the executive director in accordance with C.R.S. 39-21-113 and as provided by subsections (7), (8), (10), (13), (14) and (15) of such section or in the limited manner provided under subsections (4), (9), (11), (12), (16) or (17) of such section.” This would include the state retail marijuana sales tax return data.
The sales tax return information for these establishments is confidential, including the amount remitted. In order to preserve the confidentiality of taxpayer information, the Department uses the following rule of thumb when releasing sales tax information. The Department only releases sales tax information if there are three or more vendors and any one vendor does not constitute more than 80% of the total sales tax number.
Your jurisdiction may want to consider a similar procedure. Please keep in mind that if your local government has a single marijuana establishment operating within the boundaries of your jurisdiction, no information may be released because doing so could disclose confidential tax information. This includes divulging or making known in any way the amount of money received from the state for the state retail marijuana sales tax. This amount cannot be published in a budget document, an annual report or any similar document which would disclose the amount of sales tax generated by a vendor.
Local governments are required to complete a Memorandum of Understanding (MOU) for Control of Confidential Data for State Retail Marijuana Sales Tax. Contact the Colorado Department of Revenue to obtain the MOU form.