Source – marketwatch.com
– Colorado may be paying a reefer refund.
Colorado may have to refund a large chunk of taxes back to its citizens, thanks in part to a rush of marijuana-related income that was originally slated to help fund education.
The turn of events is a result of Colorado’s infant legal-marijuana laws coming up against what is known as the Taxpayer Bill of Rights, or TABOR, as the Associated Press said in a recent report.
TABOR is a 1992 state constitutional amendment requiring Colorado to issue tax refunds whenever the it collects more tax money than is permitted under a formula tied to inflation and population growth.
Since Colorado’s economy has been growing faster than expected — and tax receipts are strong, helped by the marijuana sales — preliminary estimates suggest a total of $30.5 million, or about $7.63 per adult Coloradan, could be slated for refund, the AP said, citing a projection from the governor’s budget writers.
This, however, is meeting with objections from some quarters, as a measure passed in 2013, the year after legalization, contained a 15% excise tax on marijuana specifically earmarked to fund education.
“The problem is that the state is now obligated to spend money on schools, but now also obligated to give some back to voters,” said Tim Hoover of the Colorado Fiscal Institute, an organization which analyzes the impact of taxes in the state.
“The state is going to be forced to refund that money unless voters say otherwise,” Hoover said.
And while it’s total tax revenue, not just the marijuana portion, that would trigger a refund, the report said a third marijuana-related ballot measure in as many years could be needed to exempt pot taxes from the TABOR requirements.
The report said both Republicans and Democrats are working together toward a solution, which would likely await final tax estimates due in March.
While Colorado’s marijuana tax windfalls have fallen short of predictions in the first year of sales, there are signs Colorado’s great experiment will pay off in the long run.
Across the nation, legal marijuana profits grew 74% last year to $2.7 billion, according to a report from Arcview Market Research, a cannabis-industry research and investment firm. This is up from $1.5 billion in 2013.
The Arcview report called legal marijuana the fastest-growing industry in the U.S. and forecast $11 billion of sales by 2019. That would make legal marijuana more profitable than several other U.S. cash crops such as rice, cotton, sorghum and hay, though still below receipts for corn and soybeans.