Colorado’s Windfall of Pot Taxes May Trigger Up to $30 Million in Refunds

Medical Marijuana Dispensory in Denver CO
Residents of Colorado may be getting another type of refund besides their income taxes; “Reefer Refund” could be headed toward their bank accounts.

Colorado may be required to refund a hefty portion of taxes back to its citizens, thanks in part to a rush of marijuana-related revenue that was initially supposed to go toward supporting education.

The state constitution restricts the amount of tax revenue the state can collect before it’s required to return a portion of it. Therefore, every Colorado resident could get a share of the $50 million in recreational marijuana taxes taken in during the first year of it being legal. The curious situation is unique to previous tax refunds in Colorado because marijuana taxes were supposed to be used to improve schools.

Medical marijuana sign

The issue has actually forced Republicans and Democrats, for once, to agree on a tax matter.

It’s a situation so bizarre that it’s gotten Republicans and Democrats, for once, to agree on a tax issue. Neither side wants to refund the collected taxes to Coloradoans because they feel that the money should be used for what it was intended for and to support other marijuana related expenses.

Republicans say that marijuana should offset the cost of governing it so that general taxes shouldn’t pay for things like increased drug education and better training for police officers to identify stoned drivers.

“I think it’s appropriate that we keep the money for marijuana that the voters said that we should,”

said Republican Senate President Bill Cadman.

Your states slice of the pot of medical marijuana
Many Colorado residents believe that the money should not be returned because they want the taxes to be used for education instead of getting about an $8 refund per person from the estimated $30 million total.  Settling the matter may fall to Colorado voters, for a third time, by casting a ballot on the issue and exempt marijuana taxes from the refund requirement.

“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.

Could this refund issue bring about extra difficulties with legal marijuana sales (that Colorado’s governor now regrets)? Or is this just one more “growing pain” of the whole marijuana legalization procedure?

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.  (Source:


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