If Recreational Marijuana is Legalized, How Will It Be Taxed?

Recreational marijuana sales could bring in a lot of tax dollars, but there is still nothing set-in-stone to determine how that money would be spent if Measure 3 passes.

It’s a question, our State Legislature will decide. As your local election headquarters, KX News has been following the issues and topics you’ll find on your ballot Tuesday.

The tax commissioner has already said, recreational marijuana will be subject to a 5 percent general state sales tax if it becomes legal. But it could also be taxed on top of that, for a sin tax, like alcohol and tobacco currently are.

The State Legislature will be the ones to decide what that tax rate will be. With the potential for millions of dollars coming into the state if legalized, we look how that money could possibly be used.

Measure 3 Committee Sponsor Dustin Peyer says he doesn’t want the state involved in the taxation of marijuana at all.

Measure 3 Committee Sponsor Dustin Peyer says, “What we need are the cities, counties and townships to come together and say, ‘What kind of tax revenue do we need?’ because this is a brand new tax. This is something the state is not involved in and the more we get the state involved, the worse off we are.”

Peyer says it should be left to individual cities and counties so the revenue can go directly toward regional needs. 

Senator Erin Oban says, “What I think needs to happen if Measure 3 passes, is there needs to be regulation on it and there needs to be taxes on it.”

Senator Oban says tax revenue from any substance should be used for prevention, intervention, recovery and treatment.

She adds, “Those, to me, are a natural tie to what those tax dollars would bring in.”

Peyer acknowledges more community tools will be needed to keep the state safe. He thinks developing DUI testing for law enforcement is a good place to use some of those tax dollars.

Peyer explains, “There’s a lot of discussion about people driving under the influence of cannabis, and you know, that’s already happening. Law enforcement doesn’t have proper tools to detect cannabis beyond a smell.”

Republican Representative Rick Becker says he has no doubt revenue from marijuana sales will affect the state positively.

Becker explains, “I think if marijuana is taxed, it’s going to bring a lot of revenue into the state, and we should probably put that into the general fund so we can look at it for our overall general spending.”

Peyer advises the Legislature to make sure revenue goes to the most local government possible.

He says, “It’s much easier to go down to your City Commissioner, to give them a call.”>>

Representative Becker says if it passes, the Legislature should call a special session in December on this topic. He says any additional costs the state might incur by legalizing marijuana will be more than covered by even the most basic sin tax.

In Colorado, tax dollars are spent to help fund education. Senator Oban told me she is wary of using that money for education. She says she wouldn’t want to encourage substance use for the betterment of schools. 

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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