In November, the City of Aurora in Colorado voted to approve a local marijuana tax. The tax is in addition to other state taxes that were already in place. The additional tax is going to pinch recreational marijuana stores in Colorado, which could result in less sales, which will in the end result in less overall tax revenue generated by the businesses. Per Marijuana Business Daily:
Cannabis shops in Colorado’s third-largest city face higher tax rates heading into the new year, which some business owners say will drive up the price of legal cannabis well above rates on the black market.
As of Jan. 1, recreational marijuana stores in Aurora will be required to pay a 5% excise tax and a 2% sales levy, in addition to state taxes, according to The Denver Channel. The additional taxes will raise revenues for the city by an estimated $2.4 million a year.
I like the campaign slogan of ‘tax and regulate.’ However, I don’t want that to morph into ‘tax to death and regulate.’ In order for a legal recreational market to thrive, taxes have to be balanced so that they aren’t too over burdensome to businesses. Consumers are willing to pay a little more for legal marijuana, but they aren’t going to be so willing if prices at stores are multiple times more expensive compared to the blackmarket.