DENVER - For one day only Wednesday, Colorado will forgo extra taxes on recreational marijuana, creating a mini tax-holiday that has pot shops across the state preparing for a rush of business.
The event is the result of a state error when voters approved the additional marijuana taxes in Proposition AA in 2013.
An informational publication about the proposed 10 percent sales tax and 15 percent sales tax underestimated the amount of revenue the state would collect as a whole.
Under Colorado Taxpayer's Bill of Rights that means two things: First that the state will have to refund the almost $70 million that the additional sales and excise taxes raised unless voters say otherwise this November. Second, that the taxes must be turned off.
Ordinarily that would mean the tax would remain off until voters had a chance to reinstate it, but Sen. Pat Steadman, the General Assembly's finance guru, said the original proposition included the authority for the General Assembly to raise and lower the tax as it sees fit.
Steadman said when lawmakers drafted House Bill 1367 last session, which also refers the issue to voters, there was debate about turning the tax off at one minute past midnight on Sept. 16 and turning it on an hour later. Marijuana stores cannot operate during those hours.
"Was that good faith compliance with what TABOR says?" Steadman asked. "We decided at a minimum to have this rate reduction occur at a meaningful time when consumers can take advantage of the fact there is a tax reduction. This was a way that we felt in good faith we could comply with TABOR and still adhere to what voters clearly told us was their intention."
That intention was that marijuana be taxed at a greater rate than other goods and services.
The tax break is Wednesday because that is the day after the state certifies the revenues collected during the 2014-15 fiscal year and officially notifies lawmakers that Proposition AA violated TABOR.
Both Maggie's Farm in Manitou Springs and The Spot in Pueblo West expect a higher volume of customers Wednesday because of the 10 percent savings in state sales tax (the ordinary 2.9 percent state sales tax and any local taxes still apply).
Both recreational marijuana retailers have advertised special discounts as well.
"We definitely think it's going to be huge," said Rick "Vegas" Hooper, general manager of The Spot. "We have 21 strains of bud and it's all 10 percent off."
Pot shop owners will also save money on Wednesday. The excise tax, which is imposed when marijuana is sold or transferred from a wholesale grow facility to a retail store, will also be turned off.
Steadman said he is interested to see how stores handle the tradeoff of wanting to take full advantage of their tax savings while also having enough product on hand to feed the demand of consumers hoping to save.
Either way, revenue is pouring into Colorado from marijuana sales.
The Marijuana Policy Project, which put the question to voters in 2012 to legalize recreational pot in Colorado, celebrated the fact Tuesday that final collections for the 2014-15 fiscal year exceed the revenue the state collects on extra taxes imposed on liquor.
Mike Elliott of the Marijuana Industry Group said the strong revenue collections are a good sign.
"What an interesting and bizarre problem for us to be having," Elliott said. "What are we going to do with all this money?"