Taxation Of Retail Marijuana Sales

Retail marijuana sales tax - clarification of authority of local governmental entities to levy. Before the enactment of Senate Bill 17-267, concerning the sustainability of rural Colorado, the state levied 2 sales taxes on retail marijuana sales: The 2.9% general state sales tax levied pursuant to article 26 of title 39, C.R.S., and the retail marijuana sales tax, a 10% special sales tax levied on retail marijuana sales only pursuant to article 28.8 of title 39, C.R.S. Senate Bill 17-267 increased the total rate of state sales tax levied on retail marijuana sales, as authorized by prior voter approval, by exempting retail marijuana sales from the 2.9% general state sales tax and increasing the rate of the retail marijuana sales tax from 10% to 15%, effective July 1, 2017.

Because enabling statutes specify that the regional transportation district (RTD), the scientific and cultural facilities district (SCFD), and health service districts (HSD) may levy sales tax only on transactions upon which the state levies sales tax "pursuant to the provisions of article 26 of title 29, C.R.S.," the exemption of retail marijuana sales from the general state sales tax had the unintended consequence of exempting such sales from RTD, SCFD, and HSD sales taxes even though the state continues to levy the retail marijuana sales tax pursuant to article 28.8 of title 39, C.R.S. In addition, other statutes that empower certain special districts and authorities to levy sales taxes only upon transactions upon which the state levies sales tax, but do not specifically reference article 26, are sufficiently ambiguous that they could be interpreted to no longer authorize those special districts to levy sales tax on retail marijuana sales.

The act clarifies that:

• Retail marijuana sales remain subject to the sales taxes of the RTD, SCFD, and HSD and any other sales taxes that limited purpose governmental entities levied on retail marijuana sales before July 1, 2017;
• A metropolitan district, health assurance district, or health service district that levies sales tax may levy sales tax on retail marijuana sales regardless of whether or not the district was levying sales tax on such sales before July 1, 2017; and
• Any other special district or other limited purpose governmental entity that was not levying sales tax on retail marijuana before July 1, 2017, may not levy sales tax on retail marijuana sales.
  (Note: This summary applies to this bill as enacted.)