Where Does Marijuana Sin Tax Go in Colorado?


It is no longer surprising when we hear about how much money marijuana brings in to the state every year. But where does that marijuana tax money go? And how does it impact Colorado’s state budget?

When Colorado legalized marijuana for recreational use, it opened up a new stream of taxable revenue that has since brought in hundreds of millions of dollars to the state. Understanding where that money goes – and why you may not have noticed the benefits in your schools or community – can help us make informed decisions about how we vote on key issues. And if nothing else, we can feel better about our extra trip to Karing Kind knowing that we are indirectly supporting education and other great causes.

Understanding Sin Tax Syntax

For the purposes of taxation, marijuana is grouped with tobacco and cigarettes, liquor, and casinos. In addition to standard state and local taxes, revenue earned in one of these markets is subject to what is known as a “sin tax.” Whereas sales tax in Colorado averages 7.52 percent (state and local), the average marijuana sin tax hovers at a stomach-churning 10-14 percent.

But is that number really so outrageous when compared to tobacco, liquor and gambling sin taxes?

For every 20 cigarettes (one pack), consumers pay an additional $0.84, or 14.86 percent of the $5.65 cost for an average pack. Other tobacco products are taxed at 40 percent, which makes the marijuana sin tax seem like a drop in the bucket.

Liquor, wine, and beer are taxed by volume at $2.28, $0.32 and $0.08 per gallon, respectively, which translates to a very rough rate of about 10 percent for mid-shelf liquor and substantially lower for many wines and beers. But, the sin tax is included in the purchase price for beer, wine, and liquor so you may not notice the added cost the same way you do when buying marijuana.

Gambling profits in Colorado can be taxed up to 40 percent, though many casinos see rates closer to 20 percent.

All things considered, the 15-30 percent special sales tax that marijuana consumers face in Colorado is relatively mild. Especially when you consider the marijuana tax in Washington runs at 37 percent.

How Much Higher is Colorado’s Budget with Legal Marijuana?

During the 2015-2016 fiscal year, marijuana “sin taxes” brought in more than tobacco and liquor excise taxes combined ($55.2 and $42.6 million, respectively), according to 9NEWS in Denver. At $129 million, marijuana tax also contributes more funding to the state government than casino taxes ($102.9 million) and, according to some estimates, the Colorado Lottery (up to $124 million annually).

Of course, the impressive $129 million in marijuana taxes still only accounts for one half of one percent of the state’s gargantuan $25.8 billion budget. So you may not see streets paved in gold anytime soon.

Where Does That Money Go?

The wholesale tax on marijuana sales in Colorado (up to $40 million) is dedicated to schools and doled out by BEST, a state program that awards grants to local school districts in need of new or updated facilities. Any additional revenue from wholesale marijuana tax goes toward paying the staggering $5.4 billion annual cost of running Colorado’s public schools.

The special sales tax, or sin tax, that is applied during retail purchases is split between local governments (15 percent) and the state legislature (85 percent). The standard state sales tax also goes to the state legislature. In the 2015-2016 fiscal year, that resulted in just over $75 million in marijuana tax revenue for the state legislature, with a significant percentage earmarked to be spent on marijuana education, enforcement and treatment programs.

Boulder’s First Recreational Marijuana Dispensary

Karing Kind is Boulder’s first recreational marijuana dispensary and is proud to offer the lowest marijuana tax in Colorado. Our growing selection of edibles, oil and shatter make it easy to mix and match your favorite strains, concentrates and edibles. Not sure what you need? Our award-winning budtenders can help you find the right product and in the right amount for your needs.

Karing Kind is located just off of US-36, one mile north of Broadway, open daily from 9am to 10pm.

While we carry a variety of strains, concentrates and edibles, inventory and stock levels fluctuate from week to week. Check our menu and follow us on Instagram for an up-to-date list of edibles, concentrates and buds available now.