Forget Income Tax Refunds. Coloradans Might Get a Marijuana Refund! (Paid Out in Money, Not Pot)

Posted on February 5, 2015 by thetabor

<> on May 11, 2010 in Los Angeles, California.

Getty – Kevork Djansezian

Americans who are getting a jump on their income taxes may already be looking forward to receiving (and spending) their refund checks. But for those who live in Colorado, another type of rebate may be making its way toward their bank accounts: a “reefer refund”!

According to state law, Denver may be forced to return some of the money collected in recreational marijuana taxes during the first, full year of legal sales. Residents and tourists racked up $50 million in taxation revenue for Colorado in 2012.

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The state constitution contains an amendment referred to as a Taxpayers’ Bill of Rights (TABOR), which was approved by voters almost a quarter-century ago. In addition to requiring all new taxes to receive the go-ahead from Colorado voters, TABOR also compels the state to issue refunds to taxpayers whenever it takes in too much money in revenues. The definition of “too much” is set by a complex formula that has been established under the law.

Since TABOR was passed, residents of the Rocky Mountain State have received these types of refunds six times, with total amounts ranging from about $40 million to over $1 billion.

It’s difficult to determine how much of a refund Coloradans will receive this year, but early numbers are pegging the total amount at around $30 million. Final figures are expected to be released next month.

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Perhaps not surprisingly, state lawmakers are spearheading efforts to prevent Denver from having to decrease its bank account in order to issue these refunds to citizens. Proposals are being drafted by both Democrats and Republicans that would exempt recreational marijuana taxes from the TABOR formula, though the measure would likely have to be put on a ballot.

(The TABOR amendment itself is being challenged in the Colorado courts, which might conceivably render this whole issue moot.)

There are also other problems surrounding these pot refunds. Would every state taxpayer receive a check, or would refunds only be given to recreational marijuana purchasers? Or would the state rather funnel the excess funds toward Colorado schools, like a 15% excise tax on pot sales already does?

A seemingly simple proposal – reducing marijuana tax rates so that no such surplus occurs again – is not being considered by lawmakers. Strangely, even marijuana industry groups aren’t calling for lower taxes on their product.

Public opinions are mixed about the refund. But one resident summed it up this way:

“I don’t care if they write me a check, or refund it in my taxes, or just give me a free joint next time I come in. The taxes are too high, and they should give it back.”

Image credit: Flickr Creative Commons

The rest of the nation is watching what will happen with this issue in 2015.

Will this refund question lead to additional problems with legal pot sales (which Colorado’s governor now regrets)? Or is this just another “growing pain” of the entire marijuana legalization process?

http://www.ijreview.com/2015/02/245209-forget-income-tax-refunds-coloradans-might-get-marijuana-refund-paid-money-pot/

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