Colorado braces for day of tax-free weed

Voters to Decide on Spending Pot Tax Money

DENVER (AP) — An accounting error in Colorado is paying off for marijuana consumers Wednesday, when a quirk in a state tax law prompts the state to suspend most taxes on recreational pot.

The one-day pot tax holiday means Colorado won't collect 10 percent sales taxes on pot. The state is also suspending a 15 percent excise tax on marijuana growers.

The tax break is happening because Colorado underestimated overall state tax collections last year. Under the state constitution, the accounting error triggers an automatic suspension of any new taxes — in this case, the recreational marijuana taxes voters approved in 2013.

Retailers are hoping for big crowds, rolling out doorbuster-style bargains to attract shoppers. The state had no estimate on how many shoppers might turn out.

The taxes revert to 25 percent on Thursday.

Wednesday's break comes a day after Colorado made final its accounts for the fiscal year that ended in June.

See photos of Denver's High Times Cannabis Cup festival:

18 PHOTOS
Denver pot marijuana stoner holiday 2015
See Gallery
Colorado braces for day of tax-free weed
DENVER, CO - APRIL 19: A man exhales marijuana smoke during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Kimberly Bullard, 23, of Los Angeles, California takes a hit off a I420 Double Barrel Shotgun pipe during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: A man raises a lighter and joint to the sky just before 4:20 during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: A woman sports a marijuana leaf hat during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: A man takes a selfie as he smokes a joint during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Frank Froman takes a hit from the I420 Double Barrel Shotgun pipe by Incredibowl being held by Rolf Johnson, 26, during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Smoke rolls off the end of a dab rig during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Attendees do dabs during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Attendees look over a selection of marijuana themed shirts during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Mindie Flores weighs out a gram of Moon Rocks at the Kurrupt's Moon Rocks booth during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Shawn Holland, 21, takes a rip off a gas mask bong during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Harmony Johnson of Boulder rocks a marijuana leaf hat during Denver's annual 4/20 festival at Civic Center Park on Sunday, April 19, 2015. Thousands of people gathered to watch a free Rick Ross concert, while partaking in the day's goods and services. (Photo by AAron Ontiveroz/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Shawn Holland, 21, breaks up a piece of marijuana to roll a joint during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Shawn Holland, 21, blows on the end of a tulip joint while smoking it during the High Times Cannabis Cup at the Denver Mart in Denver, Colorado on April 19, 2015. The High Times Cannabis Cup runs through Monday at the Denver Mart. (Photo by Seth McConnell/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Stephanie Hodge reacts to smoking from a gas mask marijuana smoking apparatus during Denver's annual 4/20 festival at Civic Center Park on Sunday, April 19, 2015. Thousands of people gathered to watch a free Rick Ross concert, while partaking in the day's goods and services. (Photo by AAron Ontiveroz/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Dakota Wallin of Littleton smokes a half-ounce joint during Denver's annual 4/20 festival at Civic Center Park on Sunday, April 19, 2015. Thousands of people gathered to watch a free Rick Ross concert, while partaking in the day's goods and services. (Photo by AAron Ontiveroz/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Stephanie Hodge smokes a gas mask marijuana smoking apparatus during Denver's annual 4/20 festival at Civic Center Park on Sunday, April 19, 2015. Thousands of people gathered to watch a free Rick Ross concert, while partaking in the day's goods and services. (Photo by AAron Ontiveroz/The Denver Post via Getty Images)
DENVER, CO - APRIL 19: Kris Custer waves a marijuana leaf flag during Denver's annual 4/20 festival at Civic Center Park on Sunday, April 19, 2015. Thousands of people gathered to watch a free Rick Ross concert, while partaking in the day's goods and services. (Photo by AAron Ontiveroz/The Denver Post via Getty Images)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

The final tax numbers covered the first full fiscal year in which adults over 21 could legally buy both marijuana and alcohol.

Alcohol excise tax collections were up 2.4 percent, to about $42 million. Marijuana-specific taxes came in at about $70 million.

The figures don't include a statewide 2.9 percent sales taxes. In other words, alcohol likely still produces more overall tax money than pot, though the state doesn't keep data on how much general sales tax comes from alcohol.

Recreational pot is taxed much more steeply than alcohol — 25 percent, plus statewide and local sales taxes. Alcohol is taxed by volume, ranging from 8 cents a gallon for beer to $2.28 a gallon for liquor, plus sales taxes.

Colorado saw an increase last year in all three tax classes of alcohol. Beer was up 1.1 percent, liquor was up 3 percent, and wine was up 1.3 percent.

The pro-legalization Marijuana Policy Project lauded the sales tax holiday as "a much-deserved day off" for marijuana consumers, who carry a heavier tax burden than people who buy alcohol.

However, it's far too soon to say how marijuana legalization has affected behavior when it comes to consuming intoxicants.

A University of Colorado-Denver economist who has studied how marijuana availability impacts alcohol consumption said the Colorado numbers don't show much.

Economist Daniel Rees pointed out that beer sales growth didn't keep up with population growth in the last year, estimated at about 1.7 percent between 2014 and 2015.

"I wouldn't read too much into one state's experience," Rees said.

Should I Include a Dependent's Income on My Tax Return?

It may be easier and less expensive to include dependents' income on your tax return rather than have them file their own return—in certain circumstances.

Read More

Brought to you by TurboTax.com

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

Read More

Brought to you by TurboTax.com

Tax Tips After January 1, 2019

TurboTax gives you ten tax saving tips for the new year. Find strategies to lower taxes, save money when preparing your tax return, and avoid tax penalties.

Read More

Brought to you by TurboTax.com

Should You and Your Spouse File Taxes Jointly or Separately?

Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.

Read More

Brought to you by TurboTax.com
Read Full Story