Local Government Special Sales Tax On Retail Marijuana

The Colorado court of appeals has held that current law does not authorize counties to levy and collect a sales tax on retail marijuana and retail marijuana products in addition to any sales tax imposed by the state and the standard sales tax imposed by the county (special sales tax). Current law is also silent regarding the authority of a statutory municipality (municipality) to collect a special sales tax on retail marijuana and retail marijuana products. The bill authorizes counties and municipalities to levy, collect, and enforce a special sales tax on retail marijuana and retail marijuana products; except that a county may levy, collect, and enforce a special sales tax on retail marijuana and retail marijuana products only under the following circumstances:

• The county levies, collects, and enforces a special sales tax upon all sales of retail marijuana and retail marijuana products in the unincorporated areas of the county;
• The county levies, collects, and enforces a special sales tax upon all sales of retail marijuana and retail marijuana products in the municipalities within the county that do not levy a special sales tax on the sale of retail marijuana and retail marijuana products. The county special sales tax is authorized only until the municipality obtains voter approval for a special municipal tax on the sale of retail marijuana and retail marijuana products. After such time, any county special sales tax is invalid within the corporate boundaries of the municipality unless the county enters into an intergovernmental agreement with the municipality to allow the county to continue to levy, collect, and enforce the county's special sales tax.
• The governing body of any county and the governing body of any municipality within the boundaries of the county that levies a municipal special sales tax on the sale of retail marijuana and retail marijuana products enter into an intergovernmental agreement pertaining to the county's levy, collection, and enforcement of a special sales tax upon all sales of all retail marijuana and retail marijuana products. The intergovernmental agreement may include a provision for the apportionment of a specified percentage of the gross retail marijuana special sales tax revenue collected by the county to the municipality.

The bill specifies that a county or a municipality may not levy a special sales tax under any circumstance until the proposed tax has been referred to and approved by the eligible electors of the county or municipality, as applicable. A county or municipality must refer the proposed tax to the eligible electors only on the date of the state general election, on the first Tuesday in November of an odd-numbered year, or, in the case of a municipality, on the date of a municipal biennial election.

The bill specifies that if a county or municipality obtained voter approval prior to the effective date of the bill to levy, collect, and enforce a special sales tax upon the sale of retail marijuana and retail marijuana products, the tax is valid; except that, for a county, the tax is valid only so long as the county complies with the conditions specified in the bill. If the county levies, collects, and enforces such tax in a municipality that has already obtained voter approval to levy a special sales tax on the sale of retail marijuana and retail marijuana products, the county's special sales tax is invalid unless the county enters into an intergovernmental agreement with the municipality.

Any special sales tax on retail marijuana and retail marijuana products shall not be collected, administered, or enforced by the department of revenue. Instead, such tax shall be collected, administered, and enforced by the county or municipality imposing the tax.

A county or municipality in which the eligible electors have approved a special sales tax on the sale of retail marijuana and retail marijuana products may credit the revenues collected from the tax to the general fund of the county or municipality or to any special fund created in the county or municipality's treasury. The governing body of a county or municipality may use the revenues collected from the tax for any purpose as determined by the governing body of the county or municipality.

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)