Colorado Marijuana Holiday Saves Shoppers, Growers Big Bucks

DENVER (AP) - Colorado's marijuana growers were the big winners Wednesday when the state suspended new recreational pot taxes, a tax quirk that saved shoppers some sales tax but saved wholesalers tens of thousands.

Prompted by a quirk in state tax law, the one-day tax suspension allowed growers to transfer a month or more of inventory without paying 15 percent excise taxes, or $300 a pound.

At Colorado Harvest Co., a chain of dispensaries in the Denver area, owner Tim Cullen saved $45,000 - before even opening his doors to the first customer.

Looking over a small tangle of pot shoppers in his suburban Denver shop, Cullen said the crowds weren't huge but the tax break would be a big win anyway.

"This is just gravy," Cullen said about the shoppers.

The odd tax waiver was triggered almost two years ago, when Colorado voters approved two taxes on recreational marijuana - a 10 percent sales tax for shoppers and a 15 percent excise tax for wholesale growers.

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Ahead of that vote, state tax analysts miscalculated overall state revenue for 2014. The error triggered a mandatory suspension of the new pot taxes.

Lawmakers decided to waive the taxes only for a single day, though voters will have to return to polls in November to authorize the state to keep about $50 million in pot taxes collected in 2014.

Confused? So were many shoppers Wednesday - but they loaded up on lower-cost weed anyway.

"Lower taxes are always better. Who's going to complain about that?" asked a man named Ben, from Centennial, who was in line early at a dispensary that offered half-price weed to their earliest shoppers.

Some out-of-state visitors were shocked to see the virtually tax-free sale of weed. (It was still subject to local taxes and Colorado's basic 2.9 percent sales tax.)

"I saw online there was some kind of loophole on the taxes, so I had to come buy some," said David Illig of Onawa, Iowa, who was passing through on a drive to California.

Colorado tracks marijuana sales, but it doesn't make the data public, making it impossible to know if Wednesday set a single-day sales record. Several retailers said the day was akin to a busy holiday weekend.

A fiscal analysis prepared for state lawmakers earlier this year predicted that pot growers would use the tax holiday to transfer a month of more of marijuana supply. They estimated a one-day suspension would cost the state between $3 million and $4 million in lost taxes - an estimate the state marijuana regulators declined to update Wednesday.

Still, shoppers and marijuana industry workers lauded the tax holiday as a needed break.

In a statewide tally made final Tuesday, Colorado reported that it collected much more in marijuana-specific taxes last fiscal year than alcohol-specific taxes.

"The cannabis community has brought so much money to the state of Colorado, this is only fair," said Chad Drew, sales manager at Colorado Harvest Co.

- By Kristen Wyatt, AP Writer

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