Colorado’s Proposed Marijuana Tax Is Very Similar to What Alcohol Faces
In two weeks the people of Colorado will decide the fate of Proposition AA which would impose a 15 percent excise tax when unprocessed commercial marijuana is first sold or transferred to a retail outlet with an additional 10 percent sales tax. Some have attacked these taxes as unreasonable but they are every much in line with how heavily hard liquor is taxed.
Unlike marijuana, hard liquor in Colorado is taxed based on the amount of alcohol a bottle contains not its price, but we can look at an example to have a point of comparison. Let’s say you bought a 1.75l bottle of vodka for $19.00 in Colorado. Of what you pay $5.00 is going to cover the federal excise tax and $1.05 to going to the state excise tax. And Colorado has one of the lowest state liquor taxes in the country.
Of that $19 you paid, roughly $6 is going to special alcohol taxes. These special taxes add about 32 percent to the cost of your purchase, by comparison the marijuana excise taxes should add only about 22 percent to the cost of a purchase. Because of how the distilled spirit excise taxes are designed, if you bought a more expensive bottle taxes will make up a smaller overall share of the cost.
The campaign promised that marijuana would be treated like alcohol and that is essentially what Prop AA would do when it comes to taxes. Depending on your perspective you could even argue marijuana will be subject to a lower overall tax rate than hard liquor.