Amendment 64 Calculator
Colorado voters approved Amendment 64 in November 2012, legalizing the production, sale and use of adult recreational marijuana under Colorado law. The state General Assembly is currently considering legislation to levy the following taxes on recreational marijuana:
- An excise tax of 15% of the wholesale value of marijuana.
- A special sales tax of 15% on the retail sale of marijuana.
- Extension of the state’s existing 2.9% general sales tax to sales of marijuana and marijuana products.
The Colorado Futures Center seeks to provide an unbiased analysis of the fiscal impact of the proposed Amendment 64 tax measures as part of a broader commitment to look holistically at the sustainability of Colorado’s state budget. This online tool allows anyone to see how changes in demand, pricing and consumer behavior regarding recreational marijuana impact state revenues.
As of February 2013, 108,951 Coloradans held medical marijuana cards. Some of these users will transition to adult recreational marijuana. The CFC model assumed a migration rate of 79%.
What is your estimate for transitioning users?
The CFC model assumed that, on average, each user consumes 3.53 oz of marijuana a year.
What is your estimate for average consumption per user?
There are wide ranging estimates for the cost to grow a pound of marijuana; they range from $25 to over $1,500/lb. The best studies on cost to grow were completed in 2010 from the Rand Institute and are based on the California market. Rand’s 2010 estimates range from $25 to $400/lb. Rand’s high estimate, adjusted for inflation, would be $600 to grow a pound of marijuana in 2014.
What is your estimate for cost to produce a pound of marijuana?
There is markup between producer cost and retail price. Some of this markup covers the costs of the retail establishment and some is profit for the retailer. There are estimates of retailer markups as high as 300%. The CFC study assumed a retailer markup of 175% over the base cost of $600/lb..
What is your estimate for the retail markup when purchasing marijuana?
The General Assembly is considering a recommendation to refer to the voters on a 15% excise tax on the production cost of marijuana. This is consistent with the language of Amendment 64.
What do you feel is an appropriate excise tax rate on the cultivation price of marijuana?
The General Assembly is considering a recommendation to refer to the voters on a 15% sales tax on the retail price of marijuana and marijuana products.
What do you feel is an appropriate sales tax rate on the retail price of marijuana and marijuana products?
Revenue generated from excise tax on cultivation of marijuana.
Special sales tax on marijuana and marijuana products.
Colorado's normal 2.9% sales tax.
The total tax revenue generated from the excise, special, and sales taxes.
Retail price of an ounce of marijuana, including all taxes.
|Total Ounce Consumption|
|Production Markup Amount|
|Retail Markup Amount|
|Retail No Tax|
|Sales Tax Special|
|Elasticity Induced Demand|
|Demand in Ounces|
|Size of Raw Retail Market|
|Size of Raw Wholesale Market|
What will marijuana taxation generate for the state of Colorado? And, after taxes, what will the retail price be for an ounce of marijuana? Use the Colorado Future Center’s online Amendment 64 calculator to estimate retail prices and tax revenue using your own assumptions about the market for marijuana in Colorado.
You have selected a rate that is higher than the rate the voters approved in Amendment 64.
You have selected a rate that is higher than the rate currently under consideration by the Legislature.
Under the assumptions you have made, the retail price of marijuana will be sufficiently high to drive all demand back to the black market. With no legal retail purchases of marijuana, the state generates no tax revenue.