Colorado residents may get a refund for pot tax

March 14, 2014: 8:01 AM ET
Why this pot business deodorizes its cash
NEW YORK (CNNMoney)

Colorado residents could see some green in their pockets thanks to the new recreational marijuana taxes.

Budget advisers to the state legislature crunched the numbers and revealed the state could be forced to refund as much as $100 million to taxpayers.

The state's Taxpayer Bill of Rights, known as TABOR, sets limits on taxes and government spending. If the government collects more than expected, it generally owes taxpayers a refund.

But Colorado taxpayers shouldn't expect a refund check in the mail. The state has several other procedures to handle a refund.

The state could provide taxpayers a credit on the next year's tax bill, for example, or reduce the sales tax.

Related: Colorado collects millions in first month of legal marijuana

Colorado is authorized to collect about $70 million in recreational marijuana taxes. But estimates show how the state could easily collect far more in the fiscal year that begins in July.

If initial calculations end up being accurate, the state could owe taxpayers a $67 million. Another estimate puts the amount at $107 million. But it's also possible the state will collect less than $70 million, or that voters could allow the state to keep any extra money.

"This would just strike me as completely bizarre," State Senator Pat Steadman as staffers explained how the state could collect so much more than initially expected. He called the situation "frustrating."

But fellow Democratic State Senator Crisanta Duran pointed out, "It has been the will of the people to vote for TABOR and we have this."

Related: Want a job? Try the pot industry

The state has provided five TABOR refunds before, but this one is unique for technical reasons, said Wade Buchanan, president of the progressive Bell Policy Center.

The ultimate amount -- and whether there will be a refund at all -- won't be known until the coming fiscal year closes in June 2015.

Recreational marijuana first went on sale in Colorado at the beginning of January. That month, the industry brought in about $2 million in tax revenue.

Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.30%4.25%
15 yr fixed3.29%3.32%
5/1 ARM3.45%3.63%
30 yr refi4.27%4.20%
15 yr refi3.26%3.24%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com