Average Market Rate of Unprocessed Retail Marijuana
Summary
HB 1077 changes how Colorado determines the “average market rate” used for unprocessed retail marijuana under the state’s marijuana tax and regulatory framework. The bill expands the definition of average market rate to require separate categories for marijuana sold for extraction and for direct consumer sale, and it specifically adds fresh frozen indoor unprocessed retail marijuana and fresh frozen outdoor unprocessed retail marijuana. It also requires the Department of Revenue to set initial rates for extraction-allocated marijuana below the rate for marijuana allocated for direct sale to consumers, and to adopt rules establishing rates for fresh frozen indoor and outdoor marijuana by July 1, 2027.
The bill also defines “indoor unprocessed retail marijuana,” “outdoor unprocessed retail marijuana,” and “natural weather conditions” to distinguish cultivation methods for pricing purposes. Outdoor marijuana is defined as marijuana grown under natural sunlight and exposed to natural weather conditions, with limited exceptions allowing artificial light for young vegetative plants and mother plants, irrigation and similar agricultural practices, and protection from adverse weather under an approved contingency plan. In addition, the department must publish a general description of the methodology and data sources used to calculate each rate category, while protecting confidential, proprietary, and identifying information.
Impact
HB 1077 amends Colorado’s marijuana tax definitions in Title 39, Article 28.8, affecting how the Department of Revenue calculates and publishes average market rates used in the state’s marijuana excise tax structure. The bill creates new statutory categories for indoor, outdoor, and fresh frozen unprocessed retail marijuana, requires differentiated rate-setting for extraction inputs versus direct-sale product, and adds a transparency requirement for the department’s rate methodology. These changes primarily affect marijuana cultivators, product manufacturers, retail stores, and the state agency responsible for administering marijuana tax rules.
Sentiment
The bill appears to have generally favorable support, as reflected by successful committee referrals, unanimous approval of one appropriations amendment, and passage on House third reading by a substantial margin. The vote history suggests the measure advanced through the House with more support than opposition, though not unanimously. No committee transcripts were provided, so the broader discussion can only be inferred from the voting pattern and the bill’s technical, administrative focus.
Contention
The main points of contention likely center on how the state should classify and price different forms of unprocessed marijuana, especially the distinction between indoor and outdoor cultivation and the treatment of fresh frozen material used for extraction. Another likely issue is whether the Department of Revenue should have flexibility in setting market-rate categories versus being constrained by statutory definitions and required rate relationships. The recorded nays in committee and on the House floor indicate some disagreement, but the available record does not identify specific arguments or sponsors of opposition.