Concerning the average market rate of unprocessed retail marijuana.
Summary
HB26-1077 revises Colorado’s marijuana tax framework for unprocessed retail marijuana by changing how the state determines the “average market rate” used to calculate the tax on the first sale or transfer of that product. Under current law, the tax is based on a 15% rate applied to the average market rate, which the Department of Revenue determines quarterly. The bill keeps that structure but requires the department to establish separate average market rates for indoor and outdoor unprocessed retail marijuana, and to maintain separate rates for marijuana allocated to extractions versus marijuana sold directly to consumers.
The bill also defines “indoor unprocessed retail marijuana” and “outdoor unprocessed retail marijuana” for tax purposes. Indoor product is marijuana cultivated in an indoor structure using artificial lighting or otherwise not meeting the outdoor definition, while outdoor product is marijuana grown under natural sunlight and weather conditions, with limited exceptions for certain plants. The bill specifies that outdoor rates must be lower than indoor rates, and that extraction rates must be lower than direct-sale rates within both categories. It takes effect July 1, 2026, and includes a small General Fund appropriation to the Department of Revenue for administration, taxation services, and GenTax IT support.
Impact
The bill amends Colorado Revised Statutes section 39-28.8-101, changing the statutory definition of “average market rate” for unprocessed retail marijuana and adding new definitions for indoor and outdoor unprocessed retail marijuana. It requires the Department of Revenue to administer separate quarterly rates by cultivation method and end use, which will affect how the marijuana excise tax is calculated on first sales or transfers from cultivation facilities to manufacturers or retail stores. The act also appropriates $22,359 from the General Fund to the Department of Revenue for implementation and becomes effective July 1, 2026.
Sentiment
The available context suggests the bill was noncontroversial and advanced successfully through the legislature, ultimately being signed by the governor. The absence of recorded votes or committee transcript debate in the provided materials indicates no documented floor or committee opposition in this dataset. Overall, the bill appears to have been treated as a technical tax administration measure rather than a major policy dispute.
Contention
The main policy issue embedded in the bill is how to classify and tax marijuana based on cultivation method and intended use. The bill favors a more granular tax structure, with lower rates for outdoor-grown marijuana and for product allocated to extractions, which may benefit outdoor cultivators and extraction-oriented businesses. Potential points of contention, if raised, would likely involve whether the new rate distinctions create administrative complexity, whether they advantage certain segments of the cannabis industry over others, and whether the Department of Revenue’s quarterly rate-setting methodology is sufficiently clear and workable.