Colorado Marijuana Tax Rates, Excise, and Revenue

The Colorado marijuana tax rate depends on what you’re buying and where. Recreational purchases carry a 15% state retail marijuana sales tax plus whatever your city and county add on top, which pushes the combined rate in Denver to roughly 26.75%.¹ Medical marijuana patients are exempt from the 15% state tax and pay only Colorado’s standard 2.9% state sales tax plus local taxes.²

What Recreational Buyers Pay

Every recreational marijuana purchase in Colorado is subject to a 15% state retail marijuana sales tax charged on the full purchase price at the register. The rate took effect July 1, 2017, replacing the original 10% rate that had been in place since legal sales began in 2014.³ The 15% is a ceiling written into law; the legislature can lower it, but raising it above 15% would require another voter-approved measure.

One detail trips people up. Recreational marijuana is actually exempt from Colorado’s standard 2.9% state sales tax on tangible goods. The 15% retail marijuana sales tax replaces that general sales tax rather than stacking on top of it.² So at the state level a recreational buyer pays 15%, not 17.9%. Local taxes are a separate matter.

What Medical Patients Pay

Medical marijuana patients catch a significant tax break. They are exempt from the 15% retail marijuana sales tax and from the 15% excise tax that applies to recreational product.² Colorado regulations state explicitly that no excise tax is imposed on the sale or transfer of unprocessed medical marijuana from a cultivation facility to a medical marijuana center.⁴

Medical patients do pay the standard 2.9% state sales tax that applies to tangible goods, the same tax recreational marijuana is exempt from.² Local governments may also apply their own sales taxes to medical purchases. Even with those local layers added, the total medical tax burden is dramatically lower than the recreational rate. To qualify, you need a valid Colorado medical marijuana registry card; the program is limited to Colorado residents.

Local Taxes and Why Your Total Varies by City

The state-level rate is only part of the picture. Colorado law expressly allows cities and counties to impose their own taxes on marijuana sales, and nothing in the state statute prevents them from doing so.⁵ Many municipalities have taken full advantage. Local marijuana tax rates vary widely, and some jurisdictions stack a marijuana-specific local tax on top of their general local sales tax.

Denver is a useful illustration. The city’s local layers push the combined rate on recreational marijuana to roughly 26.75%.¹ That figure includes the 15% state retail marijuana sales tax plus local marijuana-specific taxes of about 10.65% and applicable local general sales taxes. A $50 pre-tax purchase in Denver adds more than $13 in taxes at the register.

Not every community in Colorado allows marijuana sales at all. Amendment 64 gave local governments the right to prohibit retail marijuana businesses, and many smaller municipalities and counties have done so. If your city has opted out, the nearest dispensary may sit in a neighboring jurisdiction with a different local tax structure, so your receipt can look very different depending on where you cross a city line.

The 15% Excise Tax You Don’t See on Your Receipt

A separate 15% excise tax applies before a recreational product ever reaches a dispensary shelf. It is charged on the first sale or transfer of unprocessed marijuana from a cultivation facility to a retail store or manufacturing facility.⁶ You won’t see this as a line item on your receipt, but it gets baked into the wholesale cost and into retail prices.

How the 15% is calculated depends on the relationship between seller and buyer. For transfers between affiliated entities (common when one company owns both the grow operation and the retail stores), the tax is based on the Average Market Rate, a value the Department of Revenue calculates quarterly for each product category.⁷ For transfers between unaffiliated businesses, it is based on the contract price agreed to at the time of the transfer.⁶ The AMR approach prevents affiliated companies from shifting product at artificially low internal prices to reduce their tax bill. Medical marijuana is not subject to this excise tax at all.

Where Colorado’s Marijuana Tax Revenue Goes

Colorado collected more than $236 million in marijuana tax and fee revenue in calendar year 2025.⁸ The money flows into several channels prescribed by statute.

Ten percent of gross retail marijuana sales tax revenue is returned to the local governments where the sales occurred, split between cities and counties based on each jurisdiction’s share of total state sales.⁵ The remaining 90% feeds the Marijuana Tax Cash Fund, which the legislature appropriates annually across state programs. For FY 2025–26, the state budgeted roughly $146 million from this fund, with the largest shares going to Human Services for substance abuse treatment and behavioral health, followed by Public Health and Environment, Education, and Public Safety.⁹

Excise tax revenue follows a different path. For FY 2024–25, all retail marijuana excise tax received transfers to the Public School Capital Construction Assistance Fund, which finances school building and renovation projects statewide.¹⁰ In prior fiscal years, excise collections above $40 million spilled over into the broader Public School Fund for general education spending, and the exact split between the two funds has shifted through multiple legislative adjustments.

1
City and County of Denver. Business Tax FAQs
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Colorado Department of Revenue – Taxation. Marijuana Sales Tax
3
Justia Law. Colorado Revised Statutes Section 39-28-8-202 – Retail Marijuana Sales Tax
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Colorado Secretary of State. Code of Colorado Regulations 1 CCR 201-18
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Justia Law. Colorado Revised Statutes Section 39-28-8-203 – Disposition of Collections – Definitions
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FindLaw. Colorado Revised Statutes Title 39 Section 39-28-8-302 – Retail Marijuana Excise Tax
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Colorado Department of Revenue – Taxation. Average Market Rate for Unprocessed Retail Marijuana
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Colorado Department of Revenue – Taxation. Marijuana Sales Generate Over $236M in Tax, Fee Revenue Figures for 2025
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Colorado Joint Budget Committee. FY 2025-26 Marijuana Tax Cash Fund Briefing
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Colorado Department of Revenue. Disposition of Marijuana Tax Revenue