Colorado has collected more than $3.1 billion in marijuana tax and fee revenue since legal adult-use sales began in February 2014, drawn from three separate state taxes plus licensing fees.1Colorado Department of Revenue. Marijuana Tax Reports That money is directed by statute to school construction, a dedicated cash fund for public health and substance abuse programs, and the cities and counties where sales occur. Annual collections peaked in 2021 and have fallen every year since.
How Much Colorado Has Collected
Collections grew from roughly $67.6 million in the partial first year of 2014 to a high of $423.5 million in 2021, then declined:1Colorado Department of Revenue. Marijuana Tax Reports
- 2022: $325.1 million
- 2023: $274.1 million
- 2024: $255.4 million
- 2025: $236.4 million
Through February 2026, the state had collected about $38.1 million for the year, bringing cumulative collections to just over $3.148 billion.1Colorado Department of Revenue. Marijuana Tax Reports
The Department of Revenue publishes monthly reports breaking the totals down by tax type and by county, so residents can see which areas generate the most activity.1Colorado Department of Revenue. Marijuana Tax Reports
The Three State Taxes
Colorado applies three different taxes to marijuana, each hitting the supply chain at a different point. Which one applies determines where the money ends up.
15% Wholesale Excise Tax
A 15 percent excise tax is charged when a cultivation facility first sells or transfers unprocessed marijuana to a retail store or product manufacturer.2Department of Revenue – Taxation. Marijuana Excise Tax The cultivator pays it, not the consumer. For transfers between unrelated businesses, the tax is based on the negotiated contract price. For transfers between affiliated businesses, the state applies a published Average Market Rate so related companies cannot undervalue internal transfers.3FindLaw. Colorado Code 39-28.8-302
15% Retail Sales Tax
Consumers buying adult-use marijuana pay a 15 percent retail sales tax on the full purchase price.4Colorado Department of Revenue – Taxation. Marijuana Sales Tax Retailers collect it and remit it to the Department of Revenue electronically.5Colorado Secretary of State. 1 CCR 201-18 This is separate from, and in addition to, the standard state sales tax that applies to other goods.
2.9% State Sales Tax on Medical Marijuana
Medical marijuana is exempt from both the 15 percent excise tax and the 15 percent retail sales tax. Medical purchases carry only the standard 2.9 percent state sales tax that applies to most retail goods.4Colorado Department of Revenue – Taxation. Marijuana Sales Tax
Where the Money Goes
Marijuana tax revenue does not flow into a general pool. Each tax has a designated destination written into statute.
Excise Tax: School Construction
Amendment 64, the 2012 ballot measure that legalized adult-use marijuana, committed the first $40 million in annual excise tax revenue to school capital construction.6State of Colorado Elections Database. 2012 Nov 6 General Amendment 64 That money funds the Building Excellent Schools Today (BEST) program, which issues competitive grants to public schools for new construction, renovations, and safety upgrades.7Colorado Department of Education. BEST Grant FAQ A 2019 bill expanded the commitment, directing 100 percent of excise tax collections to school capital construction and removing the earlier cap.
Retail Sales Tax: The Marijuana Tax Cash Fund
After the local government share is carved out, revenue from the 15 percent retail sales tax goes into the Marijuana Tax Cash Fund.8Justia Law. Colorado Code 39-28.8-501 The legislature can appropriate from the fund for a range of purposes, including:
- Substance abuse prevention and treatment, including programs addressing illegal use and legal misuse of marijuana and broader behavioral health services
- School-based and community programs for youth
- Public health work, including poison control, prescription drug take-back programs, and marijuana-related health research
- Law enforcement training, certification, and regulatory enforcement
- Rental assistance and supportive housing programs
The fund also pays the administrative costs of the Marijuana Enforcement Division and the Department of Revenue, so the regulatory system is largely self-funded rather than drawing on general taxpayers.9Colorado General Assembly. Marijuana Taxes
Local Shares
Cities and counties that allow marijuana sales receive a direct cut of state collections. The Department of Revenue distributes 10 percent of the 15 percent retail sales tax to local jurisdictions each month.10Department of Revenue – Taxation. Marijuana Tax – Information for Local Governments Each jurisdiction’s share is proportional to the retail sales tax collected within its borders compared to the statewide total, so cities with higher sales volumes receive larger distributions. The share each place receives shifts as sales patterns move; a new dispensary in one town that draws customers from a neighboring area will shift the proportions. Local governments spend the funds at their discretion, typically on regulatory oversight, public safety, and infrastructure.
Local Taxes You May Also Pay
Beyond the state-shared revenue, municipalities and counties can impose their own marijuana taxes on top of the state rates. These add-ons vary widely. Denver, for example, layers a city sales tax and a special marijuana tax on top of the state rates, pushing the combined adult-use burden above 22 percent. Boulder and other Front Range cities set their own rates as well. Local rates change frequently, so the Department of Revenue’s county-level reports or the municipal finance office are the places to check for a current combined rate.
Towns that ban marijuana sales forgo both the state revenue share and the ability to collect any local marijuana tax of their own.
Why Revenue Has Fallen Since 2021
The decline from the 2021 peak traces to a few overlapping forces. Wholesale prices fell about 63 percent between January 2021 and April 2023 as pandemic-era demand faded and cultivation supply outpaced consumption. Marijuana tourism also dropped as more states opened their own legal adult-use markets, shrinking the out-of-state buyer pool that had once driven Colorado sales. Legislative analysts project that collections will eventually stabilize and begin to recover as prices and consumption rebound, but a return to the 2021 highs is not expected soon.
TABOR and Early Surplus Revenue
Colorado’s Taxpayer’s Bill of Rights (TABOR) added an early twist to marijuana collections. When actual revenue exceeded the state’s initial estimates, TABOR required the state to either refund the excess or get voter approval to keep it. In 2015, voters passed Proposition BB, allowing the state to retain roughly $66 million in marijuana tax revenue that exceeded TABOR projections. The vote established that marijuana tax revenue, like all state revenue, remains subject to TABOR’s spending limits and voter-approval requirements.