Already among the highest in the country, Colorado cannabis taxes could increase even further despite sluggish legal marijuana sales.
State cannabis sales and excise taxes would rise by less than a percentage point in the country’s oldest legal marijuana market if HB 26-1301 passes the state Legislature and is, in turn, approved by voters in November.
According to a legislative digest, HB 26-1301, which is specifically intended to raise revenue for mental-health services, would “increase the state retail marijuana sales and excise taxes each by 0.42 percentage points.”
That would raise the total levy on legal cannabis in markets like Denver to about 27%, Westword reported.
Are cannabis taxes increasing or decreasing?
As federal funding dries up and consumer spending slows amid rising prices to create budget deficits, lawmakers across the country are pondering cannabis taxes to fill gaps.
Colorado’s budget deficit is nearly $1 billion, according to the Colorado Springs Gazette.
But industry advocates argue that raising taxes on legal cannabis even further is exactly what the industry doesn’t need amid declining sales blamed on price compression and competition from the illicit market.
How do taxes affect cannabis sales?
Cannabis consumers in California and Michigan both reacted negatively to tax increases.
A new 24% wholesale tax that took effect Jan. 1 in Michigan, the nation’s second-biggest market, saw sales crash by nearly 16% month-to-month.
Cannabis sales in California, the nation’s largest individual market, dipped below $4 billion for the first time after a short-lived increase in the state excise tax from 15% to 19% that lasted from July through October.
And the tax increase also led to an overall decline in tax revenue, state data showed.
Are Colorado cannabis sales increasing?
In Colorado, cannabis sales fell for the fourth straight year in 2025, according to state data.
Pitched by Gov. Gretchen Whitmer as a revenue source for road repairs, the Michigan marijuana tax increase is already giving state lawmakers second thoughts.
Recently introduced legislation would reverse the tax increase.
Meanwhile, in Alaska, lawmakers are considering overhauling the state’s cultivation tax to decrease overall duties.
