Governor proposes changes to Colorado's marijuana tax revenue distribution

The Joint Budget Committee (JBC) of the Colorado State Legislature convened on March 20, 2025, to discuss significant changes to the distribution of retail marijuana tax proceeds and proposed budget modifications for various state departments.

The meeting began with a review of the current 15% tax on retail marijuana transactions, which allocates 10% to local governments and 90% to the state. Of the state’s share, the majority is directed to the marijuana tax cash fund, with approximately 12.6% going to the state public school fund. A proposal was introduced that could free up an additional $9.4 million for the fiscal year 2025-26, although this amount may fluctuate based on revenue trends.

The committee noted that there is precedent for altering the distribution of marijuana tax revenues, referencing a previous change made through Senate Bill 17-67, which adjusted local government allocations in conjunction with an increase in the special sales tax rate. This proposed change could significantly reduce funding for local governments, which are already facing revenue challenges.

The JBC also reviewed several budget modifications proposed by the governor's office. Key adjustments included a reduction in funding for the cannabis business office from $1.5 million to $800,000, and a decrease in funding for the Department of Public Safety's crime prevention initiatives from $4.4 million to $2 million. The governor maintained a request for $1 million in ongoing funding for youth delinquency grants, which had previously been denied but was tabled for later consideration.

Further proposed cuts included a reduction in funding for the Colorado Gang database from $1.6 million to $250,000, as well as targeted cuts across various programs. Notable reductions included the elimination of the CU School of Public Health's regulation of marijuana concentrates, saving approximately $2 million, and cuts to substance abuse grants totaling about $2.7 million. Other significant reductions affected the Department of Human Services and the Colorado Health Service Corps, among others.

The meeting concluded with a summary of the proposed budget changes and their implications for state funding and local governments. The JBC plans to continue discussions on these matters in future meetings, with a focus on balancing the state budget while addressing the needs of various departments and local entities.