State tax revenue from marijuana sales in Colorado have surpassed $1 billion since its legalization in 2014. Total sales from licensed retailers in Colorado have exceeded $6.5 billion since the state became the first to legalize recreational marijuana. Retail customers pay a 2.9% standard sales tax and a 15% state marijuana sales tax, on top of local taxes. In addition to paying for industry regulation and enforcement, state revenue is used used to fund several state initiatives, including a public school construction fund, youth drug use prevention, and affordable housing.
Source: Claire Hansen, "State Revenue from Pot Tops $1 Billion in Colorado," usnews.com, June 13, 2019.
-Refer to the Article Summary. Refer to the Article Summary. Colorado taxes marijuana with a 2.9% standard sales tax and a 15% state marijuana sales tax, in addition to local taxes. Assume local taxes total 7.1%, so the total tax is 25% based on the initial selling price. Suppose the actual burden of the tax falls 70 percent on consumers and 30 percent on producers. In this case, consumers will actually bear the tax burden of ________ percent of the selling price and producers will actually bear the tax burden of ________ percent of the selling price.

Question

Quizplus · Accepted Answer

The total tax rate is 25%. If consumers bear 70% of this tax burden, they will pay 17.5% (0.70 * 25) of the selling price. Producers will bear 30% of the tax burden, which is 7.5% (0.30 * 25) of the selling price.

State Tax Revenue from Marijuana Sales in Colorado Have Surpassed