A provision in Colorado's HB1409 will redirect marijuana sales tax revenue away from local governments—and most retail owners haven't heard about it yet.
Most Colorado retail marijuana owners don't realize that a provision buried in HB1409 will eliminate local government funding from marijuana sales taxes starting July 1, 2026. Understanding this change now can help you plan ahead.
Currently, Colorado's retail marijuana sales tax is split among the state and local governments. Local jurisdictions receive 3.5% of retail marijuana sales tax revenue. Under HB1409, Section 1, subsection (1)(b)(I.7), that local share drops to zero on July 1, 2026—and stays at zero going forward.
This isn't a temporary adjustment. Once the local apportionment is eliminated, it remains eliminated. All retail marijuana sales tax revenue will flow to the state instead of being shared with municipalities and counties.
Local governments use marijuana tax revenue to fund services that directly affect your operating environment: licensing administration, code enforcement, local police and fire services, and community development. When that funding disappears, local governments face budget pressure.
The practical effects could include:
Communities that have grown accustomed to marijuana tax revenue funding local priorities will need to find alternative funding sources or cut services. That transition period—and the decisions local officials make during it—could reshape the retail marijuana licensing and operating landscape in your area.
You have until July 1, 2026, to understand how your local government currently uses marijuana tax revenue and to anticipate potential changes. That's roughly 18 months to monitor local budget discussions and plan accordingly.
Start by asking your local government or chamber of commerce how much marijuana sales tax revenue your jurisdiction currently receives and what it funds. Attend city council or county commission meetings where budget discussions happen. If your local government hasn't yet discussed the impact of HB1409, this is a good time to raise awareness.
Track any proposed fee increases or licensing changes that local officials justify by citing budget pressures. These may be early signs of the adjustment ahead.
The Colorado Retail Council and local chambers of commerce are monitoring HB1409's implementation. A detailed business-specific resource on the provision and its local impacts is available through your trade association.
HB1409 is codified in Colorado law. The local government apportionment elimination is found in Section 1, subsection (1)(b)(I.7), effective July 1, 2026.