Marijuana Moment: Colorado Legislative Committee Votes To Reject Bill To Put Marijuana And Alcohol Tax Hikes On November Ballot

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A Colorado legislative committee is urging fellow lawmakers to reject a bill that would put a measure on the state’s November ballot asking voters to increase marijuana and alcohol taxes to support mental health treatment.

At a meeting on Thursday, the bicameral Capital Development Committee (CDC) took up the proposal from Rep. Bob Marshall (D) and Sen. Judy Amabile (D) that aims to hike taxes on the substances and put the additional revenue toward the creation of a mental health fund overseen by the state Department of Human Services (DHS).

Members of the panel voted unanimously (5-0) to send a letter to the House Health and Human Services Committee recommending that the panel reject the legislation, HB 1301, when it’s taken up at a hearing scheduled for Wednesday.

If the bill is passed by the legislature, voters across the state would then decide on increasing the state retail marijuana sales and excise taxes by 0.42 percentage points each at the ballot this coming November. Alcohol taxes by volume would also increase for the first time in more than 30 years, by varying levels depending on the product type.

“The bill requires the treasurer to transfer an amount equal to the tax revenue raised as a result of the bill to the hospital support account that is created in the capital construction fund,” a summary of the measure says. DHS would be able to expend the funds in “priority order,” starting with the creation of a mental health institute in Aurora, then going toward operational costs for the institute and “long-term civil commitment facilities” in Mesa County.

During last week’s CDC meeting, Rep. Tammy Story (D), vice chair of the panel, asked House bill sponsor Marshall how he squares the proposal to hike marijuana taxes with the fact that the state has seen cannabis sales and resulting revenue slump over recent years.

“We kind of threw marijuana in to spread the pain, so to speak,” Marshall conceded, adding that if there were additional “harmful substances” to tax at a higher rate, they could theoretically “drop marijuana” from the equation.

“I’m a big believer in sin taxes, but the tax should go to ameliorate the issues and externalities of the sin,” he said. “So at least the way I justify this in my mind is, if you talk to a lot of mental health people, so many of the seriously mentally ill self-medicate with alcohol or marijuana. That’s how I’m able to justify taxing marijuana and alcohol for an excise tax.”

“If we need to back off on marijuana, that’s fine,” he said, “but then the alcohol would have to take a larger load of the tax, or we find something else.”

Marijuana industry representatives have criticized the bill’s marijuana tax provisions, in part by pointing out that the state already imposes significant taxes on cannabis sales compared to other states and commodities. Making it more expensive for consumers to purchase marijuana for licensed retailers could also undermine efforts to eliminate the illicit market, drawing buyers back to unlicensed sources where no tax dollars would be generated for the state.

While the state has seen over $1 billion in marijuana sales in 2025—a milestone the governor touted in December—tax revenue from cannabis sales has gradually decreased over the past five years as more states have enacted legalization and as intoxicating hemp products have grown in popularity. Nonetheless, cannabis is still bringing in more tax dollars compared to alcohol or cigarettes.

Adult-use marijuana is currently taxed at three levels in Colorado: A 15 percent excise tax, 15 percent special sales tax and 2.9 percent state general sales tax. As one of the first states to legalize marijuana for recreational use, Colorado saw revenue from those sales grow “consistently for the first eight years of legalization, peaking at $424.4 million FY 2020-21,” a report from the state that was released last month says.

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Meanwhile, the Colorado House of Representatives last week sent a bill to the governor that would allow terminally ill patients to use medical marijuana in healthcare facilities such as hospitals. Advocates have been critical about changes made throughout the legislative process—arguing, for example, that making it so hospitals would have the option—rather than a mandate—to allow medical cannabis use in their facilities fundamentally undermines the intent of the reform.

Gov. Jared Polis (D) also said last month that his state should not have joined a lawsuit supporting the federal ban on gun ownership by people who use marijuana that recently went before the U.S. Supreme Court—and he personally opposes the state attorney general’s “legal position on this.”

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