Colorado Passes First Laws Regulating Recreational Marijuana Market

Legislators in Colorado on Wednesday passed the first laws regulating the state’s recreational marijuana market, which will take effect in January 2014. Governor John Hickenlooper is expected to sign them by early June, The Wall Street Journal reports.

Washington state, which also approved the recreational use of marijuana for adults 21 and older, is still drafting regulations.

Many questions remain, including how local governments will implement the laws, and how the federal government will respond, since marijuana remains illegal under federal law.

Under the new regulations, marijuana buyers would pay a 10 percent state sales tax and a 15 percent excise tax, plus local sales tax. The revenues raised would be used to build public schools and to enforce the marijuana law. Voters must approve the tax rate in November.

Some marijuana entrepreneurs say that high tax rates could benefit illegal marijuana producers, because buyers would turn to the black market. A task force that included health officials and representatives of the state’s marijuana industry had recommended Colorado set taxes high enough to pay for administering the new law, but not high enough to drive customers to the black market.

The new regulations preserve the current model used for medical marijuana, which requires retailers to grow 70 percent of what they sell, until October 2014. The model is designed to avoid diversion to the black market. After that date, marijuana companies will be able to become either producers or sellers.

Colorado legislators also passed a bill this week that sets limits on levels of THC, the active ingredient in marijuana, for drivers. The new law mandates that drivers found with a THC level of five nanograms or more per milliliter of blood will be considered to be under the influence.