A powerful Colorado legislative committee just slammed the brakes on a plan to jack up taxes on marijuana and booze. Lawmakers voted 5-0 to urge rejection of House Bill 26-1301. The bill aimed to send a voter measure to the November ballot to fund mental health care. This rare move highlights growing worries over shrinking cannabis revenue and high taxes.
House Bill 26-1301, sponsored by Rep. Bob Marshall, D-Highlands Ranch, and Sen. Judy Amabile, D-Boulder, seeks voter approval for tax boosts. It would raise the state retail marijuana sales tax and excise tax each by 0.42 percentage points. That bumps both from 15% to 15.42%.
Alcohol faces hikes too, the first in over 30 years. Excise taxes would climb by 7.33 cents per gallon on beer and hard cider, 8 cents per liter on wine, and 60.26 cents per liter on spirits. All new cash flows to a hospital support account in the capital construction fund.
The state Department of Human Services would prioritize spending. First comes a new mental health institute in Aurora with up to 70 beds. Next, operating costs there and long-term civil commitment facilities in Mesa County.
Colorado struggles with mental health access. The state ranks near the bottom nationally for psychiatric beds and outcomes.
Committee Delivers Rare Rejection Vote
The bicameral Capital Development Committee met Thursday and acted fast. Members voted unanimously 5-0 to send a letter recommending the House Health and Human Services Committee kill the bill. That panel schedules a hearing Wednesday.
Vice Chair Rep. Tammy Story, D, pressed sponsor Marshall on marijuana taxes amid falling sales. Marshall admitted they added weed “to spread the pain.” He called them sin taxes to offset harms, noting many with serious mental illness self-medicate with pot or alcohol.
He offered flexibility. “If we need to back off on marijuana, that’s fine,” Marshall said. Alcohol could shoulder more, or find other targets.
This stands out. The committee rarely weighs in on policy bills like this.
Cannabis Sales Hit Milestone but Revenue Dips
Colorado hit over $1.1 billion in marijuana sales through October 2025. Full-year figures topped that, with tax and fee revenue exceeding $236 million for the year, per the Department of Revenue’s February 2026 report.
Yet trends worry lawmakers. Sales dropped for the fourth straight year in 2025. Tax revenue fell to $231.1 million in fiscal 2024-25, down 45.5% from the $424.4 million peak in fiscal 2020-21.
More states legalize cannabis. Hemp products with THC draw buyers too. Prices compress as supply grows.
Current taxes stack up: 15% excise, 15% retail sales, plus 2.9% state sales tax. Cannabis still outpaces alcohol and tobacco revenue.
Here’s a quick look at recent marijuana tax revenue:
| Fiscal Year | Tax Revenue (millions) | Sales (billions) |
|---|---|---|
| 2020-21 | $424.4 | Peak growth |
| 2024-25 | $231.1 | $1.1+ |
Cumulative totals surpass $3.1 billion since 2014 legalization.
Industry Fights Back Amid Mental Health Push
Marijuana groups blast the plan. Colorado Leads, the industry voice, strongly opposes it. Taxes already top other states and goods. Higher costs could push buyers to black market sellers, starving state coffers.
Breweries and distilleries echo fears. Tax jumps hit small businesses hard, risking closures. A related bill, HB 1271, for alcohol fees just died in committee.
Mental health needs burn urgent, but opponents say sin taxes miss the mark. Experts note Colorado’s bed shortage worsens crises like homelessness and overdoses. Funds could add capacity, yet revenue dips threaten reliability.
Lawmakers eye fixes. Governor Jared Polis touted 2025 sales but backs market health. Recent wins include a bill letting terminally ill patients use medical marijuana in hospitals, now awaiting his signature.
Supporters see hope in targeted revenue. Critics push general funds or other vices.
The push reflects tough choices. Mental illness touches every community. Families wait months for care. Taxpayers feel squeezed by costs.
This fight shows Colorado’s balancing act. Legal weed built schools and roads, but maturity brings slumps. Voters might decide if more taxes fit now. Lawmakers must weigh patient needs against business pain.
