Nick Hice, cultivation facility manager at Denver Relief, harvests several of the plants, getting them ready for the drying process. (Kathryn Scott Osler, The Denver Post)

Why pot shops will be selling cheap weed on this one fall day

Customers won't be the only ones saving money. Businesses, too, will save big on cannabis transfers from grows to shops

You’ve already read the news that Colorado will repeal sales taxes on marijuana for one day only — on Sept. 16 — because of a quirk in the state’s constitution.

But what does that mean for you the customer? Will you save money at the register? And how long will it take some of these businesses to adopt Sept. 16, 2015 as their own holiday of sorts with additional discounts and promotions?

Big weed sales are already in the pipeline, multiple shops confirmed this week to The Cannabist, and customers will soon be wading through the discounts and promotions — just like they were on Black Friday in 2014.

“Just hearing about it, my mind’s going — I gotta do a 4/20-type promotion for that day,” said Brian Ruden, owner of the Colorado-rooted Starbuds pot shops, who learned about the state’s pot tax holiday when called for this story. “Any chance to drive business and expose new people to the Starbuds brand is a phenomenal opportunity for us, and it’s great for the consumers as well because it allows them to take advantage of the savings on a particular day.”

With the pot tax holiday more than three months away, Ruden said it was too soon to say what his shops’ specials would be. But there will be deals, he promised, and his promotions won’t be the only ones.

“I think that we’ll offer some type of promotion,” said Ean Seeb, co-owner of the Denver Relief marijuana shop in Baker. “It’s a little down the road, but knowing the creative personnel we have on staff, I have no doubt we’ll come up with something unique for our Denver patients and customers.”

State economists expect Colorado to lose at least $100,000 from forgoing the 10 percent special sales tax for one day — and possibly more, given the amount of people who will shop on that day instead of the surrounding weeks, according to a fiscal note from the Colorado Legislative Council Staff.

So customers shopping recreationally will save 10 percent at the register, but the businesses will save even bigger on Sept. 16 — 15 percent on their recreational transfers. For example, when a cultivation transfers shop-ready weed to a marijuana store, they pay a 15 percent tax on those transfers. Sept. 16 could make for sizable savings for marijuana shops, said Seeb.

“Business owners are savvy enough to recognize that if there’s a day where they don’t have to pay taxes they can delay a transfer to take advantage of that window,” Seeb said.

It could make for potent savings at an edibles company, too, given that they rely on buying trim (remnants around the marijuana flower) from other cultivation facilities to make their products — and Sept. 16 would be an ideal day to make those purchases. The only problem: All of an edibles company’s competitors will also have that date circled on their calendars.

“I don’t know if that will be a huge benefit to us, per se,” said Bob Eschino, a partner at edibles giant Incredibles. “We’ll try to buy as much trim as we can on that date, but it’ll be me and everybody else, right?”

The state anticipates losing $3.6 million in revenue for that portion of the pot tax holiday:

“Because the excise tax is assessed when retail marijuana is first transferred from a cultivator to a processor or retailer, producers can adjust their transfer schedule to take advantage of a tax-free transfer,” the state’s fiscal note reads. “This analysis assumes that transfers that would otherwise be conducted in the month preceding or following September 16 will be shifted to that date, resulting in a loss of two months of excise tax revenue currently forecast for FY 2015-16.”

In addition to luring in deal-hungry customers, Ruden — who has four Starbuds shops with a fifth opening in Pueblo this weekend and a sixth opening in Adams County in August — said he’ll certainly transfer as much of his cultivations’ inventory that is ready on Sept. 16, but he doesn’t think it will be two months’ worth of transfers. He thinks the state’s estimates are a bit off.

“People, myself include, will try best as possible to shift as much of our production to coincide with that day and transfer it then,” Ruden said. “But the state is likely overstating by saying two months’ worth, because the store has needs, and I can’t let it run out. And the grow itself, when product is ready it’s ready. I can manipulate it to some extent, but I don’t have full control. I can only transfer as much as I can produce, but I’m not going to transfer premature product, and I’m not going to hold onto product at the risk of running out in the store.

“I’ll transfer as much as I can that day, but to do two months’ worth and make it all fall on that day is not realistic.”

Regardless, Ruden said, Sept. 16 will give him and his competitors reason to celebrate.

“Hearing this news puts a big smile on my face, because it’s a great opportunity to save money on the transfer tax, and it’s also a great opportunity to capture a new market share as customers come in and save at the register as well,” Ruden said. “Starbuds has its own cultivation centers, and that’s the part of the business that saves money on the transfer tax, but luckily we’re vertically integrated so I get to save on both ends.”