On Nov. 7, 2023, Colorado voters will once again get to decide what to do with excess tax revenue. This time, the money in question is $23.65 million in excess taxes from tobacco companies. The money can either go to various state programs or it will go back to the tobacco companies that paid it.

The outcome of the vote will also decide whether to reduce the state’s tobacco tax rates by 11.53 percent.

All of this is related to Colorado’s unique Taxpayer’s Bill of Rights (TABOR), which sets limits on how much revenue the state can collect in taxes and spend. In cases where the state collects more money than the limits, that money is refunded. How it gets refunded can be complicated and controversial; just this week, the Colorado House of Representatives passed a bill that would give voters the chance to vote on flat TABOR refunds.

Perhaps the most notable TABOR refund occurred after Colorado legalized recreational marijuana. In 2014, it generated substantially more tax revenue than anticipated and ended up refunding $58 million the state generated from legal marijuana sales.


The upcoming vote is the result of a ballot measure from 2020. During the 2020 election, more than two-thirds of voters in Colorado approved Proposition EE, which created a series of tobacco tax increases from 2021 to 2027.

The tax rates for cigars in Colorado are as follows:

  • Prior to Proposition EE — 40 percent of the wholesale price
  • Beginning Jan. 1, 2021 — 50 percent of the wholesale price
  • Beginning Jan. 1, 2024 — 56 percent of the wholesale price
  • Beginning Jan. 1, 2027 — 62 percent of the wholesale price

For cigarettes, the tax rate was 84 cents per pack prior to Proposition EE and will rise to $2.64 per pack in state taxes in 2027.

Proposition EE also introduced the first state taxes for e-cigarettes and vaping products; they are now taxed at the same rate as cigars.

Taxes collected from the sale of tobacco and vaping products have exceeded the statutory limit, which now means the legislature will ask the citizens what to do with the excess $23.65 million. Last week, the Colorado Senate approved H.B. 1290, which gives voters two options.

If they vote in favor of the ballot measure:

  • The money set aside for the potential refund related to Proposition EE will instead be transferred to the preschool programs cash fund and the general fund; and
  • The new tax on nicotine products and the increased taxes on cigarettes and tobacco products in Proposition EE will stay at the rates required by Proposition EE.

If they vote against the ballot measure, Colorado will:

  • Refund $23.65 million to distributors and wholesalers in a reasonable manner determined by the Department of Revenue; and
  • Reduce by 11.53 percent the tax rates of the taxes on cigarettes, tobacco products, and nicotine products created or increased by Proposition EE.
Overall Score

Avatar photo

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.