On Monday, the Denver City Council approved a 5% municipal tax on recreational marijuana sales in the city. The council approved the tax with a vote of 7-5.
The tax will go into effect on January 1st, when recreational marijuana sales are slated to start in Colorado. The 5% municipal tax will be added to the 25% combined state tax rate that will already be placed on marijuana.
Both tax rates must now be approved by Colorado voters this fall.
Denver Mayor Michael Hancock said, “We believe a 5 percent tax on recreational marijuana will fulfill the city’s needs to effectively regulate and enforce this new law while protecting our children and families, supporting public health and ensuring the integrity of our neighborhoods.”
During the same meeting, the council approved a sliding tax scale, which would allow them to change the tax rate between 3% and 15%. They agreed that 5% was the appropriate place to ask voters to start.
It is estimated that the city of Denver will make $9.2 million off of recreational marijuana annually if the 5% tax is approved by voters. The money from this tax will go back into supporting the recreational marijuana system.
Marijuana advocates are concerned that a potential 30% tax on recreational marijuana could lead people to just continue buying weed on the black market. Some advocates also worry that voters will think the tax rates are too high and will vote them down. Should this occur, the state will be stuck paying for enforcing the recreational marijuana sales program but will not have the funds to do so.