Denver tenatively approves 5 percent marijuana tax on recreational sales


Kim Sidwell.
Denver 4/20 rally.

The City of Denver looks like it will be asking voters to approve a 5 percent tax on recreational marijuana sales if/when the shops open for business next year.
Council voted last night on a proposal that sets an initial 5 percent tax that could be lowered to 3.5 percent or raised to as high as 15 percent. Council still has a few more steps to go through before the measure would be approved. Even then, Colorado law requires tax measures to go before voters for approval.

The city tax would be on top of existing city sales taxes as well as a combined 25 percent tax on cannabis at the state level. Those levels were set by the legislature earlier this year, but still have to be approved by voters in the fall.
Several activists and even non-cannabis supporters have warned that if tax rates are too high, people will forgo the storefront models and return to black market sales between friends. Since Amendment 64 allows for home cultivation, their assessment might not be too far off when you think that a $100 half-ounce of herb could end up costing more than $130 with the current state and local proposals.
The Denver tax rates come despite a city auditor’s report showing that a rate of 3.5 percent would be suitable to cover enforcement and regulation. Others, including Denver Mayor Michael Hancock, have argued for at least five percent all along.
Interestingly, nobody has any idea what – specifically – the money would be going towards as the council has yet to establish any regulations for the recreational industry. That was reason enough for Denver councilwoman Robin Kniech to abstain from the vote.
But others are seeing this as a cash cow.
There’s vague talk among members about the need for public awareness campaigns and many councilmember’s argue that the funds need to be adequate to cover any and all expenses related to such programs – again, despite the fact that nobody has any clue what the programs would look like or cost.
Denver City Council now has to approve the measure twice more and hear public testimony before making a final decision August 19.