5 Percent Recreational Marijuana Tax Approved By Denver City Council

COLORADO: Denver City Council approved a municipal tax rate of 5 percent on recreational marijuana sales in Mile High City on Monday afternoon — if approved by voters, the city tax would likely be in addition to the 25 percent combined state tax rate, which also must be approved by voters this November.

The city council voted 7-5 in favor of the 5 percent tax that will take effect on Jan. 1, 2014 when recreational marijuana sales can begin in the state. Mayor Michael Hancock had recommended the 5 percent tax rate earlier in the month.

“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,” Hancock said.

The Denver Post reports that the city council also approved a sliding tax scale — between 3.5 and 15 percent — which would allow the city council to adjust the tax rate as needed. However, the council agreed that voters should be asked to approve a starting rate of 5 percent.

The taxes gathered by the city will be used to cover the expenses of regulating the new legal marijuana industry including more police, drug education programs and improved oversight.

The 5 percent tax, along with state revenue and other associated marijuana fees, is expected to generate the City of Denver an estimated $9.2 million annually.

Colorado’s Taxpayers’ Bill of Rights requires that Coloradans vote on any tax increases so they will be asked to weigh in on the taxes on this November’s ballot.

If all tax rates, at the city and state level, are approved by voters in November — a 5 percent city tax, a 15 percent excise tax plus a 10 percent special sales tax rate — marijuana buyers in Denver could be looking at least 30 percent in taxes each marijuana purchase.

Read full article @ The Huffington Post