Tokers in Colorado’s largest city will pay a 3.5 percent sales tax on the pot they buy, if rules adopted by the Denver City Council in late August become law.

The council voted Aug. 26 to approve the new rules. Some of them are subject to another council vote, while the sales tax question will go before voters in November. Denver is the largest city in Colorado to accept the retail weed stores that will open their doors in January – many other municipalities have banned them – and officials have been setting up a layer of regulations in addition to those applied by the state.

“We’ve done a good job here,” Council Member Chris Nevitt told The Denver Post.

Revenue From Taxes

Officials expect the 3.5 percent sales tax will bring in $3.4 million annually, money that will go toward marijuana enforcement, regulation and education. It’s not as high as the 5 percent Mayor Michael Hancock had asked for, but it contains a provision that allows the city to raise it as high as 15 percent without voter approval.

Rules That Come With The New Taxation“This will create the opportunity to deal with some of those social costs that will come as a result of an expanded presence of marijuana in Denver,” Council Member Debbie Ortega said.

The rules passed by the council cover a number of other topics, including hours of operation and medical marijuana dispensaries that choose to sell to the general public. Among the issues addressed by the August vote:

• Established medical pot shops will get a head start. For the first two years of the program, only they will be allowed to convert into retail marijuana stores. Denver currently has about 200 medical dispensaries.
• Dispensary owners who also choose to sell to the general public will not have to build a physical barrier to separate their inventory and clientele.
• Hours of operation will be set at 8 a.m. to 7 p.m., even though a state law allows pot shops to stay open until midnight.
• When dispensaries convert to retail pot stores, public hearings will be held. They won’t be as strict as the hearings conducted for liquor licenses, though, where the question is whether a neighborhood needs or wants a liquor license to be issued.

Colorado, along with Washington, was one of the first two states in the country to legalize recreational marijuana use, possession, cultivation and sale when voters went to the polls in November. Since then, both states and many of their municipalities have been busy crafting the rules that will guide the new legal cannabis industries.