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Denver council approves 5 percent marijuana tax

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DENVER -- The city council, meeting as a committee of all 13 members, voted 7-5 Monday afternoon to move forward with a proposal to levy a five percent tax on recreational marijuana next year.

That municipal tax, which must be approved by voters, would likely come on top of the 25 percent combined statewide tax rate, which voters must also approve this November.

The council was divided on the tax rate conundrum: setting the rate too high, the industry worried, might lead would-be legal customers to go to the black market, while setting it too low, many council members argued, might leave the city without the $9 million in revenue they believe they'll need to regulate marijuana shops.

In the end, they settled on an initial five percent rate, which is what Mayor Michael Hancock's administration was pushing for, that will take effect on January 1, 2014, when recreational marijuana becomes the law of the land.

But the council also voted to leave the city come wriggle room, allowing a sliding scale of sorts so that members can vote in the future to lower the rate to 3.5 percent or to raise it as high as 15 percent depending on the revenue stream.

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