The council voted Monday to reduce the penalty to $150 for a first offense, $500 for a second offense and $999 for offenses after that, the Denver Post reported.
Previously, penalties included higher fines and the possibility of a sentence of as much as a year in jail.
Colorado voters approved a referendum in 2012 legalizing marijuana for adult use.
The Colorado Department of Revenue issued rules in September covering licensing, inventory tracking, advertising and an assortment of other regulations on the marijuana market.
Marijuana stores, cultivation and manufacturers will be licensed and, until October 2014, recreational pot stores must grow nearly all the marijuana they sell. In addition, an online tracking system must be used to document the product's journey from cultivation to processing to sale.
The rules are designed to "create a robust regulatory and enforcement environment that protects public safety," officials said.