Denver’s marijuana regulators are asking the City Council to expand rules that would bar any new players from entering the state’s largest market.

For two years, a city moratorium aimed at controlling industry growth has allowed only existing medical marijuana businesses to open recreational dispensaries, grow houses or edible manufacturers. That’s set to expire Jan. 1, a prospect that has had eager entrepreneurs and investors lining up.

But new proposals submitted Tuesday by Denver’s marijuana policy office would extend the moratorium two more years. And a newly proposed moratorium would bar any new applications for medical marijuana business licenses during the same period.

The intent, city officials say, is to hit the pause button and give them more time to gauge the impact of the legal marijuana experiment.

But the scope of the city’s proposal caught some marijuana advocates off guard, including at least one, attorney Christian Sederberg, who attended a city working group that served as a sounding board.

A battle is brewing ahead of a council committee hearing Nov. 24. Last week, Sederberg helped form the Responsible Cannabis Policy Alliance, which plans to lobby council members.

“This simply strikes me as protectionism for those industry participants that are pushing for this,” Sederberg said.

He was a co-author of Amendment 64, which voters passed in 2012 to legalize the sale and use of recreational marijuana.

On the other side of the moratorium issue are some long-established industry players, neighborhood advocates wary of more expansion and activists who opposed legalization.

Margie Valdez, a Golden Triangle resident who co-chairs the planning and zoning committee for the Inter-Neighborhood Cooperation group, applauded the moratorium idea. She also supports city officials’ neighborhood-focused proposal to require hearings with more scrutiny for marijuana licenses of all types when businesses seek to start up or change locations.

City officials say Denver has reached what they see as a marijuana industry saturation point. The city has issued more than 1,000 licenses for businesses that operate in 440 locations to serve the medical and retail markets. Dispensaries of either kind are in 210 places.

Ashley Kilroy, the marijuana policy director for Mayor Michael Hancock, says the city needs more time to assess the effects of legalization before allowing further growth that could risk overproduction, potentially sending some legally grown marijuana to the black market.

“We already have an abundance of marijuana products in Denver and marijuana businesses in Denver,” she said, adding that the city is home to about 40 percent of the state’s licenses.

Since recreational sales began in January 2014, Kilroy says she and others have been surprised by the pace of license applications in the older, medical marijuana market, which has been open to new entrants.

But the notion that Denver has reached a saturation point divides Colorado marijuana businesses.

“What you’re doing is the city and county is picking winners and losers in this industry,” said Tyler Henson, president of the Colorado Cannabis Chamber of Commerce. “By continuing the moratorium, it’s saying that there’s something wrong with this industry, which there’s not, and it’s boxing out those who want to get into this industry.”

Striking a different note is the Marijuana Industry Group, which also represents some business owners. Its statement Tuesday said its leaders still were evaluating proposal details.

Although executive director Mike Elliott said market demand should drive expansion, he quickly added: “The marijuana industry has helped spark an economic boom in Denver, but at this point, it appears the number of businesses is in line with market demand.”

Sederberg took issue. He said his policy alliance group includes established businesses, marijuana advocates and people who have spent money on plans for prospective businesses in anticipation of Denver opening up its market in two months — not closing it to them for longer.

Extended moratoriums would offer the only chance for major expansion to the holders of about 85 eligible medical marijuana licenses that, according to Kilroy, haven’t been converted or expanded into the recreational side.

Jon Murray: 303-954-1405, jmurray@denverpost.com or @JonMurray