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I solved the issue by creating another token. Thanks for the advice.
Based upon support's response:On checking with my internal team it seems that this is a known behavior when using # or $ characters along with tokens. The workaround is to try using a different character and see whether the email is getting approved.
I need to be able to utilize #'s with tokens in subject lines. This process is how we populate lead ID's and reference throughout our communication strings and CRM.