By Phillip Smith
Legal marijuana sales began in Colorado on January 1, and now, just a few months in, Denver already appears to be well-placed to claim the title of America's cannabis capital. This past weekend, tens of thousands of people flooded into the city to celebrate the 4/20 holiday and attend the latest High Times Cannabis Cup.
For blocks around the north side expo center where the Cannabis Cup took place, thousands of eager pot aficionados clogged the streets, bringing traffic to a crawl, while inside, hundreds of exhibitors peddled their wares, demonstrating both the scope of cannabis-related commerce and the grasp of American entrepreneurs. Pot smoking was supposed to be allowed only in designated areas, which didn't include the lengthy lines of people waiting to get in the event, but that didn't seem to stop anybody.
Meanwhile, downtown at the Civic Center plaza facing the state capitol, the state's ban on public marijuana use was again ignored -- blatantly and massively -- at the Official 4/20 Rally. Despite Denver Police digital signs warning that public "Marijuana consumption is illegal" and "Marijuana laws enforced," at precisely 4:20pm on 4/20, the most massive, intense, and long-lasting could of pot smoke your reporter has ever seen wafted over the city. One hesitates to estimate how many pounds of marijuana went up in smoke in a few moments at the Civic Center.
Police made a few dozen arrests for public consumption over the course of the two-day rally, but the event was otherwise peaceable, and police generally kept a low profile.
And the city's marijuana retail outlets were doing brisk business, with lines of eager buyers, many from out of state, waiting for their chance to buy weed legally. In one pot store parking lot, middle-aged customers in a pick-up truck with Texas plates shared their happiness with a car-load of 20-somethings from Wisconsin, all of them drawn to Colorado by the chance to experience legal marijuana.
"I didn't think I'd live to see the day," said one of the Texans, smiling broadly, his brown paper bag filled with buds inside a blue prescription bottle with a child-proof cap and a label identifying the plant that grew the buds. "I don't know if I will live to see the day this is legal in Texas, so that's why we came here. This is history."
At the Walking Raven retail store on South Broadway last Saturday, proprietor Luke Ramirez oversaw a handful of employees tending to an unending line of customers. A favorite of customers and staff alike was Hong Kong Diesel, a 30% THC variety with a powerful aroma, going for more than $400 an ounce.
Like all of the first generation retail marijuana stores in the state, Walking Raven began as a medical marijuana dispensary, but transitioned into the adult retail business. That required time and money, Ramirez said.
"It was about $100,000 to start up, and it took about 100 days," he said, quickly adding that it was worth it.
"This is absolutely a profitable business model," Ramirez exclaimed between greetings to customers and issuing orders to his bud sellers. "We're paying a lot in taxes, but we have a large client base -- three million adults in Colorado, plus tourism."
Making the transition from a dispensary to an adult retail outlet also helped, Ramirez said.
"We've gone from about $3,000 a day in sales to $10,000," he explained.
The state of Colorado is making bank off Ramirez and his colleagues in the marijuana business. According to the stateDepartment of Revenue, adult marijuana taxes and fees totaled $2 million in January and $2.5 million in February, the last month for which data is available. Observers expect that monthly figure to only increase as more stores open up.
It's not all roses for Colorado's nascent pot industry, though. Ramirez ticked off the issues.
"The biggest obstacles are the government and its regulatory bodies," he said. "Will they increase or decrease taxes, what about zoning, how do we get out supply? Heavy regulation is an issue. And the seed-to-sale tracking program is very expensive; I have a full-time employee just for that."
And then there is that pesky federal marijuana prohibition. Although the Justice Department has made soothing noises about not picking on financial institutions that do business with the state's legal pot shops, most banks still have not gotten on board -- and there are other, related, issues, too.
"The federal law inhibits us from doing normal business," Ramirez said. "We can't get bank loans and we don't get the 280E federal tax break. We're classified as drug traffickers, so we can't write off our business expenses."
That's not to mention the security issues around dealing with large amounts of cash because the banks don't want to risk touching it.
"We have to have multiple safes and carry cash around," he said.
Still, Ramirez is open for business, and business is good. And not only is business good, Colorado's experiment with marijuana legalization seems to be advancing with few hiccups.
"Things are generally going quite smoothly," said Mason Tvert, an Amendment 64 proponent who is now a spokesman for the Marijuana Policy Project. "Regulations are still being developed in certain areas, such as concentrates and edibles, but the system is up and running and working more or less as intended."
While it remains to be seen if the estimated $100 million in pot tax revenues this year actually happens, Tvert was confident the income would be substantial.
"We're now seeing a couple of million a month in tax revenues, and money from fees, as well," he said. "We will still see a lot more businesses opening in the future, so we anticipate revenues will increase. Also, all of the current stores were existing medical marijuana businesses that were able to make a tax-free transfer from medical to retail, but now they will have to start paying a 15% excise tax, which will bring in more than is currently being raised."
The state has, however, recently seen two deaths attributed to legal marijuana use, a college student from the Congo who fell from a balcony after eating a cannabis cookie, and a man who shot and killed his wife, also apparently under the influence of edibles (and perhaps pain pills). While the exact role of marijuana in those deaths is unclear, media and opponents have leaped on those tragedies.
The movement needs to address such incidents, said Tvert.
"We've known for some time that some people who have preexisting mental health conditions could find them exacerbated by marijuana," Tvert said. "People need to be educated about that. If marijuana were a major factor in these incidents, that is a rare thing, but it is something we should be looking and determining what we can do to better educate consumers and reduce the likelihood of any problems."
But such incidents notwithstanding, legalization is not about to get rolled back in Colorado. Instead, it's just getting started, and it's off to a pretty good start.
"This is the first quarter in the first year of a system just getting started," Tvert said. "Things are going pretty well."