February 26, 2010
A decade after Colorado voters approved medical marijuana, it’s suddenly big business.
The quickly growing industry could boost a still-ailing economy, supporters say — but it has raised challenges for local and state leaders as they seek to place limits on it.
Amendment 20, approved by Colorado voters in 2000, authorized patients and their caregivers to possess a limited amount of marijuana but did not provide a way for them to get it. Patients were left with the options of growing their own or buying it on the black market. The medical marijuana dispensaries that are popping up across the city hope to fill that void.
Colorado Springs lawyer Clifton Black, who appears to have become the local go-to guy on legal issues surrounding medical marijuana, says the industry is attracting two types.
“I meet people who are true caregivers, who don’t want to make a profit, and I also see more the business mentality where they can set up and invest some money and turn a fair profit.”
Some older dispensary owners are not impressed with the newcomers.
Michael Lee, patient No. 7 on the state’s Medical Marijuana Registry, opened the city’s first dispensary, Cannabis Therapeutics, in 2005, prompted by his frustrations as a patient.
“I couldn’t find seeds, I couldn’t find plants, I couldn’t find materials,” he said.
For years, his was the only dispensary in town. “Nobody took the risk like me,” he said. “They were all scared.”
Now, there are dozens of dispensaries.
“You have all these people thinking it’s a money train,” Lee said.
Peter Trujillo, co-owner of Trichome Health Consultants, which opened in 2008 on the city’s west side, agrees.
“I think for the most part, people are in it to make money, to make a quick buck,” he said. “There are a few places trying to help people. Those are the ones we want to keep around.”
But many new dispensary owners said their goals are just as noble.
Thomas Choi is owner of Pure Medical, which has a location downtown and one in Rockrimmon that has drawn neighborhood opposition. A medical marijuana patient himself, he said the business is about treating patients like family. “I do not want them to be on the streets getting their marijuana,” he said.
Kenny Brock opened Old World Pharm, near Peterson Air Force Base, in November. He said he learned about the benefits of medical marijuana when his aunt battled throat cancer. She is now cancer-free, he said, and working at the dispensary. For him, Brock said, it’s about helping people like her.
“It is not a green rush; people are not making money hand over fist here,” he said. “My profit margins are razor-thin right now.”
Warren Edson, a Denver lawyer who calls himself a medical marijuana legal consultant and who pushed for Amendment 20, said he envisioned that a dispensary system would arise. But it took longer than he expected.
“It surprised me that we had such low patient growth,” he said. “Unlike Oregon and Washington and California, which rocketed out of the gates with some pretty huge patient numbers, we just kind of churned along until last year.”
The numbers are exploding. In July 2008, there were 3,302 patients on the state Medical Marijuana Registry, which is administered by the state Department of Public Health and Environment. There were 17,356 as of Sept. 30, the most recent date for which figures are available. And the registry receives hundreds of applications a day.
The number of dispensaries is growing, too. Tanya Garduno, of the nonprofit Colorado Springs Medical Cannabis Council, estimates there are 40 dispensaries in town. As of Feb. 1, Colorado Springs had issued 64 sales tax licenses to medical marijuana businesses — more than a third of them in January alone. Garduno noted that those licenses may include growers as well as dispensaries.
The state Health Department doesn’t track dispensaries. Brian Vicente, executive director of Sensible Colorado, a medical marijuana advocacy group, said his best guess is that there are 500 dispensaries in Colorado. At the start of 2009, he said, there were perhaps a couple of dozen.
What happened? Edson and others point to two developments in 2009.
In July, the Colorado Board of Health rejected a proposal to limit medical marijuana providers to five patients each; an earlier such limit was tossed out by a Denver judge. And in October, the U.S. Justice Department issued a memo saying that patients and caregivers who are “in clear and unambiguous compliance” with state medical marijuana laws should not be the targets of federal prosecution. More businesspeople, Edson said, “were willing to look at this industry after that.”
That doesn’t mean growers and dispensary owners have no legal worries. Possession of marijuana is illegal under federal law — and the October memo warned authorities to beware of operations with financial gains or amounts of marijuana inconsistent with state laws.
Just this month, federal agents raided a Highlands Ranch home and seized more than 120 marijuana plants after the grower told a TV reporter about making hundreds of thousands of dollars a year. And Jeffrey Sweetin, the state’s top federal drug agent, told The Associated Press, “Technically, every dispensary in the state is in blatant violation of federal law,” but that it was up to the state to decide what to do about them.
Some dispensary owners, meanwhile, got a scare this week when the Colorado Springs City Council considered a hastily prepared resolution that would have forced dispensaries within 1,000 feet of residential areas and schools to close. The council rejected the proposed resolution. A broader ordinance to regulate dispensaries and growers is still before council.
Early this month, state Attorney General John Suthers sent a letter to Colorado lawmakers urging them to oppose any measure “that embraces the clinic or dispensary model for distribution of medical marijuana.”
“To embrace commercial dispensaries or clinics would go far beyond the intent of voters,” he wrote. “In my opinion, it would constitute de facto legalization.”
Whatever the ultimate fate of the industry, it’s booming now, and that could help depleted coffers in Colorado Springs and other cities.
Garduno, of the Colorado Springs Medical Cannabis Council, outlined the potential financial impact at a City Council discussion this month of the proposed city ordinance. Based on current patient growth, the Medical Marijuana Registry could contain 50,000 or more patients by the end of 2010, she said. With about 9 percent of those from El Paso County, and at an average price for medical marijuana of $350 an ounce, the projected annual city sales tax revenue would be $1.6 million.
Garduno also pointed to other businesses benefiting from the medical marijuana boom — commercial real estate owners and brokers, providers of security systems, horticulture experts, office supply stores, lawyers.
Black, of Black & Graham LLC, is one of those lawyers. Medical marijuana clients make up a small but growing part of the firm’s business, he said. “Mostly, folks, they come to me to learn the law, to find out what they can and can’t do.”
But with Amendment 20 failing to provide a way to get marijuana, and with a lack of regulation concerning this new industry, it’s not always clear what’s legal. To shield themselves, some dispensaries require that a patient designate an agent of the dispensary as caregiver; others merely encourage it, offering incentives such as a discount.
“My advice to my clients is to only provide medical marijuana to patients that have listed you as their primary caregiver,” Black said.
Similarly, some growers may try to protect themselves by having caregiver status for the patients they grow for. But when they contract with dispensaries seeking to sell their surplus, “I don’t think the law allows that,” Black said.
It’s that fuzziness in the law that prevents Garduno, a caregiver who grows pot for a handful of patients, from contracting with a dispensary.
“I would love to have a very clear relationship where I grow, I take it to a reputable dispensary, they sell the product, and it’s a great relationship. But right now, it’s not recognized, so I don’t have the option of expanding.”
Clarifying such relationships is one of the goals of the ordinance before City Council, Garduno said.
“If we ... recognize the fact that medical marijuana doesn’t fall out of the sky, then we can continue to move forward with a legitimate industry,” she said.
Many dispensary owners say they would welcome regulations if they brought clarity to their business.
“We want to be as forthright as we can, and we want to make sure everything we do is 100 percent legal,” said Trujillo, of Trichome Health Consultants.
Regulation is also being discussed at the state level. A measure approved by the state Senate but yet to be voted on in the House would mandate a “bona fide patient-physician relationship” and a full medical exam before a doctor could recommend medical marijuana for a patient.
What’s important about the proposed regulations is that “legislators are acknowledging the medical marijuana industry and trying to give us some core guidelines to follow,” said Gus Escamilla, founder and CEO of Greenway University, a “medical marijuana training school.”
“We just need to know what the rules are so we can play by those.”
Los Angeles-based Greenway University, which holds seminars in Colorado, plans to move its hub to the Denver area and build a campus there — with programs such as a Marijuana Business Administration course.
“The biggest challenge is people get excited, but they don’t realize that this is a business, this is an industry,” Escamilla said. “You have to have proper protocols, systems and standards