Nine Colorado Springs cannabis consumption clubs received cease-and-desist letters from the City Clerk's Office last week in the first crackdown under a ban on the clubs enacted by the City Council on March 22.
The clubs sprang up after Amendment 64 was passed in 2012 legalizing adult use and sales of recreational marijuana but banning public consumption. The clubs gave people a place to use cannabis and socialize in private.
Colorado Springs outlawed sales of recreational marijuana in the city, but the clubs got around the sales ban by providing pot to their patrons on a "reimbursement model:" they could either "trade" cannabis for memberships or sign affidavits saying the club was growing the customer's legally allowed six marijuana plants for them.
Although city officials view such actions as de facto sales, the practice has continued. The ban passed in March, however, says the clubs cannot sell, trade, give, distribute or allow the transfer of marijuana.
The ban gave clubs that existed before Sept. 23, 2015, eight years to phase out their businesses, an effort to help the owners protect their investment. But under the law, every owner had to submit a consumption club application and $200 fee by April 29 to get a one-year renewable license for $90 plus registration fees.
Only five clubs applied by the deadline, and only one has been approved for annual licensing that can be renewed for up to eight years: Speakeasy Vape Lounge and Cannabis Club, at 2508 E. Bijou St.
Two applications are under consideration, and two were denied: Studio A64, the first cannabis club in town, and Been Here Before Co.
The denied clubs, along with seven other identified clubs that did not apply for licensing, have been ordered to close because they are not licensed, as required.
El Paso County District Court on Sept. 9 granted the city a temporary restraining order against those clubs, prompting the cease and desist orders. The court order prohibits marijuana consumption, sales or transfers at those clubs.
At Studio A64 on Monday, though, it was business as usual, with marijuana smoke thick in the air as a news conference was conducted by Jason Warf, executive director of the Southern Colorado Cannabis Council.
Warf said some clubs are appealing the cease and desist orders through their Denver lawyer, Robert J. Corry Jr.
They also expect to be in El Paso County's District Court on Wednesday for a hearing on the lawsuit nine clubs filed in April, contesting the constitutionality of the ban.
Some club members and owners also had vowed to seek a referendum to overturn the ban, but they missed the April 21 deadline to do so.
But the cease and desist orders came as a surprise, Warf said.
"This comes after years of these clubs operating without incident . While it has taken some time to get it right, we now have legislation set to be introduced at the state level in January (to allow the clubs to essentially operate like medical marijuana dispensaries). Our goal would be that the City of Colorado Springs follow this lead and enact regulations that coincide with the efforts at the state level."
The city government is well known for its opposition to recreational marijuana, however. Even if the Legislature embraces a more lenient approach, Colorado Springs government is unlikely to do so.
Warf said the clubs have been responsible businesses, providing employment and a public service with no violent crimes occurring on their premises.
"Clubs also provide a safe, private place for the tens of thousands of tourists visiting Colorado primarily for legal cannabis. Right now they are unable to provide this space," he said.
City police confirm that they have not had issues with the consumption clubs.
"I don't know of any," said Lt. Howard Black, police spokesman. "There's been nothing we've been engaged with."
FBI and other federal officials raided The Lazy Lion last November, but no charges appear to have been filed. The disposition of that case could not be obtained Monday from the U.S. Attorney's Office.
In addition, seven misdemeanor summonses were issued to One Love Club owner Jered Ray McCusker last October for fire safety and permit violations, resulting in a guilty plea on one in February, dismissal of the others and a $200 fine, with $100 waived if he commits no further violations. McCusker also received one year's probation, and his club was to be subjected to random fire inspections. Now it has been ordered to stop operations, however.
Warf said the reimbursement model of providing cannabis is critical to the clubs' business model, and he and Corry say the ban is unconstitutional.
Although Colorado Springs is a home-rule city, Corry has said, "Home rule does not exempt you from the supreme law of the state. That applies to every governmental entity, big or small, by its own terms."
Amendment 64 does not mention cannabis clubs, however, said City Councilman Keith King. And it does allow cities to ban recreational pot sales.