For Sale, For Real: A comprehensive look at retail pot
State pot shops to open next year
By Amy Hamilton
On the website weedmaps.com, tiny marijuana leaves dot the cities and addresses in Colorado where people can shop for medical marijuana.
The green leaves march east along Interstate 70, landing on Rifle, Glenwood Springs and a number of points east on to Denver. Once there, the marijuana leaves are so numerous the name of the state’s largest city is covered in pot leaves, smothered because of the dozens of medical marijuana dispensaries there.
What you don’t see are any marijuana leaves in the Grand Valley, save for one blip in Palisade, Colorado Alternative Health Care, 125 Peach Ave.
Medical marijuana dispensaries are one thing. Residents must obtain a card to purchase marijuana at those stores.
Yet the landscape for marijuana in the Grand Valley will remain unchanged after Jan. 1 — the date residents can legally purchase marijuana at retail storefronts.
Your closest bet to purchasing recreational marijuana in the new year might be the hour drive to Rifle, providing councilors there give the OK in the next few weeks.
Plenty of Grand Junction customers already travel to Rifle to buy their marijuana, said Brian Sullivan of Green Medicine Wellness, 109 W, Fourth St. in Rifle.
“I mean, we really are the closest place on the Western Slope,” Sullivan said of Grand Junction-area residents heading east on Interstate 70. The business also sells plenty of medical marijuana to out-of-state tourists.
“We also get a lot of people coming through from Denver,” Sullivan said. “They’re passing through on to Utah.”
Rifle city councilors haven’t yet decided whether to allow retail sales of marijuana in their city limits in the long term.
Rifle’s Mayor Jay Miller said the city has collected about $100,000 in sales taxes from its five medical marijuana dispensaries.
Miller said he can’t get a reading yet on how councilors are feeling about retail sales of marijuana in their city, especially because three councilors are new.
“I’m going to wait until we talk about it,” he said.
Councilors recently enacted a moratorium on retail marijuana sales that will last until Jan. 1, 2014. Local medical marijuana businesses had pressed for a Dec. 1 date, and explained how that time line would make it easier to convert their stores to a recreational marijuana format, Miller said.
If Rifle is off the table, it appears there will be plenty of areas to purchase marijuana in the nearby Roaring Fork Valley. Garfield County has banned retail sales of marijuana, but cities inside the county, including Glenwood Springs and Carbondale, have not.
Retail marijuana gets an even friendlier reception along Colorado Highway 82, en route to tourist destination Aspen.
Pitkin County is finalizing regulations for marijuana businesses and the city of Aspen has allowed retail sales, though city leaders may limit its number of marijuana clubs and require them to be private.
Brian Sullivan, whose family also owns a medical marijuana facility in Glenwood Springs, under the same name, Green Medicine Wellness, 1030 Grand Ave., said the marijuana industry’s business leaders are keeping close tabs on how city and county officials weigh in on marijuana businesses.
“We can finally afford to get a bigger grow operation and expand,” he said, if Rifle councilors approve of retail marijuana sales. “The next several months are extremely exciting. The amount of taxes and business for local community will be great. We’ve been here for about a year and a half. What this is going to do for our business is help us finally take that next leap.”
Don’t completely write off the future of retail marijuana in Mesa County. At the earliest, voters in Fruita could approve of it on a planned ballot measure April 2014.
Tax revenue on tap, if voters approve it
By Charles Ashby.
Generally speaking, most people would rather tax someone other than themselves, but that’s exactly what the proponents of legalized recreational marijuana are doing.
Although those pot supporters know that’s somewhat of an odd position to be in, they say they have a good reason, said Joe Megyesy, spokesman for the effort to pass Amendment 64 last year and Proposition AA this November, which would impose taxes on the retail sale of marijuana.
“It’s the right thing to do,” he said. “We sold the amendment to voters as a way to raise money for school construction, and these new taxes would do that.”
That’s also why the wording in the ballot measure voters will consider on Nov. 5 is clear, Megyesy said. Out of the $70 million in excise and sales taxes the retail sale of marijuana is expected to generate statewide, the first $40 million would go toward school construction projects.
Beyond the nearly $1 million that it’s expected to cost the state to oversee the shops and enforce state regulations on those retail shops, the rest of that money would go into the state’s general fund, its main bank account that can be used to pay for anything, from schools to health care to prisons.
None of that revenue, however, is expected to be seen in the Grand Valley, at least not for some time. That’s because local governments here have either banned retail marijuana stores, or placed moratoriums on them.
Such bans have made it difficult for state officials to estimate how much the ballot measure’s 15 percent excise tax and 10 percent sales tax would bring county by county.
The only comparison is from the sale of medical marijuana from the more than 660 dispensaries in the state, only one of which is located in the valley.
Statewide, Colorado collects nearly $6 million a year from a 5 percent sales tax on medical marijuana. In Garfield County, where there are more than a dozen medical marijuana centers, the state collects more than $100,000 a year from that tax.
Because Mesa County only has one dispensary, Colorado Alternative Health Care, 125 Peach Ave. in Palisade, state taxpayer confidentiality laws bar town officials from disclosing how much the town collects in tax revenue from marijuana sales.
But the town does assess a $5 fee on each transaction at the dispensary, and it anticipates earning $50,000 this year from that fee, according to the town’s most recent financial statements in August.
Assuming an average sale of $50 per transaction, the town would earn $15,000 a year from the dispensary because of its 3 percent sales tax, which accounts for about 5 percent of all sales taxes the town expects to collect this year.
All that money goes into the town’s general fund, and little to none of it is spent on regulatory and law enforcement of having a dispensary in town, said Town Administrator Rich Sales.
“The business we have in town takes great care to follow the rules, and the last I looked, I don’t remember seeing police calls out there,” Sales said. “Actually, (the owners) are active community members, they volunteer in the parks and help paint picnic shelters and things like that, like our other businesses. They’re a good part of Palisade’s business community.”
Universe of pot-related businesses bigger than many think
By Greg Ruland
Opponents of medical and recreational marijuana sales can’t see the forest for the weeds, according to local retailers.
Those who take a 30,000-foot view of the Colorado marijuana trade say opponents must be blind not to see the approaching tidal wave of new and growing ancillary businesses the weed is seeding.
Starting Jan. 1, recreational marijuana is legal in Colorado even in places that prohibit its retail sale.
“What the (Grand Junction City Council) doesn’t understand ... what they’re thinking here is that when they drove the dispensaries out, marijuana went with it. That’s (a mistake),” said Daniel Weaver, manager of Desert Bloom Hydroponics, 445 Pitkin Ave.
Photo by Dean Humphrey
Daniel Weaver tends plants in one of the hydroponics displays at Desert Bloom Hydroponics on Pitkin Avenue.
Area residents who legally smoke and grow marijuana for personal use will continue to rely on local retailers to supply the accoutrements necessary to support their habit, he said.
For example, Colorado artisans who craft glass water pipes, including some that sell for $1,600 or more, find demand increasing for their functional artwork, said Jamie Erb, manager of Discontent, a new, alternative lifestyle shop that opened in August at First Street and North Avenue.
Surrounded by hundreds of products for the counter-culture crowd, including legal, natural, fragrant herbs that can be smoked, water pipes, skateboards, discs for golf and associated products, Erb said the City Council’s decision means fewer competitors and more business for her store.
Local commerce based on consumption of pot mirrors the trade in goods necessary to grow it.
Pumps, pipes and 1,000-watt bulbs, for example, wear out and must be replaced or upgraded. All are essential supplies for Coloradans who want to grow their own, Weaver said.
The bill at the hydroponics shop really adds up considering those who legally cultivate up to six plants at a time need special soil, nutrients, watering systems and lighting to produce the tastiest harvest.
Manure excreted by a variety of bats, for example, can be purchased at Desert Bloom, along with more than 3,000 other products, including one machine used in cultivation that sells for more than $15,000, Weaver said.
“People would be very, very surprised at how intelligent and professional farmer-growers here in this valley are. A lot of them have been doing it for a lot longer than most people think,” he said.
One company with national distribution manufactures industrial-strength fiber bags and filters used to strain and drain marijuana – a process that extracts THC-infused oil, the key ingredient in many medicinal baked goods and candy, said Stephanie Gentry, vice president of operations for Boldt Bags.
Though it already enjoyed a good reputation in Colorado, the state’s vote last year to permit retail sales of recreational marijuana boosted her business, Gentry said.
“Since the law passed, we’ve seen our business in Colorado grow by 30 percent,” she said.
While smoke shops and grow shops are the most obvious benefactors of marijuana legalization, the universe of pot-related business and services is much bigger than many realize.
Most businesses need lawyers, insurance agents and accountants, but especially those involved in the marijuana trade, where rules and regulations abound and traditional banking relationships are nearly impossible to secure. But that’s not the complete list of professional services pot-related businesses need.
One commercial real estate broker in Denver, for example, carved out a lucrative niche for himself in the sale and leasing of warehouses for storage and cultivation.
“Two, two-and-a-half years ago ... there were very few people leasing 40,000-square-foot warehouses. A normal lease on a 40,000-square-foot warehouse was maybe a $1.10, maybe $2 (per square foot),” said John Wickens, a brokers assistant at Brokers Guild in Denver. “Well, my medical marijuana guys were coming in, and they we’re doing it for about $5 to $6 (per square foot) and that was five months ago.”
The current trend for marijuana-related businesses is to buy buildings instead of lease them, Wickens said.
In one month —August — Wickens said he brokered the sale of more than $7 million worth of real estate to buyers involved in the marijuana trade.
At marijuana-related businesses across Colorado, hippies in Birkenstocks are being pushed aside by profit-driven investors in business suits who studied the numbers and want a piece of the action, Wickens said.
Publishing is also a beneficiary of marijuana legalization, said Anne Holland, co-founder of Medical Marijuana Business Daily.
Holland, who publishes two magazines dedicated to the pot business, is busy selling not only advertising, but reference and guidebooks for knowledge-hungry entrepreneurs, some of which retail for $130 each.
A quick review of Holland’s journal shows the stocks of at least 15 marijuana-related companies are now publicly traded on over-the-counter markets in New York and elsewhere.
Labs that test the quality of the weed and security firms that provide guards and alarm systems for dispensaries are a few of the business sectors enjoying an increase in sales, Holland said.
The trend is so hot that investments in pot-related businesses are often limited to specific dollar amounts by fund managers who are ultimately forced to turn venture capitalists away from their oversubscribed funds, she said.
By all accounts, marijuana is a growth industry, even for businesses that never touch the stuff.
Where is price of pot headed?
By SENTINEL STAFF
With the generally available supply of marijuana set to increase in a big way Jan. 1, 2014, the laws of economics would seem to dictate that the price of marijuana could come down with a flood on the market.
Anecdotally, medical marijuana dispensaries today probably are charging a bit more than the street does for weed, but with more shops coming online, the future retail price of pot is anything but certain.
Today, according to recent pricing data from online dispensary database weedmaps.com, medical marijuana patients using Western Slope caregivers can pick up an ounce of midgrade marijuana on average for about $185 dollars — but prices fluctuate, as does the strain and quality of the marijuana.
It’s a bit cheaper in Denver — where literally dozens of dispensaries dot the marketplace. A cursory average of prices there for midgrade weed is under $180 bucks, according to weedmaps.com.
It’s difficult to gauge how that pricing stands up to current street prices.
Glenn Gaasche, group supervisor at the Drug Enforcement Administration in Grand Junction, says generally you’re looking at $150 to $300 for an ounce of weed in Grand Junction, depending on the quality.
The variety of strain names reflects how pervasive and advanced the grow industry has become. Dispensaries offer buds with curious names like Grape Stomper X OG Kush, Wreckage, Sour Willie, Juicy Fruit, Bruce Banner and Green Crack — to name but a few from just one prominent Denver provider.