Colorado Springs medical marijuana shops may be ‘devastated’ by vote, smaller towns to see benefits
El Paso County voters picked marijuana industry winners and losers Tuesday, with decisions that are predicted to devastate Colorado Springs medical marijuana shops and buoy enterprises in Manitou Springs and Palmer Lake.
Following the vote, a marijuana industry group is looking forward to statewide solutions to help hurting medical marijuana shops, and Palmer Lake shops are planning expansions that will benefit the town.
Rather than showing a united attitude on recreational marijuana, voters splintered in different communities with Colorado Springs voters rejecting the recreational marijuana proposal by a 57% majority. The measure would have allowed the existing 114 medical marijuana shops to also sell recreational products.
At the same time, 55% of Palmer Lake voters approved a measure to allow two existing medical shops to sell recreational cannabis.
A measure that would have allowed the first marijuana shops to open in Teller County remained too close to call Wednesday in Cripple Creek.
Colorado Springs’ decision is a “big blow” to the businesses as well as people who would have benefited from the additional tax revenue, said Truman Bradley, executive director of the Marijuana Industry Group, a statewide trade association for licensed marijuana companies based in Denver. Recreational sales tax revenue in Colorado Springs would have been directed to public safety, assistance for veterans and mental health support, under a 5% tax initiative that passed with 52% of the vote.
“There are a lot of good people who put money they didn’t have on the line to do right by the businesses and the community,” he said. “It’s a bitter day.”
In fact, Bradley said he’s certain some medical marijuana stores will close in upcoming months because they don’t have enough revenue to sustain operations.
The outcome is a reversal from early polling that showed the marijuana question in Colorado Springs passing by a large margin, about 23%, said Daniel Cole, the oppositions’ campaign strategist. The support eroded during October, he said.
“We had a clear and compelling message delivered by trusted leaders,” Cole said.
The oppositions’ ads featured Mayor John Suthers and District Attorney Michael Allen and helped deliver a “trouncing” to the industry by focusing on marijuana and its connections to crime and homelessness, Cole said.
The most recent filings with the city showed the Colorado Springs Safe Neighborhood Coalition spent close to $700,000 on the campaign in the final weeks. A large portion of that money was donated by Colorado Dawn, a nonprofit that does not have to disclose its donors and gives to numerous causes.
The Your Choice Colorado Springs campaign in favor of the question raised more than $1 million early on, but most of that money went into placing the questions on the ballot. The campaign spent $308,000 during the most recent reporting period, city records show.
The campaign did not respond to requests for comment Tuesday or Wednesday.
Jason Warf, executive director with the Southern Colorado Cannabis Council, said industry members were disappointed, but his group had expected strong opposition and were surprised when opponents didn’t spend more earlier.
“I do think its unfortunate that city leaders used their platform to put out so much misinformation to their voters,” he said. For example, homelessness is not directly caused by marijuana legalization. Many other economic factors contribute.
In the coming months, Warf said his group plans to focus on revisions to state law that could help bolster medical marijuana sales. A recent law limited how much medical marijuana concentrate can be purchased in one day, revising the limit down from 40 grams to 8 grams, among other changes. Warf said some lawmakers are already interested in addressing some of the impacts from House Bill 21-1317.
Statewide, medical marijuana sales have significantly declined this year, according to statistics from the Colorado Department of Revenue. September sales of $17.6 million marked the lowest monthly amount since the sale of recreational pot began in 2014.
“The industry has faced tough times, which has resulted in layoffs and tremendous losses,” Bradley said. “I’m not talking about shrinking profits, I’m talking about literally in the red for the rest of the year. Almost all (medical marijuana) businesses in Colorado Springs will lose money in 2022.”
At the same time, many Colorado Springs residents are buying recreational marijuana next door in Manitou Springs, the community with the highest-grossing store in the state, Bradley said.
“Who’s laughing all the way to the bank is Manitou Springs because they put that tax money to work,” he said. “Whether you support cannabis, whether you consume cannabis or not, if you live in Colorado Springs, your community is missing out on those tax dollars.”
Manitou Springs was bracing for a major hit to its budget if Colorado Springs voters legalized recreational marijuana sales, but officials are now breathing a sigh of relief, Mayor John Graham said Wednesday.
“We anticipated it would have a huge impact on us, since marijuana sales are a big deal” for Manitou Springs, he said. “… It does give us some breathing space. It’s a guess as to how much we would (have lost), but it was fairly sobering and that’s punctuated a lot of our thinking.”
Manitou Springs had been the only municipality in El Paso County to allow recreational pot sales and it contributes heavily to the community’s budget, officials have said.
Roughly 77% of Manitou’s total tax revenues come from sales taxes, including those from recreational marijuana, the city’s 2022 budget shows. The general fund receives about 61% of its revenue from sales taxes.
The Manitou Springs City Council worked for months to create a proposed 2023 budget that includes a 30% reserve, well above the usual 17% reserve most local governments aim for, to help soften a blow if Colorado Springs had legalized recreational marijuana.
The council also, in late August, immediately and indefinitely ceased allocating incremental municipal sales taxes to its urban renewal authority to divert money into the city’s general fund for basic services.
“It’s been a good exercise because it’s forced (the City Council) to scrutinize what we do,” Graham said. “… I think our guiding principles have coalesced to where we feel we really need to conserve money.”
Palmer Lake shops also expect to reap benefits from the Colorado Springs’ vote and pass along the tax revenue benefits to the town to help pay for basic services, such as infrastructure and police protection. Voters agreed to allow existing medical shops to transition after a string of no votes.
“We were feeling a lot more positive this time than we were in the past. I think it helped a lot that our town council are the ones that put it on the ballot,” said Tyler Woodward with Alpine Essentials, a medical marijuana shop. He couldn’t say exactly how long it could take for the two shops to transition to recreational marijuana. Both have to be licensed by the town and the state, he said.