CO: Study Examines Economic Impact Of Marijuana In La Plata County

Photo Credit: Durango Herald

Marijuana sales totaled $27.7 million in La Plata County in 2016, generating $36.9 million in economic output and 351 jobs, according to a study released last week by Local First.

The impetus for the study, said Monique DiGiorgio, managing director of Local First, was that La Plata County considered in June 2017 implementing excise taxes on marijuana sales, and the Durango City Council had a similar discussion in August 2017. Both boards ultimately decided against implementing a tax.

“When the excise taxes were considered, it was clear we didn’t have good data to make better decisions about the cannabis industry,” DiGiorgio said.

The study was sponsored by Aurum Labs, a certified cannabis testing laboratory in Durango; Durango Cannabis Co.; Durango Organics; The Greenery; Santé; Sweet CO2 Oil; and the Southwest Colorado Small Business Development Center.

While the $4,000 report was paid for by businesses in the cannabis industry, DiGiorgio said Local First was conscientious about choosing a reputable, third-party researcher to conduct the study to provide an unbiased profile of the economic impact of the industry based on solid data.

Local First is a small trade association that represents La Plata County independent businesses. It has about 250 members. Without the financial support of the industry, the study could not have been completed, DiGiorgio said.

The report found employee wages, salaries and benefits, as well as business-owner income, from the marijuana industry in the county totaled $14.8 million in 2016.

“Wages in the cannabis industry are comparable to, or better than, wages in other types of industries in La Plata County and were much better than the state-mandated minimum wage of $8.31/hr in 2016,” according to the study.

Total revenues brought in for the city of Durango from 2015 to 2017 were $3.4 million for Durango, $1.1 million for La Plata County, $61,000 for the town of Bayfield and $53,000 for the town of Ignacio.

Researchers used Aurum Labs as a case study of the economic benefits derived from legal cannabis.

“Aurum Labs currently has 15 highly educated and specialized employees and believes in providing a fair wage and a good quality of life for their employees, and attempts to hire local first,” the report states.

Aurum has hired seven Fort Lewis College graduates and pays five salaried employees an average wage of $55,000 a year, according to the report.

High licensing and fee requirements could be problematic, the report said.

“The complex and costly cannabis fee and licensing structure varies widely at the state and local levels. Some local businesses have considered leaving the La Plata County area in search of a more competitive business environment if permitting costs continue to increase,” the report said.

The report notes Aurum Labs pays $16,000 in licensing and fees annually to operate in Durango. Adding state costs, fees total $20,000. The report noted most business licenses in other industries often pay less than $500.

One surprising conclusion from the study, DiGiorgio said, was the number of associated and support industries for retail sales that are considering leaving La Plata County for nearby counties that require fewer regulatory hurdles.

“I have nothing against Montezuma County, but our charge is to keep businesses here in La Plata County,” she said.

In terms of jobs, the study found 233 jobs directly related to the industry in La Plata County in 2016.

The study concluded 50 indirect jobs were created by the industry. Also, 68 induced jobs were created. Induced jobs are generated when industry employees spend money on housing, food and entertainment.

Donna Graves, who conducted the study, said the indirect and induced job numbers were determined based on an economic multiplier the study used – the IMPLAN economic modeling software.

Graves, who has conducted several economic analyses for the Region 9 Economic Development District of Southwest Colorado, said the IMPLAN software is a widely used modeling system to conduct an economic analysis.

Joel Cameron, founder and CEO of The Greenery, a Durango recreational marijuana company, in an email said, “The Greenery sincerely hopes this report garners confidence and support from our local community leaders and encourages constructive decision-making that cultivates continued growth in our industry. Growth in our local cannabis economy benefits La Plata County and Durango as a whole.”

Another surprising detail that emerged from the study, DiGiorgio said, are the ties employees and owners of cannabis businesses have with the community.

“A lot of them went to FLC. They have families here. They are the people we know and see on the street every day,” she said.

The study also looked at the industry’s impact on tourism. It found that 8 percent of tourists who visited Colorado and filled out surveys in October and November of 2017 said they visited a marijuana dispensary.

Another survey conducted in 2016 by Strategic Marketing Research Insights, which was hired by the Colorado Tourism Office, found 7 percent of visitors said legalized marijuana was a motivator to travel to the state, and 12 percent said they’ve actually visited a shop while in the state.

The survey does caution that studies have not captured the opinion of people who may have refrained from visiting the state because of their objections to legalized marijuana sales.