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New Colorado Rules Not Curbing Growth of Medical-Marijuana Industry

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As Colorado's new tougher regulations on the medical marijuana business take hold – rules its sponsors predicted would curb sales – the industry is showing remarkable resilience.

The state Department of Revenue is preparing to issue its first dispensary licenses and to aggressively enforce the new regulations.

Still, of the 818 dispensaries that originally applied for licenses in August, 759 have managed to navigate the rules and remain on track to receive one. That is a drop-off of about 7 percent.

If there is a pot bubble in Colorado, it hasn't popped yet.

When the bill creating the new rules was passed by the legislature last year, one of the sponsors, then-state Sen. Chris Romer, predicted it would "close down as much as 50 percent of the existing retail structure."

That doesn't appear to have happened yet due to a combination of a product "that so many need" and the industry's ability to cope with the changing rules, said Aaron Smith, executive director of the National Cannabis Industry Association, a trade group.

"There will be probably some fallout, but I think this industry is pretty well grounded," Smith said.

Romer, a Denver Democrat, and co-sponsor Rep. Tom Massey, a Poncha Springs Republican, say dispensary numbers are likely to shrink after July 1, the date when Revenue Department auditors begin actively checking on compliance.

"My priority was responsible regulation, so I'm pleased that the initial phase has worked to ensure compliance with the law," Romer, who is running for Denver mayor, said in a statement. "As we move into full implementation, I expect we'll see additional dispensaries that don't meet the strict state regulations closed."

Dispensary license application fees run between $7,500 and $18,000. The mandated security systems and other items run thousands more.

Faced with such bills, some dispensary owners have called it quits – by selling to dispensaries looking to expand.

"At some point, there's got to be competition in the market that's going to eliminate some of the centers that are less viable," Massey said.

Ryan Cook, a co-owner of The Clinic in Denver, said his business plans to double its number of locations to four.

The Clinic is also looking at opening another location outside Denver.

Facing a statewide moratorium on opening new dispensaries, the only way to expand is by purchasing a dispensary that is already in the license-application queue, Cook said.

"We're not going to see a huge reduction in the number of dispensaries, probably just a reduction in the number of different names we see," Cook said.

So far, eight dispensaries have been denied licenses for failing to show they are growing 70 percent of the marijuana they sell, said Julie Postlethwait, a spokeswoman for the Revenue Department's Medical Marijuana Enforcement Division.

Other dispensaries have withdrawn their applications, including several that are in areas that have recently banned marijuana businesses.

After July 1, when a number of new rules officially take effect, the division will also begin denying licenses for more reasons, such as an owner failing to pass a background check.

News Hawk- Jacob Ebel 420 MAGAZINE
Source: denverpost.com
Author: John Ingold
Contact: Contact Us
Copyright: The Denver Post
Website: New Colorado rules not curbing growth of medical-marijuana industry
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