Business

Colorado’s Pot Industry Is Poised For Another Growth Spurt

Greg Campbell
Contributor

Colorado’s nine-month-old retail marijuana industry is about to experience another growth spurt, as a requirement for business owners to have experience selling medical marijuana phases out in October.

That means newcomers can enter the market for the first time, but it also has state overseers grappling with how to monitor and regulate the amount of pot plants growing in the state.

Under the medical marijuana laws that were in effect for retail stores since January, retail outlets were required to grow 70 percent of the pot they sold, and production caps — previously based on the number of patients a medical dispensary served — stayed in place to avoid a glut of pot that could be diverted out of state or into the black market.

But the Associated Press reports that the limitations actually restricted supply to the point where retail marijuana is sold for up to $500 per ounce, well above black-market prices.

Colorado’s marijuana enforcement division has drafted rules to keep some production caps in place, with one proposal being that commercial growers will need to prove to regulators that they’re selling at least 85 percent of their crop to retailers before they’re allowed to add more plants.

The state will also allow pot to be grown in greenhouses and in some limited places outdoors, as long as local zoning allows it, according to AP. Originally, pot was only to be grown in enclosed warehouses under lights — a mode of operation that has been criticized by some because of the enormous amount of energy required.

But some who hope to enter the marijuana business under the relaxed rules are worried that the proposed production caps are unfairly stacked against the newcomers — only half as many plants are allowed in greenhouses, which use less electricity and are therefore cheaper for a startup, as in warehouses.

“The only person who is going to benefit is either the power companies, people who are renting warehouses, or people who have built huge growing warehouses,” Thomas Killeen, who hopes to begin cultivating marijuana in Colorado Springs, told the AP.

Applications for new stores have been submitted since July, with nearly 300 “notice of intent” forms having been filed for either new retail outlets or cultivation facilities, according to the Denver magazine Westword.

Despite opening the market to new operators, it’s still restricted to only those who’ve lived in Colorado for at least two years and who can pass a substantial financial, personal and criminal background check.

While the move is expected to add new jobs to the industry and more revenue to the state coffers, few expect a sudden explosion in new retail outlets. Westword notes that both Denver and Colorado Springs have moratoria on stores without a background in medical marijuana sales until 2016, and Aurora, which only began accepting applications for retail stores on July 1, will limit them to 24.

A final decision on the production caps will be made by the Department of Revenue, which regulates the pot industry. There is no deadline for final approval of the provisional rules, according to AP.

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