Stick, split or switch: What’s a pot shop to do?
October 30, 2013
GLENWOOD SPRINGS — When "recreational" marijuana sales officially become legal in Colorado on Jan. 1, 2014, existing medical marijuana dispensaries throughout the state will have had three months (since Oct. 1) to make a choice — either stick with the business they've been operating, split their business to include recreational/retail sales as well as medical pot, or switch over from the medical side of things and go entirely for recreational/retail sales.
The governments of Glenwood Springs and Carbondale both have followed up on statewide passage of Amendment 64 last year, setting up local laws to enable the new businesses to operate within the towns' boundaries, although Glenwood Springs has a moratorium in effect that prevents medical marijuana outlets from applying to join the new wave of recreational pot shops even if they wanted to.
In Carbondale, a law passed earlier this month makes it legal for medical marijuana shops to apply to either sell both medical and recreational pot, switch entirely to recreational sales or stay with the medical marijuana business model.
In unincorporated Garfield County itself, the county commissioners earlier this year decreed that there would be no provisions for any recreational marijuana businesses to set up shop in the county's jurisdiction, although voters in 2010 approved marijuana cultivation in the county for the medical marijuana businesses.
All of this is just fine with Darren and Shalynn Hofert of Spring Valley, owners of the Green Natural Solutions medical marijuana dispensary on Grand Avenue in downtown Glenwood Springs, who already have decided they like the business they are in and have no plans to change.
Plus, Darren said, they're not at all convinced that recreational marijuana is such a good business to be going into.
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"One reason we're going to stick is I can see basic economic principles coming into play," he told the Post Independent on Friday, predicting that recreational pot shops will raise demand for a limited amount of product being grown in the state.
"Demand will go through the roof," he said, "and supply will decrease" as growers move to meet that demand.
He said he doubts there will be enough new cultivation operations to fully meet the need, at least not as the industry is being shaped by the state legislature.
Already, he said, some medical marijuana shops in the area have reported a tough time keeping their shelves stocked, although he said he has not had any trouble because their source of medicinal pot is solid and not planning to change its focus.
But the main reason to stick with the medical marijuana business, he said, is because "people depend on Green Natural Solutions for quality product, and for quality selection."
He said he has no problems with the new, recreational marijuana industry, and that he thought about making the change but opted not to.
"Originally, we did," he said, admitting that he voted in favor of Amendment 64.
"I could support it," he said of his vote, "but I couldn't be fair to my patients [if he changed his business.]"
In Carbondale, the only other town in Garfield County that has opted to allow the new recreational marijuana industry to set up within the town's boundaries, two of the three existing medical marijuana businesses will be trying their hand selling both medical marijuana and recreational pot.
Longtime Carbondale businessman H.P. Hansen has owned and operated, with his son Anders as manager, a medical marijuana store called MMCC (Medical Marijuana Center of Colorado) since 2010, and currently is planning to split the business into a joint medical/recreational operation.
"I think we're going to do both, because it seems like the prudent business thing to do," said Hansen, 67.
He said he likes the medical marijuana business, largely because it is a way to help people deal with their medical problems.
But, he added, "It's not a great business model … we're not getting rich. And I'm a medical guy 100 percent, because I've seen it work for my patients."
Dividing his store into medical and recreational sales, he said, is a way to set up for what he believes is inevitable — the evolution of marijuana into a generally accepted and respected industry that is regulated but not illegal anywhere in the nation.
"I personally feel that, 10 years from today, cannabis [the scientific term for marijuana] will be mainstream medicine," he declared.
Before that happens, though, he feels it is a good idea to gain experience in both kinds of sales.
"Come Jan. 1," Hansen admitted, "I'm not expecting lines out the door of people coming in to buy pot.
James Leonard, 28, of Carbondale, manages the Doctor's Garden medical marijuana shop at the corner of Weant and Main, on the third floor of the Mi Casita building.
And that shop, he said this week, is also going to be selling both recreational and medical marijuana.
He said he already is at work getting his recreational marijuana application in to the town (which carries a $5,000 annual operating fee along with other fees and charges), and has a meeting later this week with the state department of revenue, which oversees the industry.
As confirmed by Carbondale Town clerk Cathy Derby, none of the medical marijuana businesses in town had gotten their applications in to Town Hall by the end of business on Oct. 25, although she said she is expecting them any day now.
Speaking of the delay, Leonard said, "What it has to do with is, a lot of people want to see exactly how this shakes out," with state and local elections scheduled for Nov. 5 asking voters to approve taxes for recreational marijuana. Recreational marijuana is subject to normal state and local sales taxes, but if passed, the taxes on recreational marijuana will be 10 percent on sales to the public, and a 15 percent excise tax on wholesale recreational pot sold to a retail outlet.
Carbondale's town board, as part of its new marijuana regulations, also is asking voters to approve a 5 percent sales tax and a 5 percent excise tax as well.
If the state taxes are not approved by the voters, he said, "I don't see why anyone would want to do medical."
But if the high state taxes are approved by voters, Leonard said, then either sticking with strictly medical marijuana sales, or a combination of medical and recreational, may make good business sense for the time being.
In either case, he said, he is looking forward to staying in business and meeting his customers' needs.
"Our model has been slow but steady and compliant," he noted. "We're still going to cater to the medical community, but look forward to catering to the recreational community, as well."
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