The forecast for Denver’s marijuana industry is hazier than usual this winter as the City and County of Denver considers extending a moratorium on pot businesses for another two years, leaving entrepreneurs and owners holding their collective breath.
The original marijuana moratorium, approved before the first legal sales on January 1, 2014, allowed only existing medical marijuana businesses in good standing with the city to apply for recreational licenses. It was set to expire on January 1, 2016, but was extended for another four months, until May 1, by Denver City Council during a December 14 meeting, when it was amended to also ban new medical pot business licenses during this period. Since then, there have been multiple meetings between Denver’s Office of Marijuana Policy and the city’s Marijuana Moratorium Committee, which includes several councilmembers skeptical of the hold on new businesses being pushed by Mayor Michael Hancock’s office.
The extended moratorium is intended to pause Denver’s rapidly growing marijuana industry as administrators determine its impact,
"The extension of the transition phase on retail marijuana licenses, coupled with a moratorium on new medical marijuana licenses, will allow additional time for the city to assess the impact of commercial marijuana cultivation, production and sales in our communities,” the city said in announcing the short-term extension.
Other reasons that Denver would like to hold off on any growth in pot businesses include crime and a few bad actors in the industry, says Ashley Kilroy, executive director of the Office of Marijuana Policy, who cites fourteen instances of retail dispensaries selling to minors in 2015 as well as an increase in dispensary burglaries.
Lieutenant James Henning of the Denver Police Department echoes Kilroy’s concern about dispensary burglaries, though he notes that industry-related crime overall represents less than one-tenth of 1 percent of Denver crime. “Eighty percent of that is related to burglaries of business locations,” Henning said at a council meeting. “Only about 1 percent [of Denver businesses] are industry-related, but they’re responsible for about 11 percent of business-related burglaries.”
Other crime factors cited as reasons for an extended moratorium are diversion and black-market sales, as evidenced by the Golden Gopher case of March 2015, when the DPD, working in conjunction with federal agencies, indicted 32 people on charges of growing mass quantities of marijuana and flying it to Minnesota to sell on the black market. More than 1,950 marijuana plants and 499 pounds of dried product were confiscated from illegal grows in Denver by law enforcement during the Golden Gopher case.
Councilwoman-at-large Robin Kniech, a member of the Marijuana Moratorium Committee, doesn’t buy the black market as sufficient cause for a moratorium extension. “Marijuana did not get invented when it was legalized. Legalizing marijuana did not create the black market,” she said at a January council meeting. “If I’m running an illegal grow, I’m running an illegal grow. Whether we have a moratorium or not — that criminal element doesn’t care.”
Kniech’s problems with the proposed moratorium don’t end there. Even if the moratorium stops new marijuana businesses from opening, she says, it wouldn’t stop them from moving to neighborhoods that are already dense with marijuana businesses or cultivating more cannabis in grows that are already licensed. An alternative approach through zoning regulations would better address the issues at hand, she says: “A moratorium would essentially do nothing. There are better options to serve the community than a moratorium.”
Other vocal opponents of the moratorium come from inside the pot industry.
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“What this does is prohibit new businesses that invested hundreds of thousands of dollars in medical businesses with the intent to convert to recreational from doing so,” says Tyler Henson, president of the Colorado Cannabis Chamber of Commerce. “The moratorium is then choosing who wins and who loses, and stifles innovation and competition. That is a dangerous precedent we should not set.”
Larisa Bolivar, president of the Cannabis Consumers Coalition, thinks the moratorium has an effect on pot users as well. “Consumers are largely impacted by this, especially because many trusted brands in Denver were caught using unapproved pesticides, leaving consumers to choose between businesses who already proved themselves to be dishonest,” she says. “There will be no challenges from outside brands looking to set higher standards.”
Still, not everyone in the industry sees the moratorium as a bad thing. “Given the current saturation of the Denver market, I don’t see this moratorium on new dispensaries having much of an impact,” says John Lord, founder of Colorado dispensary chain LivWell Enlightened Health.
As of December 2015, there were 451 distinct marijuana businesses in the City and County of Denver and more than 200 open dispensaries, according to the Office of Marijuana Policy. Denver City Council will decide whether to extend the moratorium for two years by May 1.