Marijuana: The million dollar pot questions Denver City Council hasn't answered

Yesterday, a Denver City Council committee further refined a draft ordinance related to retail marijuana sales, and marijuana attorney Warren Edson says one of the changes, related to the coexistence of medical and recreational weed, represents a step forward.

Yet he's also puzzled about why a couple of "million dollar questions" have yet to be addressed.

What are they? And what else happened yesterday? We'll fill you in on the details below.

According to Edson, the committee's achievement at its afternoon session involved "virtual separation" -- allowing merchants to sell both recreational marijuana and medical pot in the same location without having to build walls or otherwise physically separate the two enterprises.

"To me, that's one of the few times when it's almost an all-around win," he maintains. "For the merchants, it allows them to serve the recreational world without having to do a huge store redesign, which frankly would have been impossible in some of those places."

Still, there is at least one drawback. Since the stores will be restricted to adults age 21 and over, medical patients younger than that won't be able to go inside. As such, they'll have to rely on parents or caregivers to purchase items for them until they come of age.

Denver City Council.
Denver City Council.

"That's a bummer," Edson concedes. "But I did get a kick out of council praising the home-grow aspect of Denver and Colorado's law. They talked about how it allowed folks to grow for themselves, while the rest of the world is passing state and local ordinances prohibiting home grows, and how it allows 18-21 year olds to grow their own, so they won't need to go to the stores."

In addition, Edson is pleased that the committee lined up behind what he calls "a lower cellar" for city sales taxes on recreational marijuana: 3.5 percent, as opposed to the 5 percent rate Mayor Michael Hancock endorsed. Of course, the current language would allow council to raise the rate to as high as 15 percent without a vote of the people should taxes not cover costs. But Edson says by starting at 3.5 percent, "it at least opens things up to a more sensible discussion of the rates based on actual sales and not mythical numbers."

In the meantime, Edson notes tweaks in the format of public hearings that must take place before a medical shop can transition into a recreational one. During the first wave of applications, from 2014 to 2016, these sessions will mainly focus on "the track record of the business that's been there, the track record of the owner coming in, as well as any potential issues in the future," Edson says. After 2016, however, the rules add what Edson calls a "needs and desires" aspect similar to the approach used in alcohol-related hearings.

Here's an excerpt from page fifteen of the latest draft rules, which we've included below in their entirety:

(1) The reasonable requirements of the neighborhood and the desires of the adult inhabitants as evidenced by petitions, remonstrances, or otherwise;

(2) The number and availability of other retail marijuana stores in or near the neighborhood under consideration;

(3) Whether the issuance of such license would result in or add to an undue concentration of the same class of license and, as a result, require the use of additional law enforcement resources; and

(4) Whether the issuance of the license will adversely impact the health, welfare or public safety of the neighborhood in which the retail marijuana store of the neighborhood.

This expansion of the rules adds what Edson considers to be "the weirdness of having local citizens coming in and saying, 'It's my need and desire to have a store where I can come in and buy marijuana in my neighborhood' -- which, after all, is still against federal law.

"The awkwardness of that was discussed, and how it's not a fair requirement for these groups. But it becomes a requirement in 2016." And because the definition for who can comment about store transitions beginning in 2014 is broader than the one pertaining to alcohol, "there are going to be a heckuva lot of hearings," Edson says -- and they could last a long, long time.

Continue for more about the million dollar pot questions Denver City Council hasn't answered.   Other alterations have been made when it comes to application and licensing deadlines, with one related to medical marijuana dispensaries moved up to July 2014 from October of that year. And time is short. Because of Labor Day, there'll be no council meeting next week. As a result, public comments will be heard on September 9, with a final vote expected on September 16, just two weeks before the October 1 start of the application period. "Folks will have to make a very major decision," Edson says, "and they don't have very long to make it."

Warren Edson.
Warren Edson.

In the meantime, there are those two million dollar questions of Edson's we mentioned earlier. The first: How many plants will a recreational marijuana store be allowed to have?

"There are three types of retail store licenses, and they're modeled on the MMJ licenses, where there's one for 300 patients, another for 301-500 patients, and a third one for 501 patients to infinity," Edson says. "Now, with MMJ, patients have signed up a primary center, and six plants can be grown for each of them -- so, for 300 patients, it's 1,800 plants."

In contrast, recreational marijuana customers will be able to go to any shop they want, as long as they're of age. So what plant count will be put in place for each license tier -- and what will be the limit on the top one? Edson figures the standards will mirror MMJ, but he's only guessing. "I'm surprised on both the state and local level that there hasn't been more discussion of this," he adds.

And million dollar question number two: How can Denver entrepreneurs who want to focus exclusively on growing marijuana, as opposed to running a shop, do so when there's a two-year freeze on new licenses?

"The way the state system is set up, vertical integration" -- the requirement that shops grow 70 percent of their own product -- "goes away on October 1, 2014," Edson says. "After that, you can just be a grow or a MIP (Marijuana Infused Product manufacturer) or a combination of those factors. But how's that going to work in a city where you have no new business licenses until 2016? And we're only talking about nine months into the license when people can just be a grow. There haven't been discussions about that, and about people having to buy these licenses and finding out what the deal is later."

Obviously, a lot of details remain elusive. And the clock is ticking. Here's the latest draft of Denver's licensing ordinance, dated August 22.

Draft Text of Denver Retail Marijuana Licensing Ordinance: August 22, 2013

More from our Marijuana archive circa August 20: "Marijuana: Denver City Council recommends lower sales tax out of fear higher one would fail."

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