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Medical marijuana costs, fees, competition means few are getting rich, MMC staffer says

Medical marijuana costs, fees, competition means few are getting rich, MMC staffer says

Given the ongoing medical marijuana green rush in Colorado, plenty of folks are under the impression that most members of the industry are getting rich.

Not so, says Denver Relief creative director Christopher Meyer, who sees a big disconnect between perception and reality.

In "Medical Marijuana Doesn't Grow on Trees: The Myth of Making it Big in Colorado," a post on the Denver Relief blog, Meyer describes the situation like so: "While many have been successful, stiff competition for patients among dispensaries has driven prices lower and lower, while the cost of being compliant with Colorado's new regulations is reaching its peak."

The impact is being felt at Denver Relief -- and while Meyer isn't one of the company's owners, he's witnessed the short-term sacrifices they've made in order to guarantee they'll be around for the long haul.

"Every bit of revenue we generate is going right back into the company," he says. "And as far as I know, no one is going to be earning record profits in the first couple of years because of the investments that are required."

For instance, he notes, "the warehouses that needed to be built to be compliant with the new regulations are very expensive," and so are many of the other accoutrements required by the state.

An image from Denver Relief's website.
An image from Denver Relief's website.

Example? Meyer says that prior to the passage of HB 1284, the measure that regulated medical marijuana in Colorado, "we put fifteen cameras into our retail space, along with a security system we thought would be sufficient to meet the regulations. But now we have to replace our DVR with one that costs several thousand dollars, because the MMED" -- that's the Medical Marijuana Enforcement Division -- "has to hook into it, and you've got to have the right software."

In addition, Meyer says the scale with which the center weighs its products must be approved by the USDA, a federal agency -- ironic, since the feds see all marijuana as illegal. The cost of the device, and the calibration and certification required, is in the $1,000 range, he estimates.

Obviously, these costs keep adding up even as increased competition from other centers has caused retail prices to fall. That's been especially true lately, Meyer notes, thanks to outlets that may not meet the July 1 licensing deadline selling products at going-out-of-business level prices.

Presumably, this situation will stabilize in a couple of weeks -- but that doesn't mean the challenges are over.

"A lot of medical marijuana centers that exist now aren't necessarily as successful as they look," Meyer points out. "There are a lot of people who might be upside-down on them or are heavily in debt." After all, he adds, "the transition from marijuana being a black-market drug, where the overhead is the cost of producing it, to owning a retail space and a warehouse and having employees and licensing and taxes and all that really eats into the profit margin pretty quickly."

As such, Meyer believes businesses operating the right way -- like, in his view, Denver Relief -- will last, while those more focused on making fast money won't.

"I imagine some dispensary owners have taken money out of the business and spent it on themselves," he says. "And I don't think they're the ones who'll be around in the coming years."

More from our Marijuana archive: "Medical marijuana: Board of Health passes new driving rules, caregiver language (PHOTOS)."