Denver took an early step this week toward expanding the city's marijuana hospitality program, but we're still far from seeing pot-friendly cafes and art galleries around town, with or without COVID-19.
Colorado has registered over $8.2 billion in marijuana sales since recreational dispensaries opened in 2014, but there are just three licensed marijuana lounges in the state, according to the Marijuana Enforcement Division, as well s a handful of private clubs operating in legal gray areas. That's because marijuana hospitality businesses weren't legal at the state level until 2020, although several public social consumption businesses in Colorado Springs and Denver had operated in a gray area a few years earlier.
But Initiative 300, Denver's own pot hospitality program implemented in 2017, has stricter rules than the state's, imposing strong location requirements while banning marijuana sales as well as smoking indoors at any venues. While both the Department of Excise and Licenses and Denver City Council have broached updating the program, no significant changes have been made to I-300.
On May 28, the city's new Marijuana Licensing Work Group, created to advise city council on marijuana hospitality, delivery, social equity and other business issues, met virtually to discuss whether or how Denver should allow more pot-friendly business.
"As far as policy not considering business models, I think the way I-300 got rolled out was a pretty clear fail. It just doesn't work. It's virtually impossible to make money from this, and that's why there are so few [marijuana-friendly businesses]," Truman Bradley, head of the Marijuana Industry Group, said during the meeting.
According to Bradley, current rules in Denver banning smoking and micro-marijuana sales, both of which are now allowed under the new state law, make a pot hospitality business unprofitable, and a location restriction banning any pot-friendly business within 1,000 feet of schools, daycare centers, drug treatment centers and city-owned parks, pools and recreation centers blocks a social use establishment from opening in popular Denver neighborhoods.
This concern has been shared by marijuana-friendly businesses owners and even a council task force over the years in Denver, but now they have a more powerful ally: Governor Jared Polis's administration.
"For hospitality and delivery, the state is excited about any local jurisdiction that wants to engage in [them]," said Ean Seeb, the governor's marijuana policy advisor; he told meeting participants that he's been talking with other local governments that are open to the newly legal forms of business. (So far, however, Glendale may be the only municipality that's actually committed to opting into the state's rules, as other governments consider it...slowly.)
Although there was a general consensus in the group that location restrictions and smoking and sales bans are killing any serious interest in the current business model, the jury's still out on whether those rules should be changed. And, as with the 2016 debates surrounding Denver's social use program, the major sticking point came back to youth use.
Representatives of Denver Public Schools and Denver Public Health warned the group that placing marijuana businesses in dense areas correlates to higher rates of teenage use, which they believe is caused by a normalization of marijuana. According to DPS substance prevention supervisor Michel Holien, teenage use across Colorado has increased. She cited data from an unreleased 2019 report from the Colorado Department of Public Health and Environment; a Healthy Kids Colorado survey asking students about drug use isn't expected to be published until June or July, according to the CDPHE.
"Any comparison from 2015, 2017, 2019 have just been my own pulling of numbers, but I will say we are now seeing an increase in youth usage," Holien said. "We're definitely seeing increases in density throughout the years."
Holien didn't say how much youth use had gone up by 2019, or in what areas of the state, but it was enough to make Excise and Licenses director Ashley Kilroy wonder if the marijuana hospitality discussion should be sidelined until the survey data is released. "Maybe we should make this a parking lot discussion until we get the data," Kilroy proposed. "If youth usage went up 50 percent, I'd like to know that."
Other topics yet to be resolved about marijuana hospitality include hours of operation, zoning codes, customer liability and barriers to entry, as the MLWG was created to advise marijuana licensing issues through a social equity lens. The next meeting will be held Thursday, June 11, online, and is viewable to the public.
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