The Mile High share of Colorado's legal marijuana market is shrinking, according to a report just released by the City of Denver.
Published every year as a brief overview of Denver's marijuana market, the report is a collaboration between several city departments. The 2018 edition is heavy on self-praise for what the city sees as a "model of marijuana management" that has "emerged as a global leader in marijuana regulation." But what are the numbers showing?
Issues such as marijuana-related crime, impaired driving, tax revenue, social consumption and youth use have all been hot topics since the sale of recreational marijuana started in 2014, and annual reports from the state Marijuana Enforcement Division and city governments are starting to provide concrete data of what's changed over the past several years.
On the surface, the Denver results show that (once again) that the sky isn't falling, but they also indicate that the city's grip on Colorado's marijuana money is slipping. Denver's share of the state's pot revenues fell nearly 10 percent from 2014 to 2017, the report shows, and now sit at 38.7 percent. But that reduction wasn't due to slipping demand, as Denver sales increased over 77 percent in the same span, accounting for over a half-billion dollars last year.
According to Ashley Kilroy, executive director of the Denver Department of Excise and Licenses, the change in market share was somewhat expected as more states and counties around Colorado have allowed dispensaries to open since 2014, including such metro communities as Aurora, Thornton, Federal Heights and Longmont. "Other jurisdictions are coming online," she says.
After growing around 20 percent from 2016 to 2017, Denver marijuana tax revenue is only expected to grow around 8 percent this year, according to the report's projections. Medical sales, coming off a 3 percent yearly dip in 2017, are off to an even weaker start this year. Kilroy says medical marijuana's slow decline actually started later than the city had expected. "When recreational started, we thought rec sales would quickly cannibalize medical, and we didn't see that," she explains.
Other developments in the report:
Armed burglaries on licensed marijuana businesses in the city accounted for 70 percent of pot-industry crime in 2017, the report shows. And despite making up less than 1 percent of all businesses in Denver, marijuana-industry burglaries accounted for 10 percent of all business burglaries last year. According to Kilroy, the majority of robberies occur at growing operations. "A few years ago, those rates were even higher," she says. "It's decreased over time."
Industry crime rates have fluctuated since 2012, when only medical marijuana businesses were operating in Colorado. That year, there were 191 industry crimes, 142 of which were robberies. Those numbers bounced up and down slightly until 2016, when instances of industry crime peaked at 209. However, as Kilroy notes, industry crimes fell in 2017, dropping over 33 percent to 139.
Kilroy says district managers from the Denver Police Department have been meeting with marijuana business owners to share tips about fighting crime and have helped form security and safety plans for dispensaries, grows and infused product centers.
While she wouldn't discuss the city's open case regarding the Sweet Leaf dispensary chain, which was raided in December for alleged marijuana sales over the daily legal limit, Kilroy praised local law enforcement and regulatory discipline efforts.
Concerns over stoned driving have remained high since 2013, when 33 of 84 DUID cases in Denver involved marijuana. Those numbers increased each year until falling slightly in 2016 and then stagnating last year, with 63 of 119 DUID cases involving pot.
There is still no scientific way to detect current marijuana impairment, but Colorado law enforcement and the Department of Transportation continue to make efforts to educate the public about stoned driving and gather opinions on the matter. While many of Denver's educational efforts have focused on youth prevention, the city has played host to numerous CDOT campaigns and awareness events dedicated to marijuana impairment. Since 2013, the city has added more trained Drug Recognition Expert officers to manage the increased presence of stoned drivers, the report adds.
The city is currently overseeing more than 1,100 active marijuana businesses licenses, but only one of them is for social marijuana consumption. Although the application process has been open for almost a year, just three businesses have applied, with one approval, one denial and another currently up for consideration. Kilroy believes the small number stems from a combination of state and federal restrictions, a lack of profitable business models and limited commercial interest.
"We have never had significant interest in this license since the day [it] passed. Never," she explains. "When Amendment 64 passed, we had tons of phone calls that were interested in coming in and making money. When [the social consumption measure] passed, we had about 90 percent less inquiries. We're also curious why there hasn't been interest."
Kilroy points to state restrictions banning social consumption businesses from selling marijuana or obtaining a liquor license as significant obstacles, as is the Colorado Clean Indoor Air Act, which bans smoking indoors in public places. Critics of the program have blamed strict location restrictions on the business licenses, which ban them from sitting 1,000 feet from any school, child-care center, drug or alcohol treatment facility, or city-owned park or recreation center. A Denver City Council task force is currently evaluating the success of the city's social consumption program and will issue recommendations in November.
Despite the lack of places to consume marijuana in public, the report shows public consumption citations in Denver reached their lowest point in four years in 2017, falling over 50 percent since 2014, from 762 to 369.
Mayor Michael Hancock initially opposed marijuana legalization in Colorado, but has since started arguing on the legal industry's behalf for banking services. In June, his office announced a national mayoral group Hancock helped start that will lobby Congress to pass the STATES Act, which would allow American states and territories the right to decide how to regulate marijuana within their borders.
Hancock has also recently pushed to raise Denver's special sales tax on marijuana from 3.5 to 5.5 percent as part of a fundraising initiative for affordable-housing programs. Kilroy says that change is expected to happen in October.
In an announcement released with the report, the mayor praises the city's approach toward marijuana regulation. “This new report demonstrates Denver’s coordinated approach between multiple agencies to manage marijuana is working,” he says. “That’s because of coordination between Denver’s Excise and Licenses, Fire Department, Police Department, Department of Public Health and Environment, Community Planning and Development, as well as our partners in other city agencies, the community from the marijuana industry and public health advocates.”
Find the full report below:
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