Medical marijuana centers will be big winners if Denver plan goes through, activist says

In a post published yesterday, Denver City Councilman Chris Nevitt defended a Denver proposal to limit recreational marijuana license applications to previously existing medical marijuana businesses until January 1, 2016.

Marijuana attorney Warren Edson is a longtime critic of such an approach, and he's not thrilled with this one, either. But he does acknowledge that if the plan passes, current businesses will find the licenses worth more and more with each passing month.

Edson has spoken against vertical integration rules that require retail outlets to produce the majority of their own product, as is currently the case in the medical marijuana industry; he sees it as an impediment to new businesses seeking to compete in the marketplace. Yet the marijuana laws signed by Governor John Hickenlooper late last month leave VI in place until July 1, 2014, and keep new applicants on the outside looking in for the same amount of time.

In a previous interview, Edson portrayed this part of the legislation as a sop to current MMJ businesses that could have unfortunate consequences.

"We're going to have a huge increase in demand with no increase in supply," he told us. "According to state figures, we're expected to go from 100,000 consumers" under the MMJ system "to 1.2 million consumers. That's a ten-fold increase with no preparation for meeting that demand. And cannabis isn't like baking bagels, where, if there's a demand for more of them, you just bake more. You need a two-to-four-month period to grow and properly cure cannabis.

"The industry hasn't been able to meet the demands of 100,000 patients, and we're going to multiply that by ten?" That, says Edson, will "lead to a price increase" made ever greater by much higher taxes.

Nonetheless, a draft proposal shared with members of Denver City Council earlier this week (see it below) extends the exclusivity period for current businesses by a year and a half beyond the state's requirement -- and Nevitt told us he thinks that's a good idea for several reasons. He fears the equivalent of a gold rush in which a bunch of unqualified "knuckleheads" get into the business, besmirching the reputation of the state and the industry at a time when most of the "bad apples" that jumped in during the original 2009-2010 dispensary boom have been "weeded out."

Moreover, he thinks people who may have voted for Amendment 64 but are still trepidatious about its implementation will be reassured by the idea that the number of businesses will remain stable for the first couple of years. And he dismisses the thought that new entrepreneurs will be kept out by the statute, because they can always buy the operations of those already in the game.

Edson's response? Bringing vertical integration back from the dead "seems to fly in the face of the way they tell us liquor needs to be regulated."

As for exclusivity, he sees it less of a benefit for consumers and more a boon for MMJ businesses. In his words, "Folks who are looking to sell a license in the City of Denver that has a certificate of occupancy just had the value of that license increase exponentially with the City Council statements" of earlier this week.

Here's the complete draft of the proposed Denver regulations.

Draft of Denver Retail Marijuana Local Licensing Ordinance

More from our Marijuana archive: "Marijuana: Governor John Hickenlooper signs six pot bills that 'are charting new territory.'"

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