The downtown strip of Edgewater is scattered with local shops and a mural on the side of the Providence Tavern on January 4, 2017 in Edgewater, Colorado. (Helen H. Richardson, The Denver Post)

How two small cities became Colorado marijuana kings in the Denver metro area

'We hit the ground running': Edgewater and Glendale took different paths to become leaders in the marijuana business

Edgewater and Glendale are separated by more than the 10 miles between them.

Edgewater is the very picture of suburbia, with its quiet collection of modest, single-family homes perched along tree-lined streets on the western shore of Sloan’s Lake in Jefferson County. Glendale is a hard-charging, commercially focused city defined by apartment living, mid-rise office and hotel towers, strip clubs, strip malls and a world-class rugby stadium.

But both Glendale and Edgewater, with 11 recreational marijuana dispensaries and counting between them, now rank as the leaders in the metro area for the number of pot shops per capita.

How they came to share the title of king of the weed shops, however, unfolded in very different ways.

“We hit the ground running,” said Edgewater city manager HJ Stalf. “We adopted everything well before the opening date (of legal recreational marijuana sales in Colorado).”

That opening date was Jan. 1, 2014, and Edgewater had already embraced the notion that it wasn’t going to sit out what three years later has become a $1 billion-plus industry in Colorado.

“We didn’t go out and actively recruit, but we created a structure that allowed it to succeed,” Stalf said.

That included allowing stores to locate without separation buffers from one another, and most critically, permitting shops to remain open until midnight. With Denver’s more than 150 recreational pot shops required to close at 7 p.m., those extra hours have given Edgewater a built-in late-night market and a competitive edge.

That advantage, however, is not assured in perpetuity. Just last week, the Denver City Council’s marijuana special-issue committee began discussions on extending the hours of operation for pot shops in Denver.

“The best benefit of having a dispensary in Edgewater is the hours,” said Ben Loblick, assistant manager of Green Dragon Cannabis Co. “We get busy after 7 p.m., which is closing time in Denver.”

Green Dragon sells weed in Edgewater’s tiny downtown district, right across the street from the police station.

Across town, Glendale followed a less deliberate path to establishing a recreational pot industry inside its borders. Deputy city manager Chuck Line said the city’s five pot shops — with two more in the pipeline — came about “more by happenstance.” While it’s perhaps not surprising a city with the kind of laissez-faire, business-friendly environment Glendale is known for would one day host a robust retail marijuana scene, it took time.

“The market kind of took care of it for a while,” Line said.

The city’s first recreational marijuana dispensary didn’t open until January 2015 and the city only finalized its cannabis regulations in November, which also allows shops in the city to do business until midnight.

But Line was intrigued enough by the potential economic benefits of the nascent pot industry early on that he actually ventured out on a late-night reconnaissance mission to Edgewater in the first few months of legal sales. He remembers receiving a ticket at one shop indicating that he was nearly the 400th customer that day. Line quickly crunched numbers in his head, estimating the average purchase per customer and calculating the take using Glendale’s 3.75 percent sales tax rate.

“My impression was out of a store that is 1,000 square feet at our sales tax rates — that’s $309,000 sales tax revenue in one year,” he said. “It’s just incredible.”

That’s a calculation Edgewater did long ago. With the $1.4 million in annual marijuana sales tax revenue (that includes the proceeds the state shares back with communities with retail cannabis) accounting for 20 percent of Edgewater’s $6 million budget last year, Mayor Kris Teegardin said the city is fully aware of the value of cannabis cash.

“Revenue has definitely been very productive for us,” Teegardin said.

Stalf said the city’s six pot shops generate taxes equivalent to those of a big box store. Edgewater, which has a 3.5 percent sales tax rate, has used its marijuana sales tax proceeds to repave all 12 miles of its streets and is planning to dedicate future revenues to building a $10 million state-of-the-art civic center to house its city hall, police headquarters, library and recreation center.

It’s a far cry from a generation ago, Stalf said, when the city “really struggled to keep up.”

“We’ve got some problems behind us that we can sustain for 20 years,” he said.

While Glendale’s sales tax collections and state shareback from recreational marijuana stores — more than $1.2 million a year — isn’t far behind Edgewater’s, it accounts for only 3.1 percent of the city’s $31.7 million annual budget, given the city’s well-developed commercial base.

Line said the marijuana revenue isn’t dedicated to any particular line item in Glendale’s budget, but he believes that variety in the city’s retail sector is good for its overall economic health.

“It’s a component that you wouldn’t want to miss — I don’t know why a community would want to miss out on that diversification,” he said.

Taylor Fant, manager of The Smokin Gun Apothecary, said his dispensary has been doing business on the former site of the Shotgun Willie’s strip club for nearly a year.

“We were openly embraced by the city,” he said.

The Green Solution, with 10 shops in the metro area, chose to locate in both Edgewater and Glendale. It’s expecting to open its Glendale location — 4151 E. Kentucky Ave. — later this year. CEO Kyle Speidell said it’s noticeably easier to open a dispensary in the two smaller cities than in more rules-heavy Denver.

He also said there’s a cogent business strategy to setting up shop near two major commercial corridors in the metro area — Colorado Boulevard in Glendale and Sheridan Boulevard in Edgewater. And having the ability to sell weed after 7 p.m. is the clincher, Speidell said.

“I feel they’re really smart in what they are doing,” he said of Glendale’s and Edgewater’s approaches to the sector.

Line said he was initially surprised that two communities, each less than a square mile in size and each with about 5,000 residents, would come out on top of the cannabis heap. It came down to being open-minded about the economic benefits of pot sales and recognizing that the industry could help contribute to a reduction in black-market sales of the drug, he said.

And the cities’ small size turned out to be an important element in allowing them to maneuver in the shadow of cannabis-rich Denver.

“We’re like a speedboat,” Line said. “We both know how to act dynamically and quickly to changing circumstances.”

Those circumstances include understanding the surrounding market and knowing how to take advantage of it, Stalf said. Specifically, Edgewater’s cannabis businesses have benefited from bans placed on recreational marijuana sales in neighboring cities, including Golden, Arvada and Lakewood, he said.

It doesn’t take much figuring to know that it’s not just Edgewater residents who are gobbling up millions of dollars worth of recreational marijuana. And that’s just fine with Stalf.

“We’re an exporter and those guys are importers,” he said.

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A tale of two cities, by the numbers

Number of recreational marijuana stores

  • Glendale: 5 (7 by the end of 2017)
  • Edgewater: 6

Recreational marijuana sales 2016

Edgewater

  • Sales tax revenues — $1 million
  • State shareback — $400,000
  • Total — $1.4 million
  • Annual budget — $6 million

Glendale

  • Sales tax revenues — $987,000
  • State shareback — $254,000
  • Total — $1.2 million
  • Annual budget — $31.7 million

Source: Cities of Glendale, Edgewater

This story was first published on DenverPost.com