Q: Could recreational marijuana cause prices to drop?
A: Researchers have suggested that large-scale marijuana legalization would cause prices of pot to plummet. They’ve not dropped yet. But, with all the rules stores must comply with in Colorado plus the uncertain demand for store-bought marijuana, it’s not clear what will happen to prices long-term in the state’s new marijuana market.
Q: Will recreational marijuana stores take credit cards?
A: Many shops take credit and debit cards, but it’s best to check with the shops. But, in general, legal marijuana shares this in common with black-market marijuana: It’s a cash business. Federal banking regulations mean that marijuana stores commonly don’t have access to banking services. There are a possible solutions on the horizon, but, for now, expect to pay for green buds with greenbacks.
Q: Will the federal government put the kibosh on Colorado’s marijuana industry?
A: It certainly has the option to, but all signs are that it won’t. President Barack Obama has previously said — to Barbara Walters, no less — that the feds won’t arrest individual marijuana users in Colorado and Washington, the two states that have legalized pot use for people over 21. An August Justice Department memo tells federal prosecutors not to make it a priority to block marijuana-legalization laws or shut down marijuana stores abiding by state laws and regulations, as long as those rules are robust.
Q: Robust like how?
A: The Department of Justice has identified eight things it’s most concerned about that it wants state marijuana regulatory schemes to address. If those concerns are dealt with, the DOJ says in the memo it’s open to the possibility that states with legalized marijuana could replace “an illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for.”
The eight federal priorities are:
• Preventing marijuana distribution to minors;
• Preventing money from sales from going to criminal groups;
• Preventing the diversion of marijuana from states where it is legal to states where it is illegal;
• Preventing criminal groups from using state laws as cover for trafficking of other illegal drugs;
• Preventing violence and the use of illegal firearms;
• Preventing drugged driving and marijuana-related public health problems;
• Preventing the growing of marijuana on public lands;
• Preventing marijuana possession or use on federal property.
Q: So how will Colorado regulate marijuana stores?
A: Hopefully more tightly than it has previously regulated medical-marijuana shops.
All people selling or commercially producing recreational marijuana need a license to do so. There are security specifications, limitations on where stores can advertise, prohibitions on who can work in the industry, packaging requirements, health-and-safety measures and dozens of other rules. There is also an ambitious seed-to-sale tracking system that will keep tabs on individual marijuana plants from the time they’re placed in soil to the time their products leave the store. The state rulebook for recreational marijuana stores stretches 136 pages long.
Q: Seed-to-sale tracking? How does that work?
A: The state rolled out its $1.2 million marijuana-tracking system called MITS, for, uncreatively, Marijuana Inventory Tracking Solution. (Take a test drive for yourself here.)
It works like this: Every plant that a commercial grower sticks in dirt gets a radio-frequency tag that moves with the plant through its lifecycle. Once the marijuana is harvested, everything is weighed, then it’s weighed again after drying out and at other points during processing until it’s all packaged up to leave the grow. The packages shipped to the stores can’t weigh more than a pound and they get their own RFID tags. At the shop, store owners are required to weigh their inventory every day. All of this data is entered into MITS.
Stores are also required to have some type of point-of-sale tracking system to chart sales. In theory, every purchase in the point-of-sale system should have a corresponding drop in inventory in the marijuana-tracking system. It’s up to the state’s pot auditors to actually scour the books and make sure it all matches up.
The tracking system does have its limits, though, which is why officials say it is just an enforcement tool, not the whole regime. And, embarrassingly for the state, holiday shipping delays mean that not all plants in the commercial system will be entered into MITS by Jan. 1.
Q: What are the packaging rules?
A: All pot leaving a recreational marijuana shop must be in an opaque, child-resistant package. All marijuana products also must have labels on them, detailing the potency, the types of chemicals used in cultivation and other information. And every label has to have the state’s official, incredibly dull-looking marijuana decal on it.
Q: How many people are on the job for the state?
A: The state Marijuana Enforcement Division is budgeted for 25 criminal investigators and six to eight compliance investigators. Considering that there will likely be hundreds of recreational marijuana stores, state officials say investigators will use the data in MITS as part of a risk-based enforcement approach, rather than making consistent, frequent checks at all stores, grows and infused-products businesses.
Q: Stores, grows, infused products-makers? What’s with all these different business types?
A: Stores are easy to explain — they sell pot. Infused-products businesses are the folks who make marijuana brownies and the like, but also things such as marijuana-infused drinks, tinctures to be used under the tongue, lozenges, balms and any number of other products. There’s even marijuana-infused massage oil.
The grows — or cultivation facilities, in state officials’ terms — are what supply marijuana to the businesses. Unlike in the world of Doonesbury, people off the street can’t just sell weed to licensed stores.
The state also issues licenses to people wanting to open marijuana-testing labs, which check marijuana for molds and toxic chemicals and also measure potency.
Q: So all these businesses work independent of one another?
A: Not currently. Like the state’s medical-marijuana industry, the recreational marijuana industry will start out vertically integrated. That means stores and grows have to be part of the same business and stores must grow almost everything they sell. There can be stand-alone infused-products makers, but they can’t sell their products to the public independently. That must be done through a store, too.
Q: I want to open my own marijuana store. Where do I start?
A: Unless you’re already in the Colorado marijuana business, you’ll need to bide your time for a bit. Until July, the only people who can apply to open a recreational marijuana store are those who are already licensed to run a medical-marijuana business. The earliest newcomers can open up shop is Oct. 1, 2014.
Q: And those newcomers will have to be vertically integrated businesses, too?
A: Nope. Starting in October, Colorado’s marijuana industry goes into a blender and the ties between growers and sellers can be chopped apart. Existing growers and sellers can decouple. New businesses can be stand-alone stores or wholesale growers. It will be a whole new model for the young industry — assuming the state legislature doesn’t change the plan in its 2014 session.
Q: Who are these owners of recreational marijuana stores?
A: Today, most of the major players in the medical-marijuana industry are people with serious business backgrounds, all the better to compete in an increasingly competitive marketplace.
Q: How much does it cost to open a marijuana store?
A: The state charges an application fee of $5,000 ($500 if the applicant currently owns a licensed medical-marijuana business) and license fees from $3,750 to $14,000. But that just makes you legal. The total startup cost for a marijuana shop — including all the necessary growing equipment, decor upgrades, security systems and real estate — is in the hundreds of thousands to millions of dollars. Most business owners get the money from their personal savings, friends and family. But specialized marijuana investment groups are also playing a bigger role. Currently, all money invested in Colorado marijuana businesses must come from people living in the state.
Q: Why do the license fees vary?
A: It’s based on how big your business is. The state has three tiers for both medical-marijuana dispensaries and recreational marijuana stores. On the medical side, the tiers are based on how many medical-marijuana patients are registered with the dispensary. The recreational tiers — at least initially — are built on plant counts. Type 1 stores, the smallest level, can grow up to 3,600 plants combined in its cultivation facilities. Type 2 shops can grow 6,000 plants. And Type 3 stores can grow a whopping 10,200 plants.
Q: Ten thousand plants? How much will that produce?
A: You’re walking down a rabbit hole, my friend. Debates over marijuana plant yields are epic. It depends on the growing method, the length of time, the fertilizers used, the lights used, the room conditions, the music you play to the plants, and just about every other variable you can imagine. Let’s just assume that standard indoor growing conditions will yield about 2 ounces per plant. That means 10,000 plants will get you a stupefying 1,250 pounds of sticky icky.
Q: If the feds decided to prosecute a store growing 10,000 plants, what would the punishment be?
A: Growing more than 1,000 marijuana plants is a minimum 10-year federal prison sentence and an individual fine of not more than $10 million. Trafficking 1,250 pounds — about 550 kilograms — comes with a five-year minimum prison sentence and up to a $5 million individual fine. So it’s little wonder why RiverRock dispensary owner Norton Arbelaez says pot shops have extra incentive to follow the state’s rules: “If you’re an irresponsible business owner in this business, you lose your freedom.”
Q: Other than having a lot of money, what requirements are there for marijuana business owners?
A: They must be Colorado residents — meaning they have to have lived here for two years. If they have been convicted of a felony, they have to wait five years before applying to open a store. And if that felony was drug-related, they must wait 10 years.
Q: How do I just get a job in the marijuana industry?
A: Try, try and try again. Sometimes job listings are posted on Craigslist or a website like Cannajobs.com. Sometimes stores advertise open positions on their own websites. There are several marijuana trade schools in Colorado.
If you do get hired, you’ll need an occupational license from the state. And that involves a complicated lottery process that could require several trips to the Marijuana Enforcement Division’s office.
More answers to common questions — Click here