Denver officials could soon shut down as many as 41 medical marijuana businesses as the city cleans up outstanding license applications that have been pending for years.
All medical marijuana businesses in the city must be licensed by July 1, and the city has sent letters to dozens of businesses ahead of the deadline, warning that they must cease operations if they don’t get their licenses by then.
“Failure to comply may result in law enforcement and administrative action,” cautioned a letter sent to the businesses last week.
Ashley Kilroy, Denver’s coordinator for marijuana policy, said city officials have also visited the businesses — mostly cultivation facilities — to urge them to finish up the licensing process.
“We hope that they’ll be in compliance and, if not, we’ll have to figure out how we go about enforcing the order to cease operations,” she said.
Related: Colorado’s marijuana regulators vow to step up enforcement
The issue reaches back to the genesis of Colorado’s regulated marijuana industry. Marijuana businesses in Colorado need both a state and local license to operate.
When state and city officials began licensing medical marijuana shops in 2010, they allowed stores and affiliated businesses that were already operating to stay open while their applications were being reviewed. In regulatory parlance, such businesses were “operational pending.”
Dozens of businesses remained in that licensing limbo for years, and state and city regulators have only in the past year significantly chipped away at the backlog. When Denver officials sent a letter about the July 1 deadline earlier this year, it went to 101 businesses that still needed a city license.
That number is now down to 41, though almost none of them are stand-alone businesses. Three of the still-unlicensed businesses applied to make marijuana-infused products. The remaining 38 are cultivation facilities that are attached to already-licensed stores.
For instance, the Little Brown House dispensary on South Broadway has two business applications — for a grow and a products-making facility — on the list, even though the dispensary storefront is licensed. A woman who identified herself as a manager at the store but refused to give her name said Monday the business is wrapping up inspections that were left over when the company was sold to a new owner.
“We’ll be open on July 1,” the woman said.
Regulating: Surprise health inspections for Denver makers of pot edibles
State officials, too, have addressed their licensing backlog in recent months.
Nearly 100 businesses were operating with pending state applications in Colorado late last year. That number dwindled to only eight by this spring. A spokeswoman for the state Department of Revenue could not provide a tally for the current number of operation-pending businesses.
As the state backlog shrunk, regulators denied a larger percentage of the applications — including several for businesses embroiled in allegations of criminal conduct.
Earlier this year, Conley Hoskins, the owner of several medical marijuana businesses involved in a state grand jury indictment, sued the Marijuana Enforcement Division, arguing he was denied due process in his license denials. Last week, a judge in Denver dismissed the lawsuit because Hoskins had not first exhausted all administrative appeals.
Other applicants, though, have complained they were denied a state license for comparatively minor problems. Brooke Schott, who ran the Burnzwell dispensary in Denver with her husband, said the state Marijuana Enforcement Division denied her store’s applications by citing violations like inadequate security camera coverage or operating procedures. When her husband tried to fix the problems, Schott said state regulators ignored the effort.
Schott said she and her husband plan to appeal the denial, though a hearing date has not yet been set. Burnzwell also received a letter from Denver about its local licenses. Right now, Burnzwell is closed, Schott said.
“We would have been able to finish our (city) permits,” she said. “But with the state not letting us go forward, we’re not going to be able to meet that, either.”
“We’re probably going to end up bankrupt over it.”
John Ingold: 303-954-1068, jingold@denverpost.com or twitter.com/john_ingold
