Only six months old, Colorado’s recreational marijuana industry starts a transformation Tuesday that could add hundreds of new pot businesses to the state and reconfigure the market’s architecture.
Previously, only owners of existing medical marijuana shops could apply to open recreational stores, and all businesses had to be generalists, growing the pot that they sold. The model matches what is required of medical marijuana dispensaries.
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Starting Tuesday, newcomers to the Colorado recreational marijuana industry can apply for business licenses. What’s more, when these new businesses begin opening in October, all recreational marijuana companies will be allowed to specialize — as wholesale growers without a storefront, for instance, or as stand-alone stores that don’t grow their supply. The only requirement is that owners be Colorado residents.
“We are going into uncharted territory,” said Sam Kamin, a University of Denver law professor who has tracked developments in Colorado’s marijuana industry. “It’s something that hasn’t happened in medical (marijuana), and it hasn’t happened in recreational.”
How the new rules will ultimately impact the industry, though, is unclear.
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As of mid-June, 292 people had filed optional notices with the state saying that they planned to apply for a recreational marijuana business license starting July 1. The notices don’t say how many of the would-be business owners want to open stores versus cultivation companies.
It also remains to be seen where those businesses will all go. Many cities — including the state’s second-largest, Colorado Springs — still have bans on recreational marijuana businesses. Denver, home to the majority of recreational stores in Colorado, has a moratorium on applications from newcomers until 2016.
Aurora, which currently has no marijuana stores, will for the first time accept applications for recreational shops starting Tuesday. But it has capped the number of stores in the city at 24.
Mike Elliott, executive director of the Marijuana Industry Group, said zoning restrictions and real estate crunches will further squeeze the space that new businesses can go. “It’s tough to know how many people are really going to apply,” Elliott said. “Running a marijuana business is much, much more difficult than it might initially appear.”
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Elliott said it’s also uncertain whether the market has room for new recreational stores, which have seen lower-than-expected demand.
Of the more than $200 million in sales at all Colorado marijuana stores during the first four months of the year, two-thirds of it has been at medical marijuana dispensaries.
“Right now,” Elliott said, “we don’t really know what the market can bear.”
John Ingold: 303-954-1068, email@example.com or twitter.com/john_ingold