Thursday, May 20, 2010

The Bloom Is Off the Bud

You have to ask yourself why Colorado people who voted in favor of medical marijuana suddenly needed House Bill 1284 which effectively kills a lot of small businesses and sets up a system that only favors people with very deep pockets. The bill was signed into law by Governor Ritter recently.

Amendment 20 which made medical marijuana legal in Colorado, did not even mention dispensaries. Originally, it only named caregivers who would raise the plants would provide the medical marijuana to patients.

Obviously, since not everyone who would be a patient for medical marijuana personally knows a grower, storefront dispensaries sprang up, providing a place for these patients to get their stuff.

It was an entrepreneurial boom in Colorado for a couple of years after the passage of Amendment 20. People who have a green thumb decided to grow medical marijuana as a way to make a living. Some of them became caregivers who sold directly to patients, and some growers sold to dispensaries.

Given that so many businesses around here have been having a hard time due to home foreclosures, bankruptcies and such, and with businesses like IBM keeping busy with laying off American workers in Boulder so that they can hire more people in India to take over their jobs, it was a breath of fresh air to see something happen to stimulate new business start ups and create new employment.

Senator Chris Romer suddenly introduced and promoted the bill to regulate all these new businesses. What are the new rules?

Well, it clearly favors big operators.

Bill 1284 limits caregivers to five patients. That will certainly limit a person's ability to be a caregiver.

Growing plants is a full time job. They require constant attention to control temperature, moisture, humidity, nutrients, keeping clean of bugs, pruning, trimming, curing and so on. Being a caregiver is not the kind of thing you can do well as a part time hobby. So it makes sense to let caregivers have more patients and raise more plants, to give them more of a margin to make a living.

The new law also requires dispensaries to grow 79% of their own product and buy what else they need from other dispensaries. Up until now, small dispensaries have been buying product from independent growers.

How much money do you think it would take to set up both a dispensary and a growing operation and pay these fees?

A lot of the independent operators spent their savings and everything they could scrape together to invest in this new legal business opportunity, leasing property, buying equipment, hiring help. And now the playing field is tilted by who? Dispensary licenses could cost $18,000. Add to that the requirement to have a dispensary and growing facility that is properly equipped and has all the licenses, and you are looking at pretty hefty investments.

One aspect of the new law may reveal who is behind the changes to force many small operators out of business. The new law will permit one person to have multiple licenses for multiple locations.

I wonder if Senator Chris Romer, the primary sponsor of the new medical marijuana law, received substantial campaign contributions from individuals who will benefit from this unique aspect of the new law?

Interestingly, in Colorado, one person cannot have more than one retail liquor license. This is the stumbling block that prevents grocery store chains from selling liquor in Colorado.

So the new law says caregivers cannot serve more than 5 people, but one person could own a chain of dispensaries. Does anyone else smell something funny here? And I do not mean the bloom on the bud.

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