Higher goals
A slate of proposed changes could open marijuana’s next era — with more money, larger companies and more ways to consume.
Few people in Colorado have frustrated the cannabis industry more than Gov. John Hickenlooper this year. When lawmakers decided to let people vaporize weed in dispensary “tasting rooms,” Hickenlooper vetoed it. The next day, he rejected a bill to allow more investment in cannabis companies, and another that would have opened medical marijuana to people with autism.
Hickenlooper had reasons for each veto, saying that he wanted to proceed cautiously. In the industry, though, it was seen as one last whammy from a governor who opposed legalization.
“The governor is facing a different world ahead of him, running for president. He’s been trying for a significant time to distance himself from the marijuana issue,” said Peter Marcus, a former politics journalist who now represents Terrapin Care Station.
“I think he was just sending a bit of a message. ‘I’m not the marijuana governor.’ ”
But that all changes in January.
“New-age Budweisers”
Gov.-elect Jared Polis describes himself as “the only candidate” who helped pass marijuana legalization. And the state legislature is looking much more Democratic. That means cannabis advocates — who were already winning Republican votes — now can aim higher.
“I think this is a really good time and ripe opportunity to make sure we regulate this like the drug it is — and not the drug some people fear it to be,” said state Rep. Jonathan Singer, a Boulder County Democrat.
Together, a slate of proposed changes could open the industry’s next era — one with more money, larger companies and more ways to use the product.
“I think you’re going to start to see the new-age Budweisers and Coors Lights — the bigger companies that are going to be the name and the brand that we’re all going to know,” said Albert Gutierrez, CEO of Medpharm Holdings, a cannabis research and cultivation company.
“You’re going to probably have more variety from these companies, whether they’re offering drinks or chocolate bars. But these companies are going to be the household names that people are going to come to know over the next 30, 50, 100 years,” he said.
Meanwhile, critics are raising alarms that legal marijuana is exposing kids to higher levels of THC, and offering them stealthy new ways to consume it.
“We should all be able to agree that Colorado’s increasingly potent marijuana products are harmful to youth and that we have a collective responsibility to protect Colorado kids,” wrote Henny Lasley, the co-founder of Smart Colorado, in an email.
The group wants Polis and the legislature to “adopt commonsense protections for youth” including limits on Colorado’s increasingly potent THC products. They’re also concerned about potentially stealthy products such as cannabis inhalers, which are the subject of new state rules.
Likely targets
The proposals that Hickenlooper vetoed are likely to return this year. They are: More access to investment.
One bill last year would have allowed publicly traded companies to invest in and own cannabis businesses, and it would further loosen limits on out-of-state investment. More than a dozen other states already allow similar investment, according to state Rep. Dan Pabon.
“Most of our financing is coming from people who are lending money, and it’s not cheap money,” said Christian Sederberg, an attorney involved in the finance bill. “It creates an environment where it’s difficult for people to grow their businesses, hire more people, modernize their infrastructure.”
While Colorado cannabis is a $1.5 billion industry, industry insiders claim companies are stretched thin because they can’t take federal tax deductions or access major capital markets. Meanwhile, they’re competing for new markets such as Canada.
Marijuana revenue and sales are growing, but prices have been dropping as the market matures, Sederberg said.
“That will cause a number of mom-and-pop shops … to want to merge with folks that have lowercost production, higher-level efficiency,” said Dean Heizer, chief legal strategist for Livwell, one of the state’s largest cannabis companies.
New investors will facilitate those mergers, buyouts and consolidations, he explained, though he doesn’t expect a “radical evolution.”
Previously, Hickenlooper said he vetoed the bill because it was “premature,” in part because the U.S. Congress hasn’t updated financial laws to include marijuana companies, and companies can’t get access to most banking services. The governor also cited concerns about keeping criminal enterprises out of the legal market.
Looser rules on social use. HB 1258 was supposed to solve one of the biggest complaints about legal marijuana: There are few places to legally use it.
The bill would have allowed marijuana retailers to open up “tasting rooms,” where customers could buy and vape small servings of the drug. Local governments would have decided whether or not to allow the rooms.
“It was the first cannabis public consumption law passed through a legislature in America,” said Marcus, whose employer supported the bill.
Hickenlooper argued that tasting-room customers would be using cannabis “openly or publicly,” which is forbidden in Colorado’s legalization language, among other concerns.
That “openly or publicly” language has confounded and irritated cannabis lawyers and entrepreneurs alike. This past June, Denver police ticketed tourists who were consuming on a cannabis tour bus, prompting a fight over what’s “public.”
Singer argues that was never the intent of the amendment, and he said the legislature could reexamine it alongside a new tasting-room bill.
“It was (supposed to be) the idea of people not just smoking in other people’s faces,” he said. Medical marijuana for autism. Last year’s HB 18-1263 would have allowed people with autism spectrum disorder to get medical marijuana, which is cheaper and can be prescribed for children.
The bill passed by strong margins, but it faced opposition from psychiatrists and the head of the state Health Department. Hickenlooper cited those concerns when he vetoed the bill, saying it could encourage “more young people to look at this as an antidote for their problems.”
The governor also ordered a state study of the treatment.
Stretch goals
And then there are the loftier goals:
Delivery. HB 18-1092 would have created a “pilot program” for marijuana delivery in willing cities. It initially included both recreational and medical cannabis, with the test lasting two years.
“We have liquor delivery. We have prescription drug delivery,” Rep. Singer said. “We have patients who can’t even get to a dispensary because they’re too sick.”
Republicans killed the bill on a party-line Senate committee vote. It faced criticism from law enforcement, which asked whether couriers could be targets.
This year, “it’s something where we have to take the temperature of folks,” Singer said. “We’ve got this whole new blank slate of (legislators) that don’t have a voting record right now.”
Microbusinesses. California recently created a new option for entrepreneurs. The “microbusiness” model in that state allows businesses to grow, process and sell cannabis on one small site, kind of like a small beer brewery.
In Colorado, Singer and Rep. Leslie Herod are interested in a variant: They could allow small businesses to operate under the licensing umbrella of a bigger company.
“What we’ve unfortunately found out is that it’s the people with access to capital who are the people who are succeeding in our new legal regimen,” he said.
“Hopefully, this is an opportunity to ensure that the same people who were victimized in the drug war have the opportunity to participate in this market.”
Smaller adjustments
It’s not just about introducing new laws. The state’s regulatory programs for medical and retail marijuana are scheduled to “sunset,” or expire, in 2019. That means legislators and government staff are working to revise and renew the rules.
A state report includes these suggestions:
• Streamline licensing and ownership rules.
• Give a state agency more power to shut down unlicensed operations.
• Allow dispensaries to sell hemp products for human consumption.
• Require testing of CBD products, similar to THC products.
• Loosen criminal background restrictions.
• Unify some of the rules about cultivating retail and medical cannabis.
None of these discussions will grab as much attention as the legalization of retail marijuana five years ago. But they will shape how the cannabis industry looks in the next five years, and which role Colorado plays in an expanding national market for the drug — for better or for worse.