Colorado develops possible exit strategy for pot dealers

DENVER — Colorado is considering an unusual strategy to protect its nascent marijuana industry from a potential federal crackdown, even at the expense of hundreds of millions of dollars in tax collections.

A bill pending in the Legislature would allow pot growers and retailers to reclassify their recreational pot as medical pot if a change in federal law or enforcement occurs.

It’s the boldest attempt yet by a U.S. marijuana state to avoid federal intervention in its weed market.

The bill would allow Colorado’s 500 or so licensed recreational pot growers to instantly reclassify their weed. A switch would cost the state more than $100 million a year because Colorado taxes medical pot much more lightly than recreational weed — 2.9 percent versus 17.9 percent.

The measure says licensed growers could immediately become medical licensees “based on a business need due to a change in local, state or federal law or enforcement policy.” The change wouldn’t take recreational marijuana off the books, but it wouldn’t entirely safeguard it either. What it could do is help growers protect their inventory in case federal authorities start seizing recreational pot.

Sponsors of the bill call it a possible exit strategy for the new pot industry.

The state had about 827,000 marijuana plants growing in the retail system in June, the latest available data. More than half were for the recreational market.

“If there is a change in federal law, then I think all of our businesses want to stay in business somehow. They’ve made major investments,” said Sen. Tim Neville, a suburban Denver Republican who sponsored the bill.

If federal authorities start seizing recreational pot, Colorado’s recreational marijuana entrepreneurs “need to be able to convert that product into the medical side so they can sell it,” Neville said.

His bill passed a committee in the Republican Senate 4-1 last week.

But it’s unclear whether the measure could pass the full Colorado Senate or the Democratic House. Skeptics of the proposal doubt the classification change would do much more than cost Colorado tax money.