DENVER, Colorado, March 19 (By Carl Schreck for RIA Novosti) – The pungent scent of cannabis percolates through the car fumes in places along this busy commercial strip that locals call “The Green Mile” and “Reefer Row” – a reference to the dozen or so medical marijuana dispensaries dealing legal dope in the neighborhood.
But the whiff of green could soon intensify on this billboard-lined thoroughfare south of downtown Denver as local marijuana entrepreneurs prepare to cash in on legions of potential new customers looking to get high under a new Colorado law legalizing recreational cannabis.
“People are very excited for it,” said Javi Rosenbloom, head marijuana grower at New Broadsterdam, a dispensary in Denver’s cannabis district on South Broadway Street. “I think it’s going to be huge.”
Colorado and Washington State this past November became the first US states to legalize recreational marijuana use for adults. And while both states currently allow individuals 21 and older to possess small amounts of the drug, elected officials there are still hammering out a legal framework for the commercial cannabis trade – a process watched closely by other US states seeking new revenue streams in tough economic times.
Last year Colorado saw around $200 million in retail sales in medical marijuana, and many expect this Rocky Mountain state’s roughly 500 medical pot dispensaries to get first crack at licenses to operate retail outlets for recreational cannabis once the state government finalizes the rules.
Big Business Prospects in Sight
This could mean a tenfold increase in the legal customer base, from around 100,000 medical marijuana users to more than 1 million recreational cannabis users in Colorado, said Luke Ramirez, co-owner of the Walking Raven, a small medical marijuana shop in the heart of the Green Mile.
“It will be a great financial opportunity for the medical marijuana industry,” Ramirez said.
But the dispensaries are not the only businesses positioned to capitalize on a potential “green rush” as legal marijuana hits the shelves. A host of ancillary enterprises see opportunities as well, including supply stores selling grow lamps and soil for cannabis cultivation, and companies churning out a range of marijuana-infused edibles and drinks.
“We’re very well positioned to serve both markets: medical and adult-use marijuana,” said Tripp Keber, owner of Dixie Elixirs & Edibles, a Denver company that produces chocolates, candies and soft drinks infused with tetrahydrocannabinol (THC), the active psychotropic compound in cannabis.
Dixie is a private company and does not publicly disclose its revenues. But Keber said its revenues are up 150 percent compared to 2011 and 2012, and that he expects revenues to triple thanks to the legalization of what the company calls “adult-use” marijuana.
Dixie operates out of a spacious warehouse on the outskirts of this mile-high city where it has hired engineers, chemists and culinary nutritionists to work on its THC-laced product line, which the company supplies to a majority of Colorado medical marijuana dispensaries.
The facility is replete with stainless steel and employees decked out in lab coats, hair nets and rubber gloves filling medical capsules, putting the finishing touches on handmade chocolates and loading fresh cannabis trimmings into a CO2 machine used to extract the THC from the biomass.
The air of precision, hygiene and efficiency at Dixie’s warehouse recalls chemistry-teacher-turned-drug-dealer Walter White’s well-oiled methamphetamine lab in the acclaimed US television series “Breaking Bad.” Its reputation for commitment to science and chemical purity has followed it down to the dispensaries it supplies on the Green Mile as well.
“I hear their shit is tight,” a dispensary employee on the strip said during a break from rolling joints after learning of this reporter’s visit to the facility.
A Broader US Trend?
On a recent Thursday morning, 26-year-old Lexi Yurkovsky sat across from a colleague at the Dixie warehouse dipping hallucinogenic truffles into a pot of bubbling chocolate and placing the finished product on a large metal sheet.
Yurkovsky, a native of the Ukrainian city of Kharkov who moved to Denver from Maryland, is a trained culinary nutritionist who worked as a line cook before her career took an unexpected turn into psychotropic snacks.
“I just sort of stumbled into this job,” said Yurkovsky.
In addition to truffles, she works on THC-infused hard candies and rice crispy treats.
Dixie is in the process of arranging for its products to be licensed and sold in numerous other states that have legalized medical marijuana, including Arizona, California, Massachusetts, Connecticut and Maine.
Not all Colorado businesses dealing in medical marijuana are prepared to make the jump into recreational dope.
“We got this far because of our patients, and we don’t just want to abandon them and go recreational,” Andy Betts, a manager at the dispensary Denver Relief in downtown Denver, told RIA Novosti.
The company, however, has been consulting clients both in Colorado and in other states who are looking to get into the recreational and medical marijuana business, Betts said.
Since Colorado voters approved Amendment 64 to legalize recreational pot last November, the company has received more than a dozen emails and phone calls a day from aspiring pot entrepreneurs, Betts said.
“People with money that just have no clue and just really want to get into the industry but just don’t know how,” Betts said as a registered patient received a clear plastic bag filled with plump green marijuana buds from the clerk on duty.
Part of Betts’ job, he said, is to weed out the 90 percent of inquiries that have no prospects of leading to a successful venture.
“If half a million to $1 million to simply start up sounds way out of their ballpark, then that right away is pretty much a given that it’s not going to work out for them,” Betts said. “You do need a good amount of capital to start in this industry.”
Regulatory Challenges
In the meantime, Colorado’s would-be marijuana magnates remain in a holding pattern until state lawmakers finalize the rules for the commercial cannabis trade by July 1, the deadline given to legislators to enact the regulations.
Colorado officials are treading on legislative terra incognita in attempting to regulate this budding industry, encountering a dizzying array of potential pitfalls with unforeseen consequences for law enforcement, state coffers and the marijuana industry itself.
One example is the fate of the current rule requiring medical marijuana dispensaries to cultivate 70 percent of their own plants to process and sell, said Rosenbloom, the head grower at New Broadsterdam on the Green Mile.
In a pinch, the dispensaries can purchase up to 30 percent of the marijuana they sell from outside grow houses. But such restrictions could hamper recreational marijuana shops from reacting quickly to a rapid spike in customers, Rosenbloom said. A Grateful Dead concert in town with Phish as the opening act could leave a shop scrambling to fill demand.
“You could have one day 10 people come in, and then all of a sudden you’ve got to have 100 pounds on hand,” said Rosenbloom, 28, who said he has been growing pot for 15 years. “If you’re not set up for that model, you kind of get hurt.”
The state’s task force on the issue released its report last week with 58 nonbinding recommendations for officials to consider as they go about setting the final rules.
Regardless of what regulatory structure is ultimately enacted, the sword of Damocles hanging over the heads of Colorado’s recreational cannabis entrepreneurs is the word from Washington on whether it will enforce a federal ban on marijuana, which remains a Class 1 controlled substance in the United States.
US Attorney General Eric Holder told federal lawmakers earlier this month that the Justice Department would “likely have an ability to announce what our policy will be relatively soon.”
Numerous former heads of the US Drug Enforcement Administration are urging Holder to head off legalization in Colorado and Washington to prevent a domino effect spawning similar legislative drives in other states.
Keber, the owner of Dixie Elixirs & Edibles, said he’s optimistic that federal authorities will honor the will of Colorado voters. With economic struggles nationwide, Washington would be unwise to put the clamps on a growing industry, Keber said.
“What country cannot afford to generate tax revenue and create jobs for its citizens?” he said.
