As a task force appointed by Gov. John Hickenlooper moves forward with creating a set of recommendations on how to implement Amendment 64, some wonder how the eventual retail sale of marijuana will impact the state’s medical marijuana industry.
Industry observers agree that medical marijuana businesses are well-positioned and have the experience and infrastructure to make the transition to retail sales if they choose, but also have certain incentives to operate strictly as medicinal providers.“Dispensaries tend to have preferential treatment in Amendment 64,” said Shawn Coleman, president of 36 Solutions, a public affairs consulting firm, and former executive director of the Cannabis Business Alliance. “They have the first crack at licenses for retail marijuana.”

With the recent legalization of Marijuana and retail operations expected to be up and running next year, medical marijuana businesses are in a position to decide whether they want to break into the retail market, or stay under the MMJ umbrella.
With the recent legalization of Marijuana and retail operations expected to be up and running next year, medical marijuana businesses are in a position to decide whether they want to break into the retail market, or stay under the MMJ umbrella. Photo By: Dylan Langille

In order to currently purchase medical marijuana, a patient has to receive a recommendation from a doctor and register with the state of Colorado to receive a medical marijuana card.

With retail operations expected to be up and running next year, a natural question is why a person would go to the trouble to get a doctor’s recommendation when they could walk into a retail store and buy it. This places the specialized role of dispensaries in doubt.

“There will always be a medical need for cannabis, there’s no question about that,” said Erica Freeman, owner of Choice Organics dispensary outside of Fort Collins. “Whether or not the truly medical marijuana stores will be able to exist two years from now, I just don’t know. It really depends upon how the state writes the regulations.”

Coleman emphasized that the regulatory model for medical marijuana will not change once the guidelines for Amendment 64 are established, and the free market and individual communities will determine the fate of dispensaries.

There are a number of incentives a dispensary might have to remain a medical provider, said Meg Collins, current director of the Cannabis Business Alliance.

Retail marijuana will be subject to a 15 percent excise tax, from which medical marijuana is exempt. Medicinal patients under 21-years-old would not be allowed to purchase from retail stores, which would create an unmet need if all medical dispensaries closed.

“You want to make sure the medical marijuana patients under 21 have product still available,” Collins said.

Retail purchases are limited to an ounce, while dispensaries can sell two ounces at a time to card holders. Some cities or counties may decide to ban retail operations but allow dispensaries to remain open.

“Different medical marijuana dispensaries will have to decide what they’re going to do and I don’t think that’s sorted itself out yet,” Collins said. “I don’t think anybody’s going to be making firm business decisions until we have a firm idea of what the task force is going to recommend to the legislature.”

Collins said her organization has advocated for the retail industry to operate with a similar set of guidelines and regulations as the medical industry has. This vertical integration is a “closed loop” system that requires the dispensaries and grow operations to be owned by the same business. This makes accountability, surveillance and the tracking of sales and receipts easier.

Because of this familiarity, any medical marijuana business would be able to transition easily to retail sales if that same infrastructure and regulatory framework stayed in place, Collins said.

“It’s something the medical marijuana industry is familiar with, the state is familiar with and equally important is I think one of the reasons why the federal government has not come into Colorado,” Collins said.

In Larimer County, the county commissioners have begun a series of work sessions to look at all aspects of public retail sale locations and commercial grow operations in Larimer County.

At the first work session, Sheriff Justin Smith advocated for a two year delay in authorizing any sales or grow operations for retail marijuana in the county. In upcoming work sessions, other stakeholders will be allowed to speak and public listening sessions will take place sometime in May, said county commissioner Steve Johnson.

While Johnson said he’s neutral on the issue, he believes it’s important to gather information from all stakeholders and the public before deciding how to proceed with regulations or what place retail marijuana sales will have in Larimer County.

“We’re kind of plowing new ground here so that’s one thing and that brings up just a tremendous amount of questions,” Johnson said.

Choice Organics owner Erica Freeman recently invited Johnson and another commissioner to tour their medical marijuana facility outside of Fort Collins.

“We were very impressed with the level of knowledge the owners had about state regulations, how they work and the impacts of their operation on adjacent business owners,” Johnson said. “These folks working in the industry right now are really the closest thing we have to what we anticipate retail sales being.”

When asked what she would like to see from the task force as they craft regulations and guidelines for retail operations in the state, Freeman said she wants enough room for dispensaries to be able to continue serving the medical needs of patients.

“I want to see fairness. I don’t want to see the medical side of it lost,” Freeman said. “I think there’s still a huge amount of merit left on the medical side of it and I hope it doesn’t get lost in the recreational use.”