Colorado’s New Gold Rush

4:20, scenic beauty or both?As lucrative as the pot industry sounds, it’s still a far cry from tourism, one of Colorado’s biggest industries, worth roughly $17 billion last year. How will the two industries, pot and tourism, interact? Will legal pot shops draw more tourists to Colorado? Or will tourists stay away because marijuana is legal?It looks like they’ll have a choice. Places like Colorado Springs may get to be known as “safe” from marijuana. Others, like Breckenridge and Telluride, will welcome tourists who are seeking marijuana as part of their Colorado experience. Tours are already being offered by companies like Denver’s My 420 Tours, whose $1,000, four-day Mountain Tour includes a daily 4:20 Happy Hour party, snacks and meals, a cannabis cooking and recipe class, a medical-marijuana dispensary and grow tour, a concert, transportation, and discounts at restaurants and the Denver Art Museum. Al White, director of the Colorado Tourism Office, says it’s not something his office is going to market. He believes that the state’s scenic beauty and recreational opportunities are still the prime draws for visitors. “Whether it’s good for the brand of our state is still up in the air,” Gov. Hickenlooper has said.  Nederland, the small mountain town just west of Boulder whose economy is based in large part on tourism, decided to embrace the legalization of pot and the chance to have some legal pot shops in town. At the same time, Mayor Joe Gierlach said, the town didn’t want the “seamy” reputation that has followed Amsterdam over the years. “Tourism,” he says, “isn’t necessarily our goal.” The state has issued its own lengthy regulations, but Amendment 64 allows local jurisdictions to decide whether to allow retail sales. Location, signage, advertising—all aspects beyond the product itself—are up to local governments. The state’s cities and counties that wanted to take more time to prepare for legal pot shops were required by Amendment 64 to institute a moratorium by Oct. 1, 2013. Many of them will end up allowing retail marijuana establishments in six months or a year. Others decided to ban the sale of marijuana outright. Walking the tightrope in Boulder  Deciding how to implement Amendment 64 locally is a fascinating process to watch, but often frustrating for those involved. Shawn Coleman, a lobbyist for the marijuana industry, says successful implementation of the law was predicated on existing medical-marijuana businesses’ converting first, leading the way. But even the conversion process is messy at the local level. Staffs often feel overwhelmed, and politicians are caught in the hot spot between community members with varying opinions about marijuana and businesses that already bring enormous tax revenue into their communities and are likely to bring more. The Boulder City Council held several contentious meetings about its proposed regulations, and eventually eased some of the stricter regulations proposed by staff in response to business concerns. The council recognized the huge investment existing medical-marijuana businesses have made, and used their input, alongside the community’s, to guide their decisions.  Currently, Boulder has 39 pending applications for marijuana businesses, 13 of which are for new medical-marijuana licenses. The city already has 25 existing medical centers. It will start accepting applications from medical-marijuana businesses that want to convert to retail on Jan. 2. Those existing businesses have until March 1 to apply for a retail license.  Staff had proposed limits on the number of plants growers could raise, but after hearing from business owners, the council agreed there would be no limit on the number of plants. Growers will be required to pay $1 for each plant over 1,000. Other regulations the council has agreed to include limiting a single store owner to working with no more than five grow operations. Cultivation facilities are already limited to 15,000 square feet by zoning regulations. The council also reduced the penalties for odor violations, the most common complaint the city receives about growers. With the new rules, businesses will get an opportunity to take care of the problem before they are issued a ticket or their license is revoked. Boulder asked voters to approve a 5-percent excise tax on marijuana that was increased to as much as 10 percent in the November election. Voters agreed. Some of the money raised through the tax will be spent on drug-education and treatment programs. In the election, Colorado voters also passed a state proposal to impose a 15-percent excise tax and a 10-percent state sales tax on top of the existing 2.9-percent state sales tax. The first $40 million in collected revenue on sales that start on Jan. 1 will go to school construction. After that, 15 percent of the revenue will be distributed to counties that approved retail sales. In late October, Colorado Counties Inc., a lobbying group, asked the state legislature to consider also distributing that 15 percent to counties that don’t permit marijuana sales. Nederland mayor Joe Gierlach outside one of the town's three medical-marijuana centers. ‘Cottage industry’ in Ned When Amendment 64 passed, those in the marijuana industry knew that there would be taxes imposed to help pay for regulation of the industry. However, many thought that Boulder’s ballot issue ushered in an unnecessary “cash grab” that almost doubled the state taxes. There’s a “tipping point” where, if taxes get too high, people may return to under-the-table sales, something Amendment 64 aimed to stop. In contrast to Boulder, Nederland decided against levying a local tax on retail marijuana businesses. Instead, Nederland’s goal is to legitimize an underground industry and make it easy to convert to regulated status. “If we take our local industry and legitimize it, the bump we’ll get in our sales tax will be sizable. We don’t want to put an additional burden on this industry,” Gierlach says. He explains the back story: “When medical marijuana was legalized a couple of years ago, we had seven start-ups, but only three of them have lasted.” The town realized that the cost of completing the paperwork and paying taxes was difficult. In the meantime, Nederland had become home to two businesses that sell equipment and supplies, like grow lights, hydroponic equipment and fertilizer. Those two businesses generate $1.2 million in sales every year, and the sales tax they generate has been good for the small town’s budget. It became apparent to the town that bringing marijuana-related enterprises into compliance could be an economic boon. There are public-safety and environmental issues as well. A mayor’s task force began looking at the problems of unregulated marijuana growing. There were reports that powerful fertilizers were being flushed into the town’s sewer system. Growers would sell the best part of their plants—the buds—and discard the rest outside, causing dogs and possibly wildlife to get intoxicated from eating the discarded plants. Growing marijuana also requires an intense amount of electricity. Grow lights can use 1,500 watts apiece, and they need to be on for as much as 18 hours at a time. Putting even two grow lights on a typical residential circuit creates a potential fire danger. “The goal of the task force was to make it easy and convenient to get the inspections, the proper wiring, to dispose of waste correctly, to have the proper filters for air and drains,” says Gierlach. “There’s a right way to do it and a wrong way to do it. We decided to treat it as a cottage industry.” The next step was to figure out how that cottage industry could sell its product legally. Amendment 64 provided the framework, and Nederland went to work on the details, the mayor says. “We worked on our code for eight months. It was rigorously debated, and we got input from the Colorado Municipal League and attorneys. We feel what we’ve come up with is a pretty good balance. “It’s going to be a slow transition,” says Gierlach. “We may have only one shop for the first year. After that, there may be more. I don’t think we’ll see the full impact of Amendment 64 until two years from now.”

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Nederland resident Kay Turnbaugh writes about a variety of subjects for Boulder Magazine. She is the author of Around Nederland, the award-winning The Last of the Wild West Cowgirls, and The Mountain Pine Beetle—Tiny but Mighty.

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