Marijuana in Colorado: Ready for Business, Complete with Regulations

The medical marijuana trade has set up the protocols for the newly-approved recreational version

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Rick Wilking / Reuters

Growth technician Mike Lottman moves through the marijuana plants in a medical marijuana center in Denver, April 2, 2012.

Colorado boasts the only for-profit medical marijuana market in the country; and a look at the offerings at Local Product of Colorado, a pot dispensary with 200 regular users, evidences a talent for marketing. Among the fast-selling strains are Golden Goat and Sour Tsunami, a genetically engineered plant that has shown anti-inflammatory properties, according to Jason Katz, head of operations at the outlet. The store also carries a host of popular marijuana-infused edibles, oils and even drinks.

Business has never been easy. If mainstream small businessmen gripe about government regulations then they shouldn’t consider going into the legal marijuana trade. Every step in the growing process—“from seed to sale,” says Katz—is rigorously monitored by the state. The planting, growing, and processing of plants happens under the constant view of video cameras monitored by the state’s Medical Marijuana Enforcement Division. No video blind spots are allowed. Truck shipments must also detail the total weight of marijuana products, in addition to the vehicle’s time of departure and arrival. And every marijuana worker must be licensed, an arduous, time-consuming process.

(MORE: From Mexico to Moscow, The World Turns on to Marijuana Legalization)

That heavily regulated system, however, may have helped win passage for Colorado’s Amendment 64, the recreational marijuana measure approved by voters on Election Day. It legalizes the use and possession of marijuana for people over 21 and allows them to cultivate up to six plants. Experts say that Colorado’s medical marijuana regulation provides a successful model for monitoring recreational marijuana. “The thing that Colorado really has going for it is that there is already a high level of comfort and familiarity with the state licensing, taxing and regulating the above-ground distribution of marijuana,” Ethan Nadelmann, executive director of the Drug Policy Alliance, tells TIME. “People had become accustomed to the notion that this can be a source of tax revenue, and that police can play a role in insuring effective regulation rather than just arresting anyone they could.”

A long-standing argument in favor of marijuana legalization in Colorado is the drug’s sheer revenue-generating potential. Until now, drug cartels have enjoyed the lion’s share of marijuana profits. But Amendment 64 is almost certain to take a sizeable economic bite out of the black market. The law could generate up to $60 million annually for the state in combined tax revenues and savings from reduced law enforcement costs, according to the Colorado Center on Law and Policy. The amendment also calls for a 15% excise tax on wholesale marijuana sales, with the first $40 million in revenues every year earmarked for the construction of public schools. “That was certainly part of the selling point,” Sam Kamin, a law professor at the University of Denver, tells TIME. “Medical marijuana and legalization have definitely been buoyed by the fact that they are a potential tax revenue source at a time when so many of those have been drying up.”

But the strict oversight of medical marijuana has done more than set up Amendment 64 for regulatory success. Colorado’s strident rules have, for the most part, also kept the federal government at bay. The state’s Attorney General has mostly kept his hands off hundreds of dispensaries operating in the state, only targeting some that were operating within 1,000 feet of schools. “They have a policy essentially in Colorado that if you’re following state law, they will leave you alone,” says Brian Vicente, executive director of the non-profit Sensible Colorado, referring to the federal government.

While opinions vary, drug policy experts say that bodes well for the future of recreational marijuana in Colorado. They point to some promising signs. When California attempted to legalize recreational marijuana two years ago, for example, U.S. Attorney General Eric Holder warned the state of the consequences. In Colorado’s case, though, Holder has remained silent, despite repeated calls from former DEA administrators for Holder to take a strong public stance against Amendment 64. Says Nadelmann, “There’s a possibility that the Obama administration will consider refraining from intervening to the extent they are persuaded that the state has come up with a responsible regulatory model that addresses their concerns.”

-With reporting by Erin Skarda in Denver, Colo.
MORE: Two U.S. States Become First to Legalize Marijuana


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