Six years after becoming the first state in the union to officially allow adult-use marijuana sales, Colorado’s legal industry remains one of the largest and most stable in the country, with nearly 3,000 licensed businesses generating about $300 million in tax revenue. More than 40,000 currently have badges to work in the industry. And the state is now a role model for others seeking to open cannabis marketplaces of their own.
“I think the industry is healthy. I think it’s matured,” says Jim Burack, director of the Marijuana Enforcement Division. “I think there’s a recognition in Colorado, probably not unlike Washington state and others, that people are looking to us for how our industries are operating and I think they take that pretty seriously.”
Of the state’s 336 municipalities, 108 have opted to allow medical or recreational marijuana businesses in their jurisdictions, though state officials say that number is a “little misleading” because the major population centers, such as the Denver metro area, Boulder and Colorado Springs, have all opted-in, meaning the majority of Colorado residents live in areas with access to cannabis. And that number continues to grow, particularly with the 2019 creation of marijuana hospitality and delivery service licenses.
As part of its focus on Colorado, Marijuana Venture interviewed Burack and MED spokeswoman Shannon Gray to get a sense of the current state of Colorado’s legal marijuana industry.
Focus On: Colorado
Colorado has been at the forefront of legalization in America since allowing medical marijuana in 2000 and establishing a comprehensive licensing program for dispensaries in 2008, the first of its kind and a model that would allow the Centennial State to transition with relative ease from a medical-only market to a medical and recreational market following the historic vote legalizing the adult use of marijuana in 2012.
Rec sales began on New Year’s Day 2014, and Colorado has exploded into one of the most lucrative markets in the country. With sales booming in 2020, Colorado could hit $2 billion in sales and shows no signs of slowing down.
Marijuana Venture: Colorado’s industry has been up and running for six years now. What lessons have you learned that other states should know?
Jim Burack
Jim Burack: There are a few highlights here. I think the key one is about ensuring that we really are engaged with that broad range of stakeholders, and that’s our fellow state agencies, local licensing authorities, our licensees and all the other folks who have an interest in making sure they’re a part of this conversation. And I think that’s part of the reason for Colorado’s success. Another big one for us is that we’ve been pretty focused on data collection. Inventory tracking is a good example. We use inventory tracking for understanding and ensuring that our licensees are maintaining accountability of marijuana. But on a whole other level, what that does for us is give us the ability to gain insight into the industry and I think it makes us better stewards of the regulated industry. I think it gives us the ability to engage in production management so that we can try to maintain some stability in the industry, and that goes for what production and inventory levels are throughout the industry. If you go to our website and look under the resources, you’ll see that on a regular basis we’ve gone out and engaged the University of Colorado business school to help us bring in folks with some outside eyes to help us understand how the market is evolving. I think that’s been an important lesson learned for us: we don’t do this by ourselves.
MV: In light of the coronavirus pandemic, and just in general, how important to the Colorado economy is the legal marijuana industry?
Shannon Gray
Shannon Gray: I think the question is above our pay grade as the regulators, but what we can say is we here in Colorado have built a regulatory model that shows that these legal businesses are an important part of Colorado’s landscape, that both regulators and businesses can operate responsibly and these business can supply jobs as well as an important resource to the people in Colorado. We continue to reach a new record sales number each year for the past six years and this year is no different.
In fact the gains are even larger these past four or five months than they have been at any point, and I think it’s too early to say whether COVID is the reason or there are other reasons, but this industry is certainly here to stay and we’ve shown both from a regulator and an industry perspective that it can be done responsibly. And every time we hit a new sales record, we hit a tax revenue record, which goes to building new schools for Colorado kids and other various important initiatives.
MV: Like all other states, Colorado’s industry is overwhelmingly white. There has been a push in many states, including Colorado, to expand minority ownership. What is Colorado doing to expand minority ownership?
JB: There is no higher priority in 2020 than a focus on social equity, but this has been a focus for the last couple of years. There was an accelerator concept passed in 2019, and we’ve been working with stakeholders and supporting those conversations now for a couple of years. The other thing that is worth saying is we’re all working on this together, trying to understand what the challenges are and identify the impediments.
We’re literally in the midst of crafting social equity and accelerator language to go live January 1, 2021. We’re having these conversations nationally on a regular basis where all of us are exchanging notes, trying to understand different states and different municipalities, what kind of programs are working and how we can maximize the effectiveness of the provisions and rules we’re trying to put together here in Colorado.
SG: We were given rulemaking authority by House Bill 1424 to implement a social equity program, so we’re determining eligibility criteria for licensees and what the benefits of the program are for those that participate. And one thing I want to mention is that this 2020 bill provided the governor with the ability to have an expedited pardon authority for marijuana offenses, which is an important aspect to the bill in addition to our rulemaking for the program.
MV: What are the MED’s priorities for the next 12 months?
JB: I’ll tell you straight up it’s a focus on social equity and the accelerator concept and I would tell you right next to it is, ‘How do we support and promote sustainability initiatives within the industry?’ Those are our two biggies.
SG: And keeping employees and consumers safe in the time of COVID and making sure we get through this global pandemic by keeping folks safe, but let’s hope that’s over by 12 months.
This interview has been edited for length and clarity.