Local politicians slobbering over tax revenue from pot sales

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Denver’s 3D Cannabis Center owner Toni Fox thought she had enough marijuana to last through February when she opened her doors Jan. 1 for recreational pot sales.

Then she served 450 customers Jan. 1 and turned away 60. She planned to close Monday and Tuesday, she said, to re-evaluate her supply.

She had been serving 25 clients a day for the past three years while her store was restricted to medical marijuana sales, she said.

“We are going to run out,” she predicted Thursday, the second day of legal marijuana sales for recreational use. “It’s insane.”

Fox said she had a harvest ready to be trimmed. And she will hire temporary staffers from Hemp Temps, a Denver-based staffing company that specializes in growing, trimming and bud-tending.

But she guessed the supply shortage is the same story at all of Denver’s 18 stores and Pueblo’s two stores that opened last week with long lines of customers _ more than half from out of the state _ waiting one or two hours to make history by ending marijuana prohibition in the state.

Now, she said, marijuana store owners will all be scrambling to find wholesale distributors, especially on marijuana-infused products like edibles and beverages. But she’s not complaining.

“It’s awesome,” she said. “I wish more stores could have opened.”

News of people traveling across state lines to purchase pot the Wyoming Highway Patrol to issue a release with a stern warning: “Don’t bring your Colorado-purchased marijuana into Wyoming.”

The release reminded readers that possession of an ounce or less carries a punishment of 12 months’ imprisonment and a $1,000 fine.

Under Colorado’s Amendment 64, people 21 and older can possess up to an ounce of pot. And last legislative session, lawmakers hammered out the details of marijuana regulation that covered everything from packaging and labeling to background checks for business owners and a complex licensing process.

The National Cannabis Industry is projecting $400 million in sales in 2014.

Not all Colorado cities are taking part in the rush. The Colorado Springs City Council voted 5-4 in July to opt out of sales, despite the city’s voters approving Amendment 64.

There is no telling how much Colorado Springs is losing in sales tax revenue from pot sales for recreational use, said Tom Binnings, an economist with Colorado Springs-based Summit Economics.

“It’s a challenge for an economist to study any new market that has not existed before,” Binnings said. “It’s a wonderful market experiment. It will provide interesting data for researchers in the future to look at what happens when a market that is illegal and becomes legal.”

Colorado Springs City Council member Val Snider said he might reconsider his “no” vote on retail sales once he sees the long-term effects of recreational marijuana sales. Snider was the surprise swing vote that denied sales in Colorado Springs.

“We have not had a chance to see how it might affect law enforcement and drug counseling or rehab,” Snider said. “Once we get more data from Denver and Pueblo County that have gotten a chance to assess it, then yes, let’s re-look at this as a city.”

Mark Slaugh, owner of iComply, which helps marijuana store owners stay in compliance with state regulations, said Colorado Springs is missing a great money-making opportunity.

Denver store owners estimated that at least 50 percent of Wednesday’s sales went to out-of-state buyers. Those are the precious tourism dollars Colorado Springs always is pining for, he said.

Colorado Springs has about 80 medical marijuana dispensaries, and in 2012 the city collected $989,351 in sales and use tax on medical marijuana _ about a 40 percent increase over 2011.

Slaugh estimated demand for recreational pot would be three to four times that of medical marijuana. But considering the lines last week at the Denver and Pueblo stores, demand could be five times as much, he said.

“Why are we thumbing our nose at this thing?” he said.

Slaugh is heading up a grass-roots effort to overturn Colorado Springs’ ban on recreational marijuana sales. The group, Every Vote Counts, wants to get a question on the November ballot.

Council member Jill Gaebler, who favors recreational marijuana sales, said the council should put the issue on the ballot.

“That would be the right thing to do at this point,” she said.

Manitou Springs, Colo., Mayor Marc Snyder said the Manitou City Council is paying close attention to Denver and Pueblo. The council was to get its first glimpse of a proposed ordinance Tuesday, the day two new council members who favor retail marijuana sales in Manitou will be sworn in. The city could be ready to accept applications Jan. 26, Snyder said.

Council will use its “conditional use permit” process, which will allow more control over the store operations, Snyder said. The first store could be open by spring.

“If they are not compliant with any of the conditions, we bring them right in for an immediate hearing and say, ‘What’s going on?’ ” Snyder said.

Early estimates predict Manitou Springs could see about $169,000 in sales tax collections during the first year.

Two retail stores would be allowed in Manitou, but outside of the historic downtown area.

Maggie’s Farm, which was approved by Manitou Springs City Council for a medical marijuana store in October, will have first dibs at a retail permit. Maggie’s general manager Gary Kring said he saw the long lines of people waiting at the Denver stores and didn’t really think about the money his store would make in Manitou Springs.

“What went through my mind is, ‘Wow, we really are a part of making history,’ ” he said.

Kring said the Manitou store will open first as a medical marijuana dispensary and then make the conversion sometime this summer to a duel license, which allows both medical and recreational pot sales. Maggie’s Farm also expects to open a store in Pueblo West.

He already knows supply will be an issue, he said. He predicts demand will drive prices up as much as $400 an ounce.

After the first year, when the rules relax, the price should go down and supply should catch up to demand, he said.

Snyder said he worries about a run on Manitou Springs if it’s the only city in El Paso and Teller counties to allow retail sales.

“I’m glad we are not in this first wave,” he said. “I really want to see what the fallout is, if any.”


(c)2014 The Gazette (Colorado Springs, Colo.)

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