How Will Legalization Challenge Existing Canna-Businesses?

Posted by Jake Browne

Though it may come as a surprise to many, the passage of Amendment 64, the Colorado ballot measure to “legalize” possession of small amounts of marijuana, was met with mixed emotions from medical marijuana entrepreneurs. I say “legalize” because some argue the constitutional amendment wasn’t ambitious enough, others are opposed to recreational use entirely, and a few fear federal intervention in the state as a warning shot to those who want to open shop.

We, on the other hand, applaud Colorado voters. They made the right choice.

That isn’t to say that we don’t face immense challenges as an industry moving forward. In the short term, there’s little impact on our day-to-day operations. After the election results are certified, adults over the age of 21 will be able to possess and cultivate their own cannabis, a right our patients enjoy already.

It’s no secret that there are those with physicians' recommendations to use medical marijuana without ailments to justify them. In turn, you have dispensaries that cater to that crowd, with an Xbox in the waiting room and scantily clad women in their ads. They will almost certainly flip into the retail model once licensing is settled. For us, things are decidedly more complicated.

Our business model, since starting in 2009 with one delivery driver, has been clear: this is about more than cannabis. We’ve seen over 4,000 patients, and abandoning them for a recreational model where we would receive preference over other applicants just isn’t right. In fact, it would be the definition of what so many have accused dispensary owners of for so long: profiteering off of the sick.

If anything, dispensaries are hopeful that the public education effort that went into the campaign may convince reticent seniors into considering marijuana as medicine. Unfortunately, it will take much more to convince the federal government.

It has been widely reported that the Department of Justice under President Obama has shuttered more medical marijuana businesses in four years than George Bush did in eight. Those numbers can be deceiving, however, when you account for the mass proliferation of green crosses suddenly hung in formerly vacant storefronts. The volume was to be expected, but as a percentage of operating canna-businesses, it’s certainly fewer than Bush.

It’s also important to note that these were state DOJ heads acting of their own volition, not under a federal mandate. Obama might be more likely to call off the dogs when he’s not in the middle of a campaign and hence seeking to appeal to moderates. 

Remember, Colorado wasn’t lacking doomsayers when medical marijuana exploded in 2009. The sheer number of new shops that opened precluded federal intervention, however, and most action was reserved for those acting outside the boundaries laid out in quickly enacted regulations. The DEA operates with a limited budget, so medical marijuana centers that wished to remain business complied with strict rules laid out by the Department of Revenue to avoid being the “low-hanging fruit.”

We’re cautiously optimistic.

In the end, we’ll likely lose some of our base to the new retail stores—those who don’t want to be bothered seeing a physician or paying an application fee to the state. We’ll also have to stress the wellness services we offer, such as massage therapy and acupuncture, to attract patients displaced by closures. Our patients will enjoy lower sales tax rates, but will that be enough to keep people in the system?

Like much of the discussion, only time will tell.

Photo via Flickr (cc) user Colorado Medical Marijuana Connections