6 Months of Successful Retail Sales in Colorado
Closing the month of June, the State of Colorado will have half a year’s worth of data on the effects of adult-use sales under Amendment 64. The 2012 voter initiative made Colorado one of two states in the nation, alongside Washington state, to legalize cannabis for all adults, regardless of medical status.
Last week, Drug Policy Alliance (DPA) released a six-month status report on the effects of legalization in Colorado followed by a press conference yesterday to discuss the study’s findings. The findings paint a rosy picture of economic growth and vitality as well as safer streets for Colorado citizens.
“The early numbers are positive,” says Art Way, senior drug policy manager for Colorado at DPA. “Regarding overreach of the criminal justice system, in the first few months of 2014, counties across the state have issued less than 900 marijuana related citations this year [compared with 5,000 the year prior].”
Way says that millions of dollars have been saved within the state judicial districts, which, coinciding with tax revenue has been an economic boon to Colorado.
“Based on a report done by the Colorado center on law and fiscal policy, the state will expect to save anywhere from $12 to $40 million by no longer adjudicating these minor marijuana possession cases in the state of Colorado,” he says.
Way says that outside the criminal justice system, the state is seeing other “unintended benefits” such as a 10 percent overall decrease in crime in the City of Denver versus this same time last year. He says there is an additional 5.2 percent decline in violent crimes, including burglaries and that, in fact, Colorado is on track to see a three-year low in dispensary burglaries.
“It’s hard to claim a direct causation concerning our crime rate and recreational sales taking off in Colorado, but we do believe a correlation is within reason,” Way says.
Way adds that when it comes to road safety, the leading causes of traffic fatalities in the state are still a lack of seatbelt use, alcohol and poly drug use.
Way concludes that if the main goal were to keep marijuana out of the hands of minors, Amendment 6 should be considered a success. In compliance checks in Denver and Pueblo counties, 100 percent of dispensaries were found to comply with state law prohibiting sales to minors.
The implementation has not gone off completely without a hitch, as various media reports possible deaths linked to the consumption of cannabis-infused food products, or edibles.
State representative Jonathon Singer, who was one of only two members of the legislature to publicly endorse Amendment 64, says the edibles market accounts for 40 percent of recreational sales and that work must be done to reign in that “element of the industry where all the controversy has derived from.”
Singer says their needs to be better public awareness about how to use edibles and better regulations to standardize dosing.
“We know that the eyes of not only the nation, but the world, are upon us and if we don’t regulate marijuana in its entirety — concentrates and edibles as well as flower, then it is not going to go forward in other states and around the world,” says Singer.
Reaping the Financial Rewards
“The tax revenue has been pretty great,” says Mike Elliot, Executive Director of the Marijuana Industry Group (MIG), a trade association of licensed cannabis industry businesses in Colorado.
Elliot says MIG largely supported the passage of Proposition AA, which increased taxes on adult use sales by adding a 15 percent excise tax and 10 percent sales tax. These taxes are in addition to whatever other taxes or fees are added on a locality within the state, such as Denver, which takes an additional 3.5 percent.
“We as an industry did what industries generally don’t do, which is support a tax on us. We did so because we wanted to ensure there was sufficient tax revenue available to take care of various other issues that would come up,” says Elliot.
Revenues from state taxes are used to cover the state management of the program with plenty left over for drug education and Colorado schools. The state even recently committed $9 million to medical cannabis research.
Elliot estimates there are about 2,000 cannabis business licenses in the state employing roughly 10,000 workers directly — not including ancillary businesses such as construction, plumbers, accountants, attorneys, real estate and “the list goes on and on.”
”We have a very strong commercial real estate industry right now in Colorado, the estimates we have seen is that this industry has 5 million square feet of commercial real estate right now,” says Elliot. “It is very strong — in other words, think about what it does to an economy to have 5 million square feet of vacant property.”
Elliot adds that Colorado just had its best ski season ever, best tourism year ever and is now the most attractive place for young professionals in the country.
Still, an area where most Colorado politicians and cannabis industry stakeholders agree is lacking is in banking reform. Although the state legislature approved a banking co-operative plan, federal law is still a deterrent to the industry operating on any other currency than cash.
“We are happy to pay our taxes but we don’t want to be treated like drug cartels anymore,” Elliot concludes.
Six Months In Colorado, Two Weeks Left in Washington
In Washington state, where a more controversial voter-backed initiative also passed, implementation of recreational sales are not set to begin until July 8. Washington’s retail rollout will likely be a less-hyped rollout than in Colorado due to the way the law was written as compared to Colorado’s.
In Colorado, the licensed medical cannabis dispensaries had the option of opening sales for adult use. Most businesses owners who chose to convert to “recreational” shops were ready to make sales to the public on January 1, when legalized sales went into effect. Colorado’s medical cannabis program exists side by side with the recreational market.
Washington state’s program may threaten the existing medical industry. The state tasked the Washington State Liquor Control Board with implementing the rollout of the law, which essentially rebuilds the industry from scratch to play by brand new rules. The future of Washington’s wildly unregulated medical program is likely in jeopardy.