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Seattle to Denver: A Tale of Two Cities’ Marijuana Economies

Skylines of both Seattle and Denver, two cities with growing economies in legal marijuana

Joint Opinions

Seattle to Denver: A Tale of Two Cities’ Marijuana Economies

The U.S. now has two states with two separate cannabis economies. Colorado was the first to get a recreational business up and running, while Washington is severely lagging behind a backlog of paperwork. What Washington lacks in speed, though, it seems to be making up for in a better revenue growth model.

Different Strokes for Different Tokes

Colorado and Washington have similar laws regarding recreational marijuana. The biggest difference is in how dispensaries get their product.

Colorado dispensaries hit the market first because they were controlling their own supply. State lawmakers decided it best to limit the sale of third-party cannabis products through dispensaries, forcing these business owners to grow their own. The state also recently loosened the law, allowing any adult Colorado resident to apply for a retail marijuana business license.

After watching Colorado’s economy, lawmakers in the state of Washington went a different route, drawing clear lines between the growers, producers and dispensaries for the purposes of taxation. The effect on prices is yet to be determined, as supply shortages are artificially inflating Washington pot prices.

From a consumer standpoint, this means marijuana purchased in Colorado has a homemade feel, where you can even bring your own bottles and bags to be filled (sometimes even overfilled). In Washington, it’s sold to the consumer prepackaged and branded with shiny logos. Everything is much more sterile.

The Dangers of Investment

Mad Money’s Jim Cramer is closely watching the budding marijuana industry, including maps of state laws and a Pot Index tracking the penny stock trade spawned by state initiatives to legalize medicinal and recreational marijuana. Pot-based businesses are creating a new investment bubble.

What makes the penny stock trade so dangerous is any of these companies could go under at any given moment, and in cannabusiness, solid financials don’t necessarily save a company from being raided and shut down by authorities.

Casualties of Decriminalization

One of the most dangerous investments is in Washington dispensaries. Since they’re only middlemen in the process, their only assets are real estate and branding, which isn’t much since marijuana marketing is restricted. If and when national cannabis decriminalization becomes a reality, these dispensary owners can’t compete with the Wal-Marts, Walgreens and 7-Elevens of the world.

Dispensaries in Colorado won’t have as much of an issue, as they’ll have marijuana as an asset – many even have homegrown strains, which can be valuable intellectual property when decriminalization comes. Without the ability to lean on tourism, though, Colorado pot-based businesses would have to work hard on distribution.

Dependence on Pot Tourism

Both states with recreational marijuana laws are going to have to depend heavily on tourism to make the initiatives successful, as no avid smoker will spend upwards of $25 a gram in Colorado and $35 a gram in Washington for a product they can purchase for under $10 a gram with a medicinal marijuana card or on the underground market.

Seattle continues welcoming Hempfest, while Denver holds pot rallies and both cities welcome the Cannabis Cup. These events help raise the profile of both of these cities, drawing crowds and encouraging pot tourism to their respective states.

Regardless of anyone’s personal or political stance on recreational use of marijuana, it’s a reality in both Washington and Colorado. Entrepreneurs and attorneys have filled out all the paperwork, secured investments and built two sustainable economies. The biggest question is which one will have long-lasting success.

Who do you think has a better economic future: Colorado or Washington? Tell us your thoughts below.

6 Comments

6 Comments

  1. Nicole Rigdon

    November 29, 2014 at 10:38 pm

    I have lived in Seattle for almost 10 years and was a medical patient in WA state. I now recently moved to CO, and I definitely see the differences and drawbacks to where WA state is going with their Recreational Program, and more alarmingly their Medical program. Where WA really screwed up is in how they run the Medical side. WA state does not have a formal patient registry like in CO state (where you apply for a red card and go through state approval, in WA state a “prescription” is given by approved doctors and your on your way.) Because of this, the state of WA is having issues with controlling who gets a medical card and the qualifying conditions for Medical MMJ. Because of this, the state has approved a measure to overhaul their medical program with stricter qualification guidelines, and a state registry. But what is worse is that Medical patients still pay the 25% excise taxes- they only save on the 9.5% sales tax- that’s it! What Med patient is gonna pay 25% upcharge?? No one! So this in turn will create a black market- a BAD deal for WA state. But it get’s worse. This measure also includes the clause that no collective gardens are allowed- that’s right- NO ONE IN THE STATE OF WA IS ALLOWED TO GROW THEIR OWN GARDENS. This is how greedy the WA State Liquor Control Board is! Oh the past issues I could tell you about how greedy these “F’s” really are!! When WA State voters Approved to go from private stores to public sales of liquor (thinking this would lower liquor costs to consumers) little did anyone know that the WA State Liquor Control Board added a “Sin Tax” to liquor and it’s now higher than before! So expect to see a huge shift in WA State the end of 2015- the deadline to Ax the Medical program altogether.

  2. Kevin

    August 27, 2014 at 3:36 pm

    COLORADO… Because of lower prices colorado will always have the upper hand, though even colorado prices are a little steep at a lot of dispensaries for rec use… Washingtons state government is to greedy therefore have higher taxes on MJ sales, if they would loosen there reigns a bit more and drop taxes to what colorado has in place they’ll make more in actuality because more will be bought

  3. TJ Webb

    August 26, 2014 at 6:14 pm

    I believe pots economic value will flourish in Colorado. Just read the article, pot costs less in Colorado, the quality of atleast 80% of pot in Colorado is probably better then most I’ve smoke in my entire life, and last but certainly not least pot has always been something to be inviting and calm. Not to be marketed and branded by the corporations that are destroying the country. I think Colorado will forever and always be the weed capital of these great states!

  4. Corpus DeMano

    August 26, 2014 at 2:59 pm

    I agree with Jen. When you seek to over-regulate any product, you bolster the black market sale of the item in question. Colorado going the “close to home” homegrown way will pay off in the end by keeping the quality between black market and legitimate close enough where the convenience of going into a store and paying a little extra will trump the black market’s price point by avoiding quality fluctuations.

    • Corpus DeMano

      August 26, 2014 at 3:01 pm

      I meant to say “AND avoiding quality fluctuations.

  5. jen

    August 26, 2014 at 9:11 am

    I think Colorado will last longer for sure. Washington is just trying to make as much money as possible off of consumers from a natural plant. People will just keep illegally growing it.

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