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Seeking solid ground


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Nancy Jung celebrated the one-year anniversary of opening her medical marijuana center much like she's spent many of her recent days: hoping to stay in business.

"It's kind of sad," says the owner of JP Wellness. "I would've had an event or a promotion, but I just couldn't do anything. My hands were tied, trying to survive the month-to-month and see if maybe things will change."

Across Colorado Springs, dispensary owners are feeling hamstrung by expensive requirements and fees imposed by the Colorado Department of Revenue, where just the applications required last year came with a fee of $7,500 to $18,000. Additionally, recently released rules mandate expensive electronic monitoring and point-of-sale systems, among other costly requirements.

Locally, the money grab is in full swing, with the city estimating it expects to charge local centers an initial business license application fee of $4,800, and then require $3,000 annually thereafter; this, in addition to $500 annual license fees for almost every employee. Meanwhile, the city sales tax office is bringing in nearly $50,000 to $60,000 each month.

Of course, the monetary requirements are one thing; at the same time, the cost of pot is falling through the floor, says the owner of Happy Buddha Wellness Center.

"I moved out here from the Midwest last November, and prices were right around $50 to $70 an eighth [$400 to $560 per ounce] on average — and that's top-shelf pricing," says Jeremy [last name withheld]. "And now, for the really competitive dispensaries, I've seen prices right around $200 an ounce, and that's what we're at now."

Push ...

The combination has been near-lethal for Jung. Since October, she estimates she's lost 60 percent of her former revenue, forcing her to lay off one of her three employees, and cut the hours of the remaining two down to just a few per week.

It's all part of new industry growing pains, says Grow Room Communications president Elizabeth Robinson in an e-mail.

"Prices are coming down for a myriad of reasons," she writes from Denver. "Consolidation, increasing efficiency of growing operations, the maturing of the industry and a continuing increase in the sophistication of business operations all translate to reductions in price."

Whatever the reason, the Indy found more than a handful of centers selling ounces in the $180 to $220 range. And yet, the drug's street price hasn't changed much, says police spokesman Sgt. Steve Noblitt.

"Starting in 2009, for an ounce of marijuana, the prices were anywhere from $250 to $400," he says, referencing high-quality U.S.- or Canadian-grown bud. "In 2010, it went up to $300 to $350; and then in '11 we're looking at about $325 to $425 an ounce."

So the parallel?

"I don't know if there is any parallel to draw — I don't know," Noblitt says. "I think it just could be entirely separate customers, you know? Different market. So I don't know, and my narcotics folks didn't offer any explanation, other than maybe just simple inflation."

... and shove

The worry over prices doesn't sit well with everybody. Though Judy Negley's business partner has appeared before Colorado Springs City Council to argue that the planned fee schedule asks too much of centers, it's still not her focus and shouldn't be for others, she says.

"I find that attitude very disturbing," says the co-owner of Indispensary and Independent Records. "It's a moral prerogative for us, on a number of levels. So we don't have to go around making a ton of margin to make this work. There's a way to do it and still pay our people, and pay our taxes and pay our fees and everything else."

Either way, the combination of state oversight and falling prices has put most center owners in a bind. In fact, says Jeremy at Happy Buddha, one may have caused the other.

"People have to sell 70 percent," he says, referencing the requirement that centers grow 70 percent of the product they sell. "And so a good way to do that is, if they have a lot of one strain, is drop your prices. People need to sell that product."

Which is fine, says Jung, as long as there's somebody to sell it to.

"I'm really in the middle of a crisis — I might have to close my shop," she says. "Ever since we were open, I've provided a legitimate business. I always follow the law, I do everything, I have a payment system, I pay all the sales tax ...

"You know, if you're doing the right thing, I don't think you can really survive. That's what I feel like. Following all the laws and doing everything they ask, you cannot survive [in] this business."



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