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Brave new weed



"It's time for man and the moment to meet. History doesn't wait for you — you take advantage of it, or it will roll you over."

These poetic waxings come from KC Stark of the MMJ Business Academy. His topic: the July 1 end to a longstanding moratorium on new medical marijuana dispensaries. The moratorium came to its conclusion after two years in place — renewed in annual installments — with the hope of giving state and local governments time to clarify and implement regulations on MMJ retailers.

Stark, whose Colorado Springs-based Business Academy offers seminars to entrepreneurs interested in medical cannabis, can barely contain his excitement over the local industry finally plunging into a normal, if highly regulated, market. "For two years people have been waiting for that moratorium to lift, and wondering what's going to happen, so they've watched the market," Stark continues in his interview at the Independent. "The good news is, the rules are there. Standards are established."

The moratorium was included in House Bill 1284, enacted by the state Legislature in 2010 and renewed in 2011's HB 1043. Both laws were designed to curtail the so-called "Wild West" medical marijuana scene catalyzed by the 2009 Ogden memo, in which the Obama administration urged federal officials to back off patients and caregivers abiding by laws in MMJ-friendly states. Under the moratorium, however, dispensaries found themselves faced with an increasing number of stringent statewide requirements to meet, unless they wanted to lose their license — all while being subject to the whimsical tides of the medical-cannabis market's uncharted waters.

Stark hopes an end to this uncertainty will come with the end of the moratorium. "This will be the year of contraction, and hopefully after that: stabilization," he says. "Once you reach stabilization, then you start getting real profitability and better standards because things are known, whether from an investor's perspective or an owner's perspective."

Bud-weiser to KB-Mart

It's far from clear, however, if this highly particular market will contract further than it already has — or if anyone is willing to slog through the new paperwork and fees required to receive licensure at all, the moratorium's end notwithstanding. At press time, the City Clerk's office reported several inquiries but no new applications for dispensary licenses; Stark, however, says a "dirty dozen" of interested entrepreneurs signed up for the MMJ Business Academy's most recent seminar.

"If there are fewer legal barriers to entry, there will probably be more people who try and enter and sell marijuana," agrees Jeffrey Miron, senior lecturer in Harvard University's Department of Economics and a national advocate for drug legalization. "That's not necessarily going to be good for existing business; it will tend to be bad for existing business — that's the whole point, to make it better for consumers by letting them have easier access and lower prices."

Consolidation could be a more probable consequence of unleashing the free market. Stark predicts that most of the new interest in medical marijuana will come from investors, while Miron compares the medical cannabis industry to that of another regulated, mind-altering substance: "[There will be] more innovative and typically smaller and more unusual people who come in and out, like microbrews," he says. "[But] you'll have some relatively big suppliers who capture a significant amount of the market, and have a well-known, typically kind-of-decent-but-boring product like Miller beer or Budweiser."

Franchises like weGrow, a national hydroponics supply retailer dubbed "The Wal-Mart of Weed," have already been formed, but any actual franchised growers or dispensaries, complete with slick branding campaigns and neo-Taylorism scientific management schemes, have yet to surface locally. Colorado's requirement that 70 percent of a dispensary's marijuana be grown in-house could impede plans to scale up the supply chain to support franchises.

Signaling through the (pot) smoke

To be sure, it's hard to make meaningful or concrete predictions about an industry whose very legality remains, at best, fragile. "[The market] will be more stable if there are no changes to regulations," says Miron. "But that seems like a big 'if' in this case, because of the political stuff."

Sure enough, some "political stuff" recently surfaced. Besides the end of the statewide moratorium, July 1 also marked the end of many dispensaries' ability to accept debit cards for payment, or provide in-house ATM services. Electronic Merchant Systems, the merchant account provider for most dispensaries nationwide, recently announced that due to federal-level banking insurance legal concerns, it would no longer be offering Visa or MasterCard services to marijuana-related businesses. (Discover cards, however, remain honored, reports

Meanwhile, the threat of direct interference from the federal level of government — where marijuana cultivation and distribution remains a felony — looms heavy. After the January order by federal prosecutors for Colorado dispensaries within 1,000 feet of schools to close or relocate, owners are struggling to divine what additional unspoken federal rules might surface. All in all, it's not quite an investor's Shangri-La.

Stark, however, remains almost insatiably optimistic. "We have a great city, [with] an entrepreneurial spirit that is a little bit quirky and cool and unique," he says. "I think Colorado Springs really could be the Silicon Valley of medical marijuana."

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