A bill passed in the waning hours of the Colorado legislative session earlier this month opens the door to on-premises consumption of marijuana products at licensed businesses, but local officials aren’t jumping at the chance to implement it.
House Bill 1230, the so-called cannabis hospitality measure, would allow local jurisdictions to license and regulate limited on-site consumption and sales of cannabis products beginning in January 2020.
“We did our job in the Legislature ensuring a safe and responsible system for cannabis consumption and education that offers Coloradans the ability to choose an alternative for social activities,” says Sen. Julie Gonzales, D-Denver, a sponsor of the measure. “With this bill, Colorado is one step closer to fulfilling the will of voters when they told us to regulate marijuana like alcohol.”
The bill aims to resolve a dilemma that’s existed since Colorado voters passed Amendment 64 in November 2012.
“We’ve created a public safety nuisance by creating an atmosphere where we’re selling a product you can’t legally consume anywhere,” says Jason Warf, executive director of the Southern Colorado Cannabis Council, an industry organization. “There’s a lot of folks up here at the Capitol who will tell you that any place allowing consumption right now is doing so illegally.”
The one exception is lodging properties, which already are allowed under state law to let guests consume marijuana in their rooms or in designated areas on their premises. Under the new law, they could sell limited quantities as well.
The legislation aims to release from legal limbo businesses like several Denver-based cannabis tour operations and Colorado Springs’ two cannabis social consumption clubs.
It could also greatly expand the types of businesses that could offer pot products. Restaurants could pair cannabis with cuisine; entertainment venues could accompany music with marijuana. Even art galleries, spas and yoga studios could cash in on Colorado’s green gold.
House Bill 1230, which Warf expects Gov. Jared Polis to sign, creates two licenses: one for consumption only and one for consumption with limited sales, in marijuana hospitality spaces. Alaska is the only other state that has passed a similar social consumption bill.
Under the Colorado bill’s provisions, cannabis consumers 21 years old or older could sample single-serving infused products, flower and concentrate on licensed premises, similar to brewery tasting rooms.
“Those are the two main pillars of the bill,” Warf says. “The comparison would be the liquor store-bar model; just like in an alcohol bar where you can buy a beer or a shot, the same would hold true on the cannabis side in the spirit of ‘regulate like alcohol.’ You’d be able to buy, say, a joint or a dab or two.”
The bill makes marijuana hospitality spaces an exception to the Colorado Clean Air Act, which forbids indoor smoking, and establishes some regulations.
Local jurisdictions would decide whether to allow cannabis hospitality spaces and promulgate rules for their licensing and operation, which could be more stringent than the state’s regulations.
“It is an opt-in provision, rather than the opt-out as we saw with Amendment 64,” Warf says. “As with most things in Colorado, we did our best to leave a lot of local components in the bill.”
Licenses must be obtained from both the Colorado Department of Revenue — the state licensing authority — and local licensing authorities. State licenses would have to be renewed annually.
Like retail marijuana stores, hospitality establishments would have to track sales and limit amounts a customer could buy per day.
Activities that would require additional licensing, such as manufacturing or cultivation, would not be allowed.
Alcohol could not be consumed at these establishments, and licensed retail marijuana stores could not permit customers to use marijuana products on their premises.
A handful of social marijuana clubs opened in Colorado Springs and Denver after recreational cannabis was legalized in 2012. By operating as private clubs and not selling cannabis products, their proprietors aimed to get around regulation and contended they should be treated like any other private club. By late 2015, when Colorado Springs City Council placed a moratorium on consumption clubs, their numbers in the city had swelled to 15. Council permanently banned further clubs in March 2016 and required owners of clubs in existence before the moratorium to apply for one-year consumption club licenses and pay nearly $300 in fees.
Under the terms of the ban, the licenses could be renewed annually, but owners would have to close down by March 22, 2024. The lengthy term was intended to allow them to protect their investments.
Nine of the clubs did not apply for the licenses by the April 29, 2016, deadline or were denied licenses. In September, the city sent them cease-and-desist orders.
“They’ve been able to scrape by,” Warf says, adding that HB1230 “could create more of a feasible business model for those operators.”
The owner of the Speakeasy did not return calls about potential effects of the new law, but Wanda Stark, co-owner of Studio A64, says she’s “waiting to see what happens” in response to the hospitality measure.
“We’re excited,” Stark says. “It has been a continual fight.”
The business at 332 E. Colorado Ave. is open daily and draws a crowd on weekends and during events, Stark said.
Since the bill had not yet been signed by the governor, Stark declined to comment further about how it might affect the club but says, “we definitely will go before Council if it comes to that.”
Colorado Springs Mayor John Suthers does not think HB1230 will make any difference in Colorado Springs and does not foresee that any new consumption licenses will be issued.
“It would take a dramatic change of direction by the Council to do so,” Suthers says. “Unless the Council decides to do a complete about-face and all of a sudden embrace consumption clubs, it should not have any impact.”
People who want to use marijuana can do so in their homes and “there are some motels that let you use it,” he says.
“Obviously you’re talking to someone who thinks it’s a very good situation that we do not have marijuana consumption clubs and have people out on the streets driving and all that sort of thing,” Suthers says. “I’m hoping the Council will stay the current course.”
Manitou Springs Mayor Ken Jaray said he is not familiar with the bill.
“It’s too soon for me to comment,” Jaray says. “I don’t see an overwhelming push to get that done. My gut reaction is probably not, but if the community thinks we should have a conversation about it, great.”
Manitou’s Council declined to consider grow operations or consumption clubs when it passed an ordinance allowing two recreational marijuana stores in January 2014. The two stores, Maggie’s Farm, which opened later that year, and Emerald Fields, which opened in 2015, are the only recreational marijuana stores in El Paso County.
In February of this year, Manitou’s Council passed a resolution reasserting the city’s cap on recreational marijuana licenses at two.
Warf says his organization, which urged Manitou to expand the number of licenses, probably would approach the Council about consumption clubs.
“It’s a good topic to have a discussion about, if it comes up,” Jaray says. “I’m quite neutral about it at this point, and I’m willing to hear arguments on both sides.”
— This story originally appeared in the Colorado Springs Business Journal.