Colorado’s cannabis industry under attack on several fronts

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By John Schroyer

On the surface, it might appear that Colorado’s $1 billion marijuana industry has been unencumbered by legal roadblocks or political opposition, given its speedy growth in recent years.

Nothing is further from the truth, however, particularly for the state’s recreational cannabis sector.

Nearly three out of every four municipalities in Colorado have banned recreational marijuana businesses since voters in the state approved adult-use cannabis more than three years ago.

Business owners also continually must confront new regulations and attempts by citizens and local lawmakers to trim the industry’s wings.

In fact, the pushback against the industry has reached new levels in the past few months, creating a highly uncertain climate for cannabis businesses in the state, threatening future growth, and making it difficult for companies to expand or even just plan for the future.

Just last week, for example, Denver City Council members approved strict caps on the number of marijuana retail stores and cultivation sites that can operate inside the Mile High City.

“It’d be nice just to have six months or a year where we don’t have to fear for our lives, but it doesn’t seem to happen in this industry,” said Bob Eschino, owner and founder of Medically Correct, a Denver producer of the popular Incredibles line of infused products.

“We are under attack, and the attacks are getting worse,” he added. “I don’t think people understand that this industry fights for its life every couple of months.”

Effort to ‘Gut’ Rec Industry

To be sure, Colorado’s marijuana industry is thriving.

Medical and recreational cannabis sales hit nearly $1 billion in the state last year, and revenues are on track to rise substantially in 2016 as well.

As of April 1, the state’s recreational marijuana industry boasted 426 retail stores and 530 cultivators, according to the latest data, while its MMJ industry counted 523 dispensaries and 774 licensed growers.

But there are efforts underway – and some that have already succeeded – to reign in future growth and change the landscape.

Perhaps the biggest potential threat this year to Colorado’s marijuana industry, both recreational and medical, is a proposed statewide ballot initiative to ban any marijuana products with a potency of more than 16% THC.

“It literally would gut Amendment 64,” said Mike Elliott, executive director of the Colorado-based trade association the Marijuana Industry Group, referring to the 2012 ballot measure creating the state’s rec industry. “It would probably ban all the concentrates and most of the edibles and most of the flowers that people grow, too. Most of the flower that our industry is growing is above 16% THC.”

It’s not clear yet if the measure stands a chance of making the ballot, however.

There’s no sign the two proponents – a retired high school principal named Ron Castagna and a person named Ali Pruitts – have serious money behind their effort. The initiative’s supporters must submit at least 98,492 signatures to the secretary of state’s office by Aug. 8 to make the ballot.

Smart Colorado, one of the state’s more prominent cannabis industry opponents, hasn’t taken a formal position on the measure, spokeswoman Henny Lasley said Monday. She said the group may or may not become involved in the campaign.

Smart Colorado did, however, support a similar cap that was proposed as an amendment to a bill at the state legislature in March.

“We’re not trying to shut down the marijuana industry,” Lasley said. “What we’re trying to do is raise awareness, specifically around high-potency products.”

Smart Colorado has spent more than $60,000 on lobbying efforts at the state capitol since 2014, according to data on the secretary of state’s website.

Another Potential Ballot Battle

A second, smaller proposed ballot measure in Pueblo County would ban all recreational marijuana businesses.

That would kill 117 existing licensed companies and terminate any possibility of future companies sprouting up.

Tommy Giodone, owner of Colorado Best Budz, a medical and recreational retailer in Pueblo, said the local industry takes the threat seriously and has organized a group opposing it, called Growing Pueblo’s Future.

Giodone described the group as roughly two dozen “of the larger and smaller cannabis companies fighting for our existence, wanting to make sure that we’re heard and understood, that it’s a legitimate business.”

Growing Pueblo’s Future has filed a lawsuit over the initiative in an attempt to force backers to gather more signatures than the county clerk initially deemed necessary for the measure to qualify for the November ballot.

“It’s just people with their moral values that think cannabis is the devil,” Giodone said.

Legislative Fights

At the state capitol, lawmakers have tried several times to roll back the industry.

Industry lobbyists defeated a pair of potency caps similar to the statewide ballot measure proposal, Elliott of the Marijuana Industry Group said.

But other potential regulatory changes are still possible.

For instance, the House approved a bill to prohibit edibles in the shape of animals, humans or fruit in an effort  to make infused products less appealing to kids. The measure is awaiting a vote in the Senate. It’s expected to become law, and it will likely cost many edibles producers plenty of money to retool, if they haven’t already.

“Every time a prohibitionist group wants to put the brakes on something about marijuana, they focus primarily on changing our business models, either making us do something different or creating a new label restriction,” said Dan Anglin, owner of Americanna, a Colorado edibles maker. “All of these things increase our costs, which increases consumer cost.”

While it hasn’t been easy, few entrepreneurs see the future of the state’s cannabis industry as being in doubt. It’s only a question of how much red tape companies will have to deal with.

“It’s tough to know right now how many new opportunities there are going to be. But there are going to be some new avenues,” Elliott said.

John Schroyer can be reached at