Moratoriums, Bans Could Dampen Recreational Marijuana Business Opportunities in Colorado

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This week was a historic one in Colorado on the marijuana front, with Gov. John Hickenlooper officially signing laws regulating the production and sale of marijuana for adult use.

But optimism over the industry’s immediate future has waned slightly in some areas, as the near-term business opportunities might not be as big as many envisioned.

The reason: Dozens of cities and towns across the state – including some of Colorado’s largest – have enacted or are considering moratoriums and bans on retail marijuana businesses. The moves threaten to erode some of the promise of the emerging marijuana industry and will add another layer of uncertainty for entrepreneurs, who will need to gauge the local political winds before getting in on the green rush.

In some cases, local officials enacted short-term moratoriums earlier this year to give them time to assess Colorado’s statewide rules before determining the next step. In other cases, city leaders opted for moratoriums of a year or more so they can analyze the impact of retail marijuana businesses on other communities. Some don’t have the time or resources to spend on such a weighty issue or want to ensure there’s enough time for a thorough debate. And many want to wait until the federal government makes its position on the recreational marijuana industry known before allowing cannabis businesses to sprout up.

Taking it one step further, a handful of towns decided to completely opt out and ban recreational cannabis shops entirely.

In just the past two days alone, one Colorado town enacted a year-long moratorium on marijuana shops, while local officials in Colorado Springs – including the mayor – lobbied council members for a complete ban on retail sales in the state’s second-largest city. The mayor of Denver is even pushing for a two-year ban on new marijuana licenses, saying that only existing medical cannabis businesses should be able to obtain such permits for 24 months. He also has called for zoning restrictions and a ban on cannabis clubs/lounges.

So what does it all mean for the business community? Entrepreneurs interested in starting retail shops, cultivation sites or infused products companies in cities with moratoriums will have to wait awhile – or consider setting up shop in another town – to enter the recreational marijuana market. Those in cities that are considering, but haven’t yet finalized, plans for a moratorium or ban will find it difficult to establish a business plan.

While frustrating for would-be business owners and consumers alike, the moratoriums aren’t necessarily a bad thing.

Cities that follow this path will have the opportunity to see what works and what doesn’t in other areas, allowing them to avoid some of the problems and the potential community backlash that could arise. As we’ve seen in the past, being at the forefront of the marijuana business can backfire (just look to California, which pioneered the MMJ business but has one of the most chaotic medical cannabis industries in the country because of a haphazard approach to regulations).

Sometimes it’s better to let everyone else work out all the kinks and take on the initial risks. Cities that wait might develop better regulations in the long-run, creating a more stable business environment. Additionally, entrepreneurs that rush in to start cannabis businesses might get hammered if the federal government – which hasn’t yet given an indication of how it will respond to marijuana legalization – decides to crack down on the industry.

For now, entrepreneurs should pay close attention to what’s going on locally.

Here’s a sampling of some other cities and towns in Colorado that have enacted moratoriums, implemented outright bans or are considering such moves:

Pueblo – In a unanimous decision, the City Council voted last night to ban retail marijuana stores and recreational cannabis sales until March of next year. Local officials said the moratorium gives them breathing room to assess the full impact of marijuana legalization and determine the best way to proceed. City council president Steve Nawrocki told the TV station KRDO that he wants to see how everything plays out across the state before moving forward. “I call that the prudent thing to do is be able to review and see what other communities have done,” Nawrocki said.

Aurora – This sprawling Denver suburb – which at one point was actually considering the idea of growing and selling marijuana itself – is now moving in the opposite direction, with city leaders leaning in favor of enacting a one-year moratorium on recreational marijuana businesses. Officials say the move would give them more time to craft their own rules and regulations on the industry and see how legalization plays out in other cities.

Englewood – This Denver suburb is poised to enact a complete ban this month, despite overwhelming support for Amendment 64 by locals.The ban covers retail stores, cultivation operations, testing labs and edibles companies, though residents could still use marijuana and grow their own

Boulder – Long regarded as the mecca of marijuana in Colorado, Boulder was the last place many people thought would implement a ban on marijuana businesses. But the city is moving forward with a proposal to impose a moratorium on recreational cannabis businesses until next year.

Vail and Frisco – In January, city council members in both of these mountain towns approved temporary moratoriums on retail marijuana businesses and private cannabis clubs, saying at the time that they wanted to wait until the state issued its rules and regulations on the industry. Now that Colorado has indeed finalized regulations, the towns will reexamine the issue and determine whether to move forward, extend the moratoriums or ban the businesses altogether.

Other areas that have enacted or are weighing moratoriums or even outright bans on some or all types of recreational marijuana businesses include Wheat Ridge, Broomfield, Montrose, Louisville, Fort Morgan, Eagle County and uncincoprated parts of Gunnison County and El Paso County, among others. Those that have outright banned the businesses include Superior and Westminster.