August 23, 2012

Only 8 Applications Submitted for New Colorado MMJ Business Licenses Since End of Moratorium

Logo of Colorado Medical Marijuana Enforcement Division

So much for the next Green Wave in Colorado. Consider it more of a ripple this time around, at least for now.

The state has received just eight new applications for medical marijuana business licenses since lifting a two-year moratorium on new dispensaries and grow operations in early July, officials with the Medical Marijuana Enforcement Division (MMED) said last night during a panel discussion in Denver.

Lewis Koski, MMED agent in charge, said two of the applications are for new dispensaries, while the remaining six are for marijuana cultivation sites (two of which are tied to the new MMJ centers).

The relatively low level of interest shows just how much the medical marijuana industry in Colorado and nationally has changed over the years. The state initially received 1,100 applications for dispensaries and marijuana-infused product manufacturers and 1,200 for grow operations before enacting enacting a moratorium on new MMJ operations in July 2010. Colorado lifted the moratorium this summer, and many existing dispensaries assumed there would be a rush of new players attempting to enter the market.

That’s not happening so far. Chalk up it up to the federal crackdown on MMJ – which has spooked entrepreneurs thinking about starting medical cannabis businesses – and new industry regulations in Colorado that make it much harder to open and operate a dispensary or grow operation. Additionally, the market in many areas of Colorado is already saturated, and a fair share of dispensaries are still struggling to turn a profit. At the same time, the MMED has a huge backlog of applications from existing dispensaries that it is still processing, so there’s really no rush by new businesses given that they might have to wait a long time for the agency to play catch-up.

The trickle of new applications is good news for existing MMJ businesses, as it eases their concerns about an influx of new competition. But it also signals that the industry isn’t as lucrative as it once was (or was thought to be) and could indicate that the market has plateaued.

During last night’s panel, officials with the MMED – the main agency charged with overseeing Colorado’s medical marijuana industry – also addressed the organization’s well-publicized financial struggles and provided an update on the licensing process.

Some highlights:

– To date, the MMED has awarded 347 premises licenses for MMJ businesses in the state (204 dispensaries, 25 infused-product companies and 118 cultivation operations). That’s just a fraction of the number of applications received. While some of the initial applicants are now out of business, many MMJ companies are still eagerly awaiting their licenses – something the MMED blames, in part, on long delays for approval from local governments.

– On a brighter note, the MMED is close to making a final decision on 1,100 applications. “We should be able to close the majority of these in the next 90 days,” Koski said.

– Laura Harris, director of the MMED, said the agency’s operating budget is less than half of its $5.5 million annual appropriation. As a result, the agency has just 15 workers (which, as one news organization recently pointed out, is less than the number of vehicles it owns).

– The division hopes to finish a long-awaited inventory tracking system this year.

– Officials have set up a work group to explore the possibility of implementing safety and quality standards or requirements.

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