Potential rec marijuana ban in Colorado county could create havoc for state’s MJ industry

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By Bart Schaneman

A vote next month on whether to ban recreational marijuana businesses in Pueblo County, Colorado, could have huge ramifications for the entire state’s cannabis industry.

If Ballot Question 200 passes, a major marijuana supply source would dry up, dozens of businesses would have to close and scores of workers could lose their jobs.

A yes vote also could dampen industry revenues and push up wholesale adult-use cannabis prices across Colorado, a development that would be felt by the state’s rec shop owners and other businesses including extract producers and edibles makers.

“I think the largest concern is that Pueblo has become a very valuable and necessary supply source,” said Mark Slaugh, executive director of the Cannabis Business Alliance, a Colorado-based trade group. Slaugh estimates that Pueblo County supplies an estimated 30% of the state’s wholesale recreational marijuana.

Prop 200 also could set an influential precedent for other Colorado counties, towns and cities, industry officials say. Pueblo County is home one of Colorado’s larger cities, Pueblo (population 110,000). If the measure passes, the county would be the first in the state where citizens ban an existing adult-use industry.

The measure would require all recreational marijuana testing, cultivation and product manufacturing facilities in the county, along with rec stores, to close by Oct. 31, 2017. The county would be barred from approving new licenses for these facilities. The initiative would not affect the county’s medical marijuana industry.

“Losing any local jurisdiction is nothing that anybody in the industry wants to see happen,” said Ean Seeb, partner and co-founder of Denver Relief Consulting. “But losing one of the largest cities where recreational cultivation is taking place could prove rather problematic for operators all over the place, in various ways.”

Citizens for a Healthy Pueblo, which argues legalization has had a negative impact on the community, put forward the ballot measure.

“We believe the health and safety of our community is more important than the marijuana industry,” the group says on its website. “Pueblo is not safer or healthier with a growing marijuana industry promoting and selling a harmful drug.” The group also notes the marijuana industry is a large user of water and electricity.

But cannabis industry officials argue that Pueblo County’s legal marijuana production directly competes with black market marijuana interests and captures tax revenue.

“You could imagine if we have 30% less supply available,” the Cannabis Business Alliance’s Slaugh said. “Prices would go up, we would have fewer legitimate sales and empower the black market.”

Every time one of these votes comes up, industry officials worry that other jurisdictions will attempt a similar move.

“It sets a very dangerous precedent for the industry due to those who are seeking different tactics to try and put an end to the industry as we know it,” Seeb of Denver Relief Consulting said.

Jim Parco, a spokesman for Growing Pueblo’s Future (Vote No on 200), as well as owner of rec store Mesa Organics in Pueblo, pointed to the potential job and economic losses at the local level.

Of the 183 rec cannabis licenses that have been issued by Pueblo County, 21 are for retail shops. Pueblo cannabis industry officials contend the ballot measure would eliminate some 1,300 jobs and cost the county $3 million in annual tax revenue.

“These are state-licensed, non-minimum-wage-paying jobs directly from the retail cannabis industry,” Parco said.

The initiative, he noted, targets the regulated recreational market, but wouldn’t have any impact on a person’s ability to grow, consume or possess marijuana.

“Marijuana wouldn’t go away,” Parco said. “Just all the economic benefits would leave Pueblo County.”

Under Prop 200, stores offering both medical and recreational sales would have to discontinue adult-use operations. Iesha Jiron, general manager of medical and recreational store Leaf on the Mesa in Pueblo, said about 75% of her staff would be let go.

“We haven’t seen this kind of tax revenue since the ‘80s when the steel mill was here,” Jiron said. The steel crash in 1982 devastated Pueblo’s economy, and the city has been recovering ever since. Jiron said in recent years the town has seen an uptick in tourism and jobs.

“We have done everything that we could possibly do to stay in compliance and to make sure that we follow the rules so that we as businesses can stay open. I think the opposition is uneducated about what our industry is and what our industry does. And they don’t care to educate themselves on our rules and regulations,” Jiron said.

Residents of the city and county of Pueblo, meanwhile, also will be voting on additional marijuana-related ballot questions:

  • Ballot question 1C, a countywide initiative, would urge the Colorado General Assembly to pass legislation or initiate a constitutional amendment limiting the amount of homegrown marijuana to no more than 18 plants per parcel.
  • Ballot question 2B would lift a moratorium on additional retail rec shops within the city of Pueblo.
  • Ballot question 2C would increase taxes on the city of Pueblo’s existing rec stores and operations by 4.3%, with an option for the city council to raise taxes by up to 15%.
  • Ballot question 300 would permanently ban rec stores in the city.