Medical marijuana is taken from a container at a local retailer earlier this year.
(Lewis Geyer)
Representatives of the
marijuana industry, supported by Boulder City Councilman Macon Cowles,
want the city to reconsider its approach to marijuana regulation and
come in line with the rest of the state, but top city officials say the
more stringent approach has resulted in a safer city while still
allowing businesses to be competitive.
Cowles said the city's regulations may have made sense when legal
marijuana first exploded in 2009 and the industry included shady actors
with criminal records, but the remaining 77 licensed businesses have
shown themselves able and willing to follow exacting rules and shouldn't
have to live with a "zero tolerance" policy for any rule violation and
city staff who have the discretion to revoke a license without an
administrative review.
"Most people in the industry feel like it isn't working that well,"
Cowles said. "They feel like they're hanging from a thread that could be
cut at any time. Our ordinance says that having a marijuana business is
not a property right. It's a privilege. We say there's zero tolerance
and no administrative review. That makes someone feel pretty insecure,
and that's not fair."
But in a memo to City Council, City Manager Jane Brautigam and City
Attorney Tom Carr defended the city's regulations, considered by many to
be much tougher than those in place at the state level.
"The city's regulations reflect distinct policy choices made by
council over the years," the memo said. "Council's intent has been to
limit diversion to the black market, limit access to youth, limit the
impacts on other Boulder businesses and limit the impact on residents.
Virtually everything in the city's marijuana code is directed at one of
these four policy goals."
The memo said the city's more stringent background checks led to the
city rejecting businesses licensed by the state that were later closed
by federal drug enforcement officers, while the security plan
requirements have limited burglaries and robberies.
Compliance with ID
requirements has been "disappointing," but the requirement for physical
separation between medical and recreational businesses has limited
access to recreational marijuana for those under 21. The city's zoning
and building restrictions have prevented the development of marijuana
districts and marijuana superstores and kept marijuana businesses out of
mixed-use developments, the memo said.
The memo also disputed the allegation that Boulder's marijuana
businesses are at a competitive disadvantage. Using revenue estimates
derived from sales tax payments, city officials estimated the average
marijuana business in Boulder took in almost $700,000 a year, compared
to $325,000 in Denver.
The Boulder City Council holds a public hearing and first reading
Tuesday of an ordinance that makes several changes to the city's
marijuana regulations, but not the changes sought by representatives of
the city's pot industry.
'I think we can lighten up'
The changes proposed by
staff would allow the sale of marijuana seeds, prohibit home extraction
of THC, allow transportation between cultivation facilities, clarify
that the sale of items with logos is allowed and allow businesses to use
carbon offsets from any source, not just Xcel's Windsource program. The
memo also says the City Council may want to allow for larger square
footage than the current limit of 3,000 square feet, reduce advertising
restrictions and allow the sale of products besides marijuana, in the
manner that liquor stores can sell items like mixers, ice, magazines
about alcohol and corkscrews.
But Cowles wants to see much larger changes. In an email to Hotline,
the City Council's public email system, Cowles proposed eliminating
language that refers to "zero tolerance," getting rid of a sunset
provision that gives medical businesses until the end of this year to
decide if they want to convert to recreational use, bringing inventory
reporting requirements in line with state practices, adopting state
rules for transport and labeling, adding a provision for administrative
review and creating more "formality" in enforcement, including
inspection checklists, a schedule of fines and a ranking of violations
by seriousness.
Cowles said it's natural that city staff would defend the existing
regulatory regime, and the first reading is an opportunity to get
direction from City Council about the form those regulations should
take.
"Taking a zero tolerance approach made sense at the start because
there were no state regulations in place, and there were some sketchy
operators in Boulder," he said. "Those operators have since left. They
no longer are in business here. I think we can lighten up in recognition
of the fact that we have mostly mom and pop businesses that are well
rooted in the community.
Shawn Coleman, a lobbyist for the marijuana industry and a Boulder
resident, said the staff memo is misleading in many ways. He said the
revenue estimates don't take into account the higher cost of doing
business in Boulder, which includes higher rents, higher taxes and more
expenses to comply with stricter rules. He also said it doesn't reflect a
reality in which a few businesses are generating most of the revenue --
$53.8 million in 2014 and a projected $58 million by the end of 2015 —
and many others are struggling.
Coleman said the difficulty running a marijuana business in Boulder
leaves many local businesses at risk of selling to out-of-town
investors, the very "Big Dope" the council professes to want to keep out
of Boulder.
Coleman said the state tracking system for plants goes beyond
anything city inspectors can do and makes sure product isn't moving to
the black market.
At the same time, contradictions between state and
city rules sometimes force businesses to choose which rule to violate.
The draft ordinance would allow marijuana to be transported between
marijuana centers, which Coleman said is a felony.
"This is why the city shouldn't be regulating this stuff," Coleman
said. "Who is watching this? The state, electronically in real time."
Coleman said the regulation meant to limit home extraction is written
such that it could ban someone from having marijuana at a barbecue if a
propane grill used.
Pot market advocate: Many retailers 'cash poor'
Another
lobbying firm, VS Strategies, described a long list of inconsistencies
between state and local law, from different terms used for the same
things to overly detailed operating plan requirements to the definition
of who can be considered a business manager and who can lock up a
business. VS Strategies said the city's rules may violate the due
process rights of marijuana business operators.
Despite the "zero tolerance" language, most violations result in
fines, which Carr said cost businesses less than the liquor license
suspensions that liquor stores and restaurants often receive.
In a list of marijuana violations provided to council, the offenses
ranged from failure to check ID to not having a business manager
on-site, from the use of discount cards and illegal signs to failure to
make marijuana waste unusable and unrecognizable, from using
"unauthorized locking storage" instead of a safe to accepting marijuana
without proper transportation documents.
Fines ranged from $12,000 to a few hundred dollars. Two businesses had their licenses revoked.
In the memo, Carr said that violations that result in fines can
receive an administrative hearing, while other violations can be
appealed to district court.
But Coleman said many businesses are "cash poor" and don't have the
ability to easily pay fines, while appeals to district court.
Cowles said the licensing staff may handle most violations in an
appropriate way, but it's unfair to businesses for them to have
unlimited discretion in setting penalties.
In the memo, city officials said that if City Council wants to look
at broader changes, they would recommend convening an advisory committee
made up of industry representatives, health advocates and community
members to provide feedback rather than acting quickly.
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