Colorado mountain town marijuana industry worth millions after one year
August 23, 2016
On the eve of legal marijuana's first anniversary, the front lobby at Herbal Bliss in Frisco was almost eerily quiet.
A snow-white husky slept curled in a plush chair while her owner, dispensary manager Dan Blaise, caught up on paperwork behind a nondescript desk, the sort found in a doctor's office or law firm. On the walls around him, there are no tie-dyed pot posters or Grateful Dead tributes — just an ad for vape pens and a few printed signs to remind customers about Colorado's marijuana laws. A handful of local customers pet the dog and flash their IDs before disappearing down a long, narrow hallway leading to the dispensary's equally nondescript bud room.
Then the crowd came. A group of eight had just flown from central Texas to Keystone for New Year's Eve, and before heading to the resort, the group's Summit Express driver offered to swing by the Walmart shopping center. It's home to just about everything they need for a bash: grub at Walmart, champagne at Antler's Discount Liquor and, of course, legal pot.
As the Texas group gathered for a photo outside, Blaise set aside his paperwork to greet them at the door. He says nearly half of all visitors simply stop by without making a purchase, just to say they were at a dispensary. Yet some customers come back every day during their vacations, buying edibles one day and pre-rolled joints the next, all while sharing stories about the "old days," the manager says, like one man who smuggled trash bags of hash from Vietnam in the '70s.
Oddly enough, New Year's Eve was the first slow day at Herbal Bliss since the holiday rush began. Blaise has hardly had a free minute to handle managerial humdrum like budgeting and product ordering. But he doesn't mind.
"We get a lot of people saying, 'I don't know what I'm doing here, I don't know what I want," Blaise says as he watches the group outside shuffle around for the photo. "But we expect that. You'd think that first-time customers would stop coming in, but some of them are coming back time after time. They just seem excited to be in a dispensary. "
And they were. Like roughly 90 percent of all dispensary customers in Summit County, no one in the Texas group had visited a dispensary before, let alone bought legal marijuana. Three from the group were schoolteachers who simply wanted to walk inside a legal pot shop, and before leaving empty-handed, one admitted he can't smoke anyway — his employer runs mandatory drug tests.
But the cultural tides are shifting. In little more than a year, marijuana has been decriminalized in four states and the District of Columbia, while 23 states now allow medical use and sales. The Obama administration in February ordered banks to accept funds from legal dispensaries — a sticking point for the cash-only industry — and the Colorado Department of Revenue collected roughly $36.5 million in tax, license and fee revenue from the new industry by October, the latest month for which data are available.
In the same time frame, Oklahoma and Nebraska asked the U.S. Supreme Court to combat Colorado's marijuana laws, and two Summit County locals have been arrested in other states and accused of trying to sell a combined 431 pounds of Colorado-grown weed.
For Blaise, who returns to paperwork after the Texas group wanders off, those cultural shifts mean one thing: more business than he — or anyone in the dispensary community — ever expected.
"We've been way busier than before when we were just medical," Blaise says. "Weed is becoming the new bottle of wine when you come to the mountains. It's what you buy for a party or a birthday or just about anything."
New industry, new highs
Thanks to Amendment 64, Colorado has fast become a beta tester for the American marijuana experiment as a whole. In December 2009, when the first round of medical dispensaries began popping up across the state, roughly 44,000 residents had applied for the medical marijuana registry, including Blaise. They were known as red-card holders, and they were the only folks allowed to buy marijuana under the state constitution.
Just five years and a landmark election later, the industry is wildly different. Colorado is now home to nearly 300 retail dispensaries and 450 medical centers, with the promise of dozens more after the Denver suburb of Aurora approved dispensaries in October. More than 278,000 patients are now on the medical registry, but they hardly account for the bulk of current users.
In July 2014, revenue from retail sales ($29.7 million) overtook medical sales ($28.9 million) for the first time, according to a report from The Washington Post. Factors like a 10 percent special retail tax skew the numbers slightly — medical sales don't have a special tax — but with access now open to anyone in the state older than 21, local dispensary owners have bolstered their retail operations. After all, just 10 percent of their clientele live and work in Summit County. The rest are like the Texas group: out-of-state visitors who come once or twice a year for vacation.
"The first year was incredible," says Nick Brown, owner of High Country Healing, the only dispensary in Silverthorne. "I expected it to be big, just a huge change for High Country Healing, but I never saw it growing this quickly. We've been fighting to keep up all year."
Before marijuana went legal, Brown predicted his Silverthorne operation would see a 200 to 300 percent sales increase over 2013. Instead, HCH posted a 400 percent sales increase this year and his staff tripled, growing from nine to 31 employees. The HCH grow site once produced enough cannabis to sell wholesale; now it barely meets demand for the Silverthorne store.
To the south, Breckenridge Cannabis Club on Main Street has gone through similar shifts since 2013. Owner Caitlin McGuire says her staff has quadrupled, with 30 employees now spread among four businesses, including the flagship dispensary and a grow site nearby on Airport Road. She wouldn't comment on profits, but she said the business is thriving.
BCC become the unofficial public face of marijuana last year on New Year's Day, when people waiting to buy their first batch of legal weed formed an hour-long line down the heart of Main Street.
But again, tides are shifting. The cozy, iconic shop suffered a business blow in December when the Breckenridge Town Council decided to temporarily ban all dispensaries along Main Street, siding with voters in a special advisory election. BCC must move by Feb. 2, and McGuire says she and fellow owners have decided to run their new dispensary near the grow site on the west end of town, home to the four other Breckenridge dispensaries.
"I enjoy being part of the industry, but I can't say I enjoy the volatile nature of the industry," McGuire says of the past year. "Our team has grown, but now, if something happens to us, it doesn't just happen to a couple of owners. It affects everyone, and I think everyone in the industry has gone through the heartbreak we have."
For the town of Breckenridge, marijuana is a bona fide new revenue stream. In-town dispensaries saw $6.1 million in total sales through November, up from $1.8 million in 2013. The three-fold increase brings roughly $500,000 in tax revenue back to the town, according to the town's finance services manager Brian Waldes. It's $30,000 short of the town's original prediction, but he admits no one knew what to expect.
"Keep in mind, we had no history to go on, so we took what medical marijuana revenues had been and made an educated guess," says Waldes, who notes that no town funds rely solely on marijuana revenue. "But we're very much like the canary in the coal mine. While it has brought new revenue to the town, I'm not quite sure if the risks were worth it this early."
New year, new unknowns
Despite monthly (and almost weekly) shifts, owners like McGuire and Brown are excited to be on the front line of a burgeoning industry, particularly in a tourist Mecca like Summit County. The local dispensary community is relatively small — nine stores total, located in Frisco, Breckenridge and Silverthorne — but it has outperformed every other mountain community in terms of tax revenue.
In August alone — the tail end of the summer season — Summit County generated roughly $114,500 in marijuana tax revenue, according to numbers from the state. That's double what Pitkin and Clear Creek counties generated, and nearly triple what Eagle County pulled in.
The local dispensary community continues to grow, even as the state's marijuana industry hasn't quite met early predications. In February, Gov. John Hickenlooper said the combined sales from retail and medical marijuana could reach $1 billion in the first year, with the state collecting $134 million in taxes and fees. Since then, he dropped the prediction to $114 million, due in large part to the uncertainties of the rapidly evolving industry.
For Robin Albert, Youth and Family Services Manager for Summit County, those uncertainties are a major concern for children and parents in a community built around play — and party culture. When Amendment 64 passed, it earmarked funds for education programs to keep youth away from the newly decriminalized drug.
"Will access increase because of legalization? This is anecdotal, but there's the perception that once adults can use something, it's no longer seen as a completely bad thing," Albert says. "But our message is always moderation, and when we talk to parents, we let them know they have to be smart about where and when they use marijuana."
Beginning in early 2015, the department will launch a five-year education campaign, funded in part by tax revenue from local dispensaries. The campaign, known as Healthy Futures Initiative, will gather information on the impact marijuana has had on local youth and the community. The results will help the department fill a basic, vital need for more data on legal weed, Albert says.
In the meantime, the cultural tides keep shifting and the industry keeps evolving in turn. Albert and her colleagues regularly receive calls from agencies along the East Coast for tips on how to tackle legal marijuana education. BCC will find a new home on Airport Road. HCH has plans for a 20,000-square-foot grow space to meet demand for wholesale product across the state.
For Blaise, those shifts mean more paperwork. But he doesn't mind. In just a year, he's gone from selling 2 or 3 ounces of bud per day to several pounds, and he looks forward to complete legalization.
"I think it's kind of cool," he says of the Colorado pot industry. "Hopefully it will be legal everywhere. I think this is just the tip of the iceberg."
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