The ecstatic romance of medical marijuana in Denver has cooled to a comfortable long-term relationship.
With such stability comes a common misconception that dispensary owners are striking it rich.
Colorado is producing some of the best marijuana in the world right now and there are a lot of people doing it. Dan Hartman, director of the Medical Marijuana Enforcement Division, told the Boulder Weekly that applications for State medical marijuana business licenses include 818 centers, about 320 manufacturers of infused products, and 1,250 cultivation facilities statewide.
While many have been successful, stiff competition for patients among dispensaries has driven prices lower and lower, while the cost of being compliant with Colorado’s new regulations is reaching its peak.
When I worked more often as a budtender, patients that I would speak with were under the impression that we were getting rich because we were successfully operating a fairly popular medical marijuana center during the height of the Green Rush in Denver.
It's a hard misconception to break through because of the history marijuana carries with it as a black market commodity.
The black market is a cash business with little overhead allowing for extremely high profit margins. Conversely, trying to start a successful company that will weather political changes, economic hard-times, and outspoken opponents to any legalization of marijuana is another endeavor altogether.
Success in business is not immediate gratification with frivolous spending, and many who are in the marijuana business in Colorado are funneling any revenue directly to the costs of building business and development with little or no profit being recorded.
True success in business is measured over decades, and in this commodity market, in positive brand recognition.
Creating such a company takes a lot of work, requiring a skilled staff and professional facilities that do not come cheap.
Moreover, likely the largest burden of any medical marijuana business in Colorado, is the legal necessity of producing medicine in permitted and licensed facilities of quality that can compete in Colorado's premium medical marijuana market.
Last week I wrote about the many dispensaries for sale around Colorado as an example of effects of the upcoming July 1st transition. Many are in debt from the development of their business and selling the whole operation may be the only way to keep it alive or break even.
There is very good medicine in Colorado and much like the many microbreweries in the Denver Metro Area, every dispensary has its own style and flavor. This allows cannaseurs a variety of strains, products, and concentrates that has never been seen before.
Patients come with high standards and discerning tastes who, if disappointed with any aspect of service or quality, will likely never be seen again and this in a business where word of mouth and reputation are almost everything.
Though loyalty is built into Colorado’s medical marijuana system with dispensaries often giving significant discounts for members who have assigned the center as their primary provider, patients are encouraged to be fickle by over-the-top promotions and discounts.
The rate new patients are applying for medical marijuana licenses in Colorado has decreased from 2009 which saw an immense increase. In March of 2009 there were 5,920 patients with valid red cards. One year later, almost 65,000 additional applications were received by the Colorado Department of Health and Environment. From 2010 to 2011 saw a still admirable increase of nearly 49,000, but was 29% less than the jump of the previous year.
Many dispensaries, including my employer Denver Relief, were built in that period and were vying for a rapidly increasing market. Though it wasn’t long ago, medical marijuana was just beginning to be featured in major Colorado news media and there was little regulation to speak of, other than the guidelines of Amendment 20 which was passed by popular vote 9 years earlier.
Under Amendment 20, caregivers are permitted to grow 6 plants for each patient who lists them on their state medical marijuana license application. Any person with a name and the will could become a caregiver and legally open a dispensary prior to the passing of HB 1284 in 2010.
No language in Amendment 20 forbids retail locations and 2009 saw a dramatic increase in the number of dispensaries lining Denver’s streets.
Low prices in a flooded market greatly benefit the consumer. Some dispensaries are attempting to liquidate their stock of medicine prior to July 1st when full regulation of the industry goes into effect.
Some deals are just too good to pass up, but whether such prices can sustain the industry in Colorado is yet to be seen.
Now, with medical marijuana in Colorado on the precipice of fully enforceable regulation, we can only expect that we have passed the zenith of the rise in dispensaries as the industry sits atop the chopping block of the State.
This story is also published on Denver Relief Dispensary's Blog
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