Cannabis Commerce Comes of Age

marijuana plant

A look at the marijuana industry a decade after Amendment 64

By Samantha Tisdel Wright

It was a frosty New Year’s Day in 2014 when prohibition ended in Telluride. Three fledgling retail pot shops flung open their doors to long queues of eager customers. Some of them had traveled from as far away as Texas and California to buy legal weed for the first time.

Medical marijuana had already been available in Colorado for quite a while. But on this day—thanks to the passage of Amendment 64 in 2012 which legalized recreational weed, and Proposition AA in 2013 which began laying the groundwork for how the once-prohibited drug would be taxed and regulated—marijuana could finally be purchased by anyone over age 21 without a doctor’s prescription.

The budtenders that day were in the zone, cranking through two customers every three minutes. At one point, the line at Alpine Wellness stretched out the door and down the sidewalk alongside Telluride’s west Main Street, with customers happily waiting their turn for an hour or more. Such were the salad days of legal weed in Telluride. Everything was hopeful and hazy, loose and light.

All Grown Up

It’s been ten years now since Amendment 64 passed, and the industry has emerged from the haze, all grown up. Colorado has pioneered a lawful, commercial, adult-use market while raking in billions of tax dollars for the state.

According to Stephanie Turner of the Marijuana Industry Group, a trade association that advocates for responsible marijuana regulation, there are now about 41,000 people employed by “plant-touching companies” in Colorado, a four-fold increase from just five years ago. And that number does not include people employed at so-called ancillary companies.

For better or worse, retail marijuana has matured from a seedling to a sequoia, becoming more and more tightly regulated, shaking off the “gray market” era that thrived for several years as some growers gamed the rules around medical marijuana to grow hundreds of plants for phantom “patients” and then spirited the product out of state.

As marijuana has become more mainstream, Telluride’s retail pot shops now face the same challenges as other businesses in town—dealing with high rents, inflation, supply chain issues, and new competitors—while also tackling ever-evolving compliance matters at the state level and adapting to (or rejecting) new industry trends like preordering weed online through third party vendors. 

Where Have All the Cannatourists Gone?

Business is still steady, judging from slowly upward-trending sales tax figures in town, but as more and more states around the country legalize recreational marijuana, the long lines of curious cannatourists in Telluride have thinned out.

Indeed, legal weed has become so commonplace that local entrepreneur Andrew Dolese recently decided to quit doing his popular Telluride Green Tours. He used to leave the gondola plaza every day at 4:20, snow or shine, to guide tourists through the full array of Telluride’s retail cannabis wonderland.

He had lots of big groups in the very beginning, from politicians to a rabbi with half his congregation in tow. “That was a lot of fun, getting high with a rabbi,” Dolese laughed. These days, however, “The novelty has for sure worn off, and our biggest states where we used to get our business from are now weed-legal.”

Over at the Telluride Regional Medical Center, things have settled down too. According to Dr. Diana Koelliker, medical director of emergency and trauma services at TRMC, there are fewer cases of accidental overdosing than during those first few wild years. “It has always been more in our visitor population or people who are naive to THC-containing products,” Koelliker said. “Locals who use marijuana regularly don’t tend to end up in our ER.”

Over the years the clinic has also treated several cases of accidental pediatric ingestion. “We haven’t seen any recently,” Koelliker said, “but most certainly at the beginning. Parents are better now at keeping those things out of kids’ reach. Because a lot of marijuana products are in candy, cookie, or gummy form, it’s super important to keep them locked up just like a narcotic.”

A Free Market Approach

As cannabis commerce settles in for the long haul, more conservative communities on the Western Slope are beginning to change their attitudes toward it. Norwood, a town that was once adamantly against allowing retail weed, recently dropped its local prohibition and now boasts its first flourishing pot shop, a branch of Alpine Wellness.

In Telluride, meanwhile, there are several retail marijuana businesses in town. Telluride Bud Company, The Green Room, Delilah, and Alpine Wellness all got their start as medical marijuana dispensaries back in the day and have grown and evolved with the retail industry, riding its ups and downs.

Overall, Telluride’s pot shops seem to fit pretty seamlessly into the retail picture of downtown. The Town has been weedy at heart ever since the hippie invasion of the 1970s, and its residents passed Amendment 64 by the highest margin in the state. Elected officials thus took a fairly lenient approach to retail pot regulation compared to many other Colorado communities after the amendment’s passage. “We don’t have a higher sales tax rate, we don’t have a separate excise tax, and we don’t restrict the number of licenses,” Telluride Town Manager Scott Robson said.

“Generally the high price of retail space in Telluride really limits the market from growing much,” Robson added. “There are no pending inquiries that we know of. It is rarely a point of public conversation or debate any longer. From my perspective at a broad level, there have been incredibly few issues in the Town of Telluride related to retail marijuana in town.”

In the Weeds

Out in unincorporated San Miguel County, there are currently two commercial grow operations on Wright’s Mesa near Norwood, according to San Miguel County Senior Land Use Planner Mike Huebner who handles licensing for the county. Both grows are vertically integrated with local retail operations. Plus, there is one product manufacturer facility in Ilium Valley.

That would be Mary Jane’s Medicinals, whose founder and CEO Dahlia Mertens has been around since the very beginning of Colorado’s Green Rush back in 2009, with her wildly popular cannabis-infused salves and other topical products. Along the way, she’s built her business from $1,500 in “seed money” she made trimming weed in northern California, to more than $3 million per year in sales just in Colorado—and she’s in the process of licensing her products in other weed-legal states.

With no playbook to refer to, Mertens had to figure out everything for herself, starting her business in her laundry room and eventually expanding to her full-fledged manufacturing plant in Ilium with a small team of employees. Her product line continues to grow and evolve with newly launched products like her high-potency Cloud 9 Bath Bomb loaded with 150mg of CBD and THC. “The product is a total attitude adjuster,” Mertens said. “Topicals are an incredible ambassador for the plant. I have seen a lot of people change their mind as a result of using topicals, accepting marijuana as a beautiful healing herb.”

An Ever-Changing Industry

Mertens’ company used to grow its own cannabis to meet the supply needs for its products, but after the state changed its regulations in 2015 to allow standalone wholesale grow facilities, it became more affordable for her to buy weed from larger manufacturers with massive grow operations across the state.

That year marked an inflection point for the entire industry in Colorado, Alpine Wellness co-owner Mike Grady said. Starting in 2010, businesses like his that had gotten their start under the original medical marijuana rules and regulations became subject to Colorado’s so-called 70/30 rule, which required all marijuana businesses in the state to produce at least 70 percent of their own inventory.

“We started out as a standalone medical marijuana dispensary and were forced to change into a grow operation as well,” Grady explained, “something we had not thought of considering, and didn’t know how to do.” Soon enough, though, he and his business partner Nolan Murphy bootstrapped their way into setting up a successful grow operation on Wright’s Mesa, and thus were well positioned for the new demand for their product that came with Amendment 64.

In 2015, the next huge change in the industry occurred when the state dropped its 70/30 rule. Now anyone could just open a retail shop, or just open a grow facility for wholesale distribution, without any requirement for vertical integration between the two. That created a flood of new retail shops and industrial-scale grow facilities across the state, ultimately causing the price of wholesale marijuana to plummet. “It was good and bad,” Grady said. “It created a lot of change in the market, a lot of big retail chains took root, and there was more funding for franchise deals.”

Alpine Wellness managed to weather that storm. Even in the wake of dwindling cannatourism, the business has ultimately found its own thriving niche in the regional market, with a focus on affordable, organic, sunshine-soaked, soil-grown marijuana strains. “The only thing that I can really say confidently is we are exhausted,” said Grady, caught in the midst of the fall harvest in late October. “We are so tired. We have been doing it for years with a smile, and it’s working. Business is good and will keep getting better.”

Eating it Up

Cannabis entrepreneur Stephanie Jacobson is Telluride’s new kid on the block, and at the cutting edge of where the product manufacturing industry may be headed. Her Hot Box pot brownie mix launched in 2021 and are being devoured by dispensaries across the state. Everything is included in the Hot Box Mix: just add water. It even comes with a baking tray and, most importantly, a little bottle of infused canola oil.

While the business Jacobson founded is technically based in Telluride, the manufacturing plant is in Denver, and she purchases the infused oil from another product manufacturer rather than making it herself. Part of the appeal is that it is so uniform, she explained. Whip up a batch, and you know exactly how much THC you’re getting per serving—as long as you use the enclosed cutting guide. “The distillate is odorless and tasteless, the brownies are delicious, and when you are baking them you will not have a house full of that smell,” she said.

Jacobson’s 80-year-old father, who was in hospice until he recently passed away, was one of the product’s biggest fans. “No one is scared of a pot brownie,” Jacobson said. “It is not intimidating. I think now that there has been such a cultural shift and marijuana is more widely accepted, it has really pushed the innovation.”

Show Me the Money

Back in the good old days when prohibition ended, 420-friendly Green Party County Commissioner Art Goodtimes predicted that cannabis commerce would bring economic benefits to San Miguel County. And he turned out to be correct.

But the sales tax that retail cannabis brings to Telluride and San Miguel County is minuscule compared to each entity’s overall revenues. Telluride’s sales tax from retail marijuana in 2021 added up to $262,223, or about 2.6 percent of overall sales tax revenues for the Town, while the County got $55,650 from its own sales tax. These funds are not earmarked for anything in particular, but simply flow into the general fund.

The big bucks that were promised to Colorado voters through Amendment 64 go to the state’s Marijuana Tax Cash Fund in the form of state sales tax (from retail stores) and excise taxes on grow operations. The sales tax money eventually comes back to communities across the state in the form of health care, health education, substance abuse prevention and treatment programs, and law enforcement funding. The marijuana excise tax revenue flows into the Building Excellent Schools Today (BEST) Fund.

And the bucks, indeed, are big. According the Marijuana Enforcement Division’s most recent data, the retail marijuana industry has brought in nearly $2.3 billion in tax and fee revenues, and an eye-popping $13.5 trillion in total sales since 2014.

The Cop Shop

On the law enforcement end of the equation, the San Miguel County Sheriff’s Office still busts the occasional illicit grow operation, said Sheriff Bill Masters, but there has not been a cannabis crime wave in the county since the passage of Amendment 64.

There have, however, been a few serious marijuana-related incidents.

There was a 2011 case (just before the passage of Amendment 64) where two victims with a medical marijuana grow operation in Norwood were kidnapped, tased, and robbed at gunpoint by a neighbor linked to organized crime in Arizona.

Feds busted two marijuana grows between Gateway and Naturita on public land in 2015, where they found thousands of plants and arrested ten people working the sites.

And then there was this grisly headline in the Telluride Watch back in 2014: “Pitbull Bites Man’s Penis, Hazmat Team on the Scene.” The sheriff’s deputy who responded to that bloody scene discovered a butane hash oil manufacturing (BHO) operation in said man’s abode. Such operations have since been strictly outlawed.

In general, though, Masters said, things are veering toward the less shocking end of the spectrum. This item in the Telluride Daily Planet’s Cop Shop from 2021 is fairly typical:

“ROLLING STONED: A Norwood man was arrested on charges of driving under the influence of marijuana and open marijuana containers after being reported for suspicious activity.”

All puns aside, law enforcement still hasn’t come up with a great way to conduct roadside sobriety tests for stoned drivers. And Masters said that overall, his office hasn’t seen an uptick in DUID (Driving Under the Influence of Drugs) cases since the passage of Amendment 64. He’s more concerned about newer entrants into the local drug scene like meth and fentanyl. “But the biggest problem is still alcohol,” he sighed. “The best we can hope for is self-driving cars.”

1 thought on “Cannabis Commerce Comes of Age”

  1. Wow, it’s amazing to see how far the cannabis industry has come in recent years. From being a taboo topic to now being a legitimate and thriving commerce sector, it’s truly inspiring. I love reading articles like this that highlight the growth and success of the cannabis industry and I can’t wait to see what the future holds for this exciting and innovative market. Keep up the great work!”

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