Colorado still has so many issues to work through before we know what effect pot tourism really has on the economy, both good and bad. Let's focus on the real numbers behind the groovy headlines.
Pot sellers are gearing up for their first holiday season since recreational marijuana was legalized in Colorado.
At Grass Station, a shop in Denver that sells $7 joints, $21 chocolate bars and even an $11 lip balm, the goal is to get the same kind of post-Thanksgiving sales bump as department stores or clothing chains. Some pot sellers have even renamed the traditional Black Friday shopping day “Green Friday.”
“We have really high expectations,” said Grass Station owner Ryan Fox. “Now we’ve got the legal means for people to give marijuana as a gift, and that’s never really been something that was feasible in the past.”
The shop expects a line at the door at 8 a.m. on Nov. 28, the day after Thanksgiving, as tokers try to get their fingers on rationed specials. Sixteen customers will get an ounce of weed for $50 that generally sells for five times that amount. Sixty joints will go for $1 each. The price for a $30 vape-pen cartridge will be cut in half.
Colorado’s almost 300 legal marijuana sellers have more to worry about than just enticing customers with discounts. The industry is grappling with 500 pages of regulation and myriad marketing restrictions. There’s also concern that the federal government still sees the trade as illegal, even if officials are looking the other way for now.
Outdoor advertising, billboards and most mass marketing for weed are prohibited, said Mike Elliott, executive director of the Marijuana Industry Group, a trade association representing 30 owners with 200 store licenses.
For that reason, many pot sellers have been hesitant to do a holiday marketing blitz.
“We haven’t spent much time thinking about the holidays,” he said. “We spend our time focusing on compliance.”
Colorado voted to allow pot sales for medicinal purposes in 2000. The industry didn’t take off, however, until President Barack Obama took over in 2009 and concerns about federal enforcement eased. The state later approved sales for recreational use — no doctor’s note needed — beginning in January. Until July, however, only medicinal retailers could apply for recreational-weed licenses. Now, most Colorado residents 21 and older can try to make it through the permitting gauntlet.
Billions of Dollars
While Washington is the only other state currently allowing recreational sales, voters in Alaska, Oregon and the District of Columbia approved similar measures on Nov. 4. The legalized pot industry in the U.S. will be worth about $2.3 billion this year and may grow to more than $10 billion by about 2018, according to the San Francisco-based ArcView Group, which invests in the industry.
This “green rush” generated $207 million in recreational pot sales in Colorado during the first nine months of the year, according to the state Revenue Department. In that period, recreational and medical marijuana combined to raise $52.5 million in revenue for the state through taxes, licenses and fees.
A stretch of Denver’s South Broadway avenue known for its antique shops has been infiltrated by the state’s newest industry. So many medicinal and recreational marijuana retailers have snatched up affordable storefronts in recent years that the area has been dubbed the Green Mile.
Efforts by the new neighbors to create a business association have met resistance by some antique-shop owners, who worry about being overshadowed. Melding the marijuana trade with traditional businesses remains a work in progress.
In the midst of this swirling uncertainty, many pot retailers have yet to tap their inner Macy’s and roll out ambitious holiday promotions. Much of their day is spent dealing with security. Banks, concerned about possible federal retribution, mostly snub the industry, leaving it an all-cash business.
Sam Kamin, a University of Denver law professor who tracks the industry, said he’s not sure how big the post-Thanksgiving sales surge will be. Black Friday may not even beat a weekend in August when the jam band Phish came to town. Still, there are plenty of signs of the market’s budding sophistication — and that includes holding more promotions.
“Christmas sales, day-after-Thanksgiving sales, your- family-is-in-town-and-you-need-something-to-get-you-through sales?” Kamin said. “None of that would surprise me now that the industry has come out into the open. I would expect to see the industry behaving like any others to the extent that it can.”
On the Green Mile, pot stores range from sober names like Colorado Wellness Inc. to playful monikers such as Ganja Gourmet, Sticky Buds and the Green Depot. The establishments don’t look much different on the outside than the antique shops, pet stores and cafes next door. Just swap wood-brown color schemes for green.
The smell, however, is unmistakable. As plants are harvested in attached grow houses at some stores, the pungent musk of fresh cannabis flowers clings to the back of the nostrils like a piney potpourri.
Inside the stores, customers get a greeting that’s more like a bail bondsman than a Gap clerk in khakis. Hefty amounts of cash and weed on the premises generally require a guard — sometimes packing a sidearm — to protect a fortified metal entrance. An ID screener often sits behind bullet-proof glass, grabbing the picture cards through a small opening or drawer.
Once customers get past the screener and enter the inner sanctum, things get fun again. At Patients Choice on the Green Mile, the Eagles’ “Hotel California” plays on the sound system as customers browse Dixie Roll chocolate chews and sarsaparilla soft drinks for $15 each. They are spiked with the cannabinoids that either make you high or take the edge off pain. Marijuana buds are prepackaged in sealed plastic pouches.
The array of offerings is dazzling. Concentrated THC, the psychoactive ingredient in cannabis, is sold in waxes, goos, hard resin bits called “shatters” and other compounds used to enhance the high. Edibles go far beyond brownies. There are chocolate bars, coffee drinks, breads, candies and the popular lollipop.
Plant-cultivation cycles and fluctuating supply can make it hard for shops like Patients Choice to plan promotions too far ahead. They aren’t always sure what products they’ll have on hand. Still, the store plans to use the holiday to attract customers during Denver’s mud season, the slow period before snow arrives and skiers hit the slopes.
At the Grass Station, located within an industrial area a few miles from Coors Field, Fox is expecting a rush of customers. The former electrical contractor, who sold medical marijuana since 2009 before transitioning to recreational sales in January, logged his biggest sales of last year on Black Friday.
Since recreational pot became legal, Fox noticed that local customers dropped by more often, treating the shop like a liquor store. Out-of-state visitors, meanwhile, would come and hang out, asking questions and exploring the place like a bookstore. So Fox decided to cater to this new consumer vibe by adding clerks and merchandising products more like a true retailer.
Grass Station budtenders assist customers at seven stations, each showcasing the shop’s product line. Transactions are completed on Apple laptops, with the store adding sales taxes amounting to more than 20 percent. On the wall behind the glass cases, video screens display prices.
On thing the store won’t be doing is embracing the “Green Friday” name. In the spirit of blending in with the rest of the retail world, Grass Station will call it Black Friday, manager Conor Morrison said.
“We all want to be taken seriously,” he said. “We want to be considered a real industry.”
To contact the reporters on this story: Duane D. Stanford in Atlanta at firstname.lastname@example.org; Kevin Orland in Chicago at email@example.com. To contact the editors responsible for this story: Nick Turner at firstname.lastname@example.org.
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Photo Credit: In this Dec. 5, 2013, photo marijuana matures in ideal conditions at the Medicine Man dispensary and grow operation in northeast Denver. Ed Andrieski / Associated Press