On front line of legalization, pot has become big business - The Buffalo News

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On front line of legalization, pot has become big business

By Scott Scanlon and Stephen T. Watson

News Staff Reporters

DENVER – Gabriel Fairorth has grown and sold pot for 17 years. The last four, he’s even done it legally.

Fairorth can work in the open these days. Colorado legalized medical marijuana more than a decade ago and lifted the prohibition on recreational sales in January.

“I’m a farmer,” the former bricklayer said proudly, as he stood inside a retail store he helps oversee in the state’s largest city. “What we do is one of the most American industries out there.”

His customers – adults of all ages and in all walks of life – are happy, too. Without fear of arrest, anyone 21 and older, from anywhere in the world, can buy, possess and consume pot in a variety of forms in Colorado.

Little more than a half-year into this experiment, predictions that cannabis would result in more crime, more motor vehicle crashes and more people in hospital emergency rooms have proven overblown. Still, as New York begins to take small steps into the medical marijuana frontier, advocates and detractors alike say it will take years for the true effect of Colorado’s marijuana laws to play out.

However, the early picture shows legalization is having a big effect on the “Rocky Mountain High” state:

The state has generated $30.1 million in taxes, licenses and fees from marijuana sales in the first six months of the year, compared to $1.97 million over the same period a year ago, when only medical marijuana was legal, according to the Department of Revenue.

There were 11,289 Coloradans working in the marijuana industry as of July, an 85 percent increase since the same time last year, according to a statewide market study.

Tourism and pot have mixed, as out-of-state visitors account for 90 percent of retail marijuana sales in mountain communities, and for 44 percent of retail sales in metro Denver.

“It’s bringing the economy to life here. Everybody’s got work,” said Bryan Tallmadge, a North Tonawanda native who has worked in Colorado’s medical and recreational marijuana industries for two years.

As New York State and 34 other states flirt with loosening their marijuana laws by allowing medical use of the drug, and as some polls show a greater acceptance of decriminalization of marijuana, it’s worth looking at Colorado, one of just two states that have legalized cannabis.

To be sure, there have been problems.

Opponents contend that the relaxation of the marijuana laws puts teenagers and children at risk, and a small number of pot-related accidents and fatalities have raised concerns. They point, for instance, to colorful marijuana-infused candies that look like gummy sweets. They also dismiss as premature any broad conclusions about the economic benefits of legalized marijuana. And they say the state has moved too quickly – with too little oversight – to allow the sale of a product that hasn’t been scientifically studied and was illegal for most state residents until eight months ago.

“It’s just unbridled commercialization,” said Diane Carlson, a founder of Smart Colorado, an organization formed to keep marijuana away from children.

But these concerns haven’t tempered Colorado’s cannabis trade. Demand for marijuana since the legal sale of recreational pot began this year has outpaced earlier projections, and hundreds of stores across the state cater to users with every form of the product imaginable – including cannabis-laced oils, creams and candies.

The immediate reaction when the law went into effect Jan. 1 was that for pot, as with alcohol 80 years ago, prohibition had ended.

“If you drove around certain parts of the city, you’d see long lines of people” where the drug is sold, said Don Jankowski, 51, who is originally from Batavia and moved to Denver two decades ago. “It seems like it’s 1933 all over again.”

Growing demand

The Marijuana Policy Group, a collaboration between private and academic consultants, estimated that state residents and visitors 21 and older will consume 130.3 metric tons of pot this year, with one ton equivalent to 35,274 ounces, or 1 million grams. A marijuana cigarette contains half a gram of pot.

The study found 485,000 adults in the state, or 9 percent of Colorado’s population, used pot at least once per month, and the 22 percent of those who use marijuana nearly every day account for two-thirds of the demand for pot.

Those users are served by 493 medical marijuana stores and 212 retail marijuana outlets – called dispensaries – according to the state Department of Revenue, more than double the 327 medical dispensaries a year earlier.

Most are mom-and-pop dispensaries that look like a cross between a health food store and a pharmacy. The names imply health work is going on inside: Metropolis Medical, Medicine Man Denver and Pure Medical Center.

Inside such places, workers hawk pot as a mood stabilizer, an elixir and an herbal supplement that you can eat, smoke, apply and vaporize.

At Terrapin Care Station, inside a former Dunkin’ Donuts at Folsom and Canyon streets in Boulder, buds tucked into bottles are among the offerings, as are 10-milligram “clinical dosage” tablets. So are oils, trans- dermal patches and creams, tinctures and bath salts.

Hash-infused edibles – including chocolates, brownies and beverages – also are offered for sale. Other dispensaries in the Denver region offer cannabis-laced gummy bears, Swedish Fish and sports drinks.

Some of the varieties are high in delta-9-tetrahydrocannabinol – THC – the ingredient used to relax the mind and body, and control nausea from chemotherapy.

Others are low in THC and higher in cannabidiol – CBD – a compound that spares users much of the “stoned” feeling and is touted to treat pain, anxiety, seizures and sleep disorders.

Among questions frequently asked of customers:

Are you looking to smoke it or eat it?

Do you want to have a good time or just relax and sleep?

An ounce of recreational marijuana costs $400, about twice that of medical marijuana. By comparison, the street price of marijuana in Buffalo Niagara can range from $150 to as much as $600 per ounce, depending on the quality, a veteran narcotics detective said.

Highly taxed

Colorado’s police chiefs and lawmakers, including the governor, largely opposed recreational pot, but now they’re charged with regulating its sale and enforcing the state’s legal-marijuana law, after state voters approved it by a wide margin in late 2012.

Since then, the state has looked to capitalize on legal sales.

• In the new recreational market, the state takes a 15 percent excise tax on the sale from supplier to retailer, and nearly 13 percent more from residents and visitors who buy at dispensaries. Each plant also is tagged with a computer chip so state vehicles can drive by grow operations and track numbers.

• Recreational pot buyers must provide a driver’s license or picture ID in a retail outlet to prove they’re 21 or older. State residents can buy or possess up to 1 ounce of pot; visitors are limited to one-quarter of that, and they are not supposed to take it home.

• Using pot in any form in public places, bars or motor vehicles continues to be prohibited. Neither customers nor employees are allowed to smoke it in dispensaries, either. This isn’t Amsterdam, and residents don’t report seeing large numbers of stoned people in public.

• Municipalities can impose even more restrictions – many continue to prohibit retail sales in their communities – and hotels and other lodgings can ban pot smoking, as they can with cigarettes. Most do. Employers, particularly those concerned about public safety and liability issues, also can ban workers from using the drug.

There’s no doubt that the sale of marijuana is good for the state government’s bottom line.

The governor’s office in February released a budget proposal for the fiscal year that began July 1, predicting the state would collect $133.6 million in marijuana taxes on $1 billion in total legal marijuana sales.

However, in June the Colorado Legislative Council predicted the state would collect just $47.9 million in total marijuana taxes in the current fiscal year. The lower estimate is driven by the fact that fewer state residents than expected have switched from using medical marijuana, which is taxed at a lower rate than recreational marijuana.

By comparison, Colorado collected $46.6 million in liquor license fees and sales, use and excise taxes on alcohol in 2012-13.

“We’re going to do everything we can to regulate this and make it work,” Colorado Gov. John Hickenlooper told a group of journalists in Denver.

Boon to economy

Supporters say Colorado’s 8-month-old legal-pot experiment has been a boon for the overall economy, including tourism, though government and industry officials say it’s too soon to know for sure.

Employment is one direct measure. The 11,289 people working in the marijuana industry as of July was an 85 percent increase over the same period one year ago, before recreational pot was legal.

That figure doesn’t include the many lawyers, construction workers, electricians, Web developers and others who work in a supporting role, said Michael Elliott, executive director of the Marijuana Industry Group trade association.

The spin-off activity reminded Elliott of a quote often attributed to Mark Twain: “During the gold rush, it’s a good time to be in the pick-and-shovel business.”

Warehouses on the outskirts of downtown Denver shuttered by the Great Recession now teem with thousands of cannabis plants, including the building that houses Fairorth’s operation.

The legalization of medical, and now recreational, marijuana has led to a small-business boom, at least judging by a recent “Best of Denver 2014” issue of Westword, that city’s equivalent of Artvoice. The cover boasted a stylized cartoon of a cow munching on marijuana leaves, while the last 35 pages were filled with ads for dispensaries and other pot-related businesses.

Tallmadge, the North Tonawanda native, has lived in the Denver area for eight years. He worked as a paralegal for 10 years before shifting gears. The 34-year-old thought getting into the medical marijuana industry would be a good way to help people, including his brother, Phillip, who died in July following a battle with lymphoma.

In 2012, he started working at a medical marijuana storefront, then moved over to the back-end operations. He later became a crew manager for Green Mountain Harvest, before leaving that job to return home this summer.

Green Mountain is hired by grow-house owners who don’t have the staff, or expertise, to harvest their own marijuana plants and prepare the product for distribution. The company, owned by Susan Chicovsky, started out with four workers in 2010. It now has more than 60.

“Our business has doubled since January,” Chicovsky said, because of recreational pot.

Are marijuana tourists flocking to Colorado to get their fix?

About 12.6 million skiers hit the slopes in Colorado during the last season – the highest number ever recorded in the state, according to Colorado Ski Country USA, which represents the largest resorts.

Ruth Abate, 54, is a Youngstown, N.Y., native who has lived in Colorado for the past 15 years. In the summer, she sells frozen treats from her Buffalo Gal Ice Cream & Goodies truck, and in the winter she works in at the Steamboat Ski Resort, in Steamboat Springs, Colo.

“When we sell tickets, there are quite a few people who have the smell of marijuana on them,” Abate said. “I think it’s boosted business at the ski area. I think people want to come to Colorado instead of Utah, so they can buy weed. I’ve had people say that to me, across the ticket counter.”

State officials plan to research the effect of pot on tourism – but don’t expect to see recreational marijuana highlighted in the Colorado Vacation Guide anytime soon.

“Colorado is uniquely positioned as a premier, four-season destination and the Colorado Tourism Office has no plans to use the legalization of the drug to promote the state,” said Kathy Green, the office’s communications director, by email.

Children hospitalized

State officials aren’t the only Colorado residents wary of legal cannabis. Critics, including many police and lawmakers who opposed the 2012 referendum, said its widespread availability has caused public safety and public health problems.

In March, a 19-year-old Wyoming college student on spring break in Denver died after jumping from a hotel balcony. The coroner’s report listed ingestion of “edible cookies” as a contributing factor in the young man’s death.

And nine children – most between the ages of 3 and 7 – were hospitalized in the Children’s Hospital Colorado emergency department after eating marijuana products as of May, more than all of last year, Dr. Michael Di-Stefano, its medical director, told the Denver Post.

Those edibles are a particular concern to groups such as Smart Colorado. They argue that children are easily confused by marijuana-laced peach rings, pixie sticks and other candy that looks identical to the real thing, and there are few laws that control their sale.

State regulators are developing new rules for labels that will make it harder to confuse edible forms of pot with regular food.

The state feels the weight of gathering more information about the medical, psychological and social effects of the rush to legalize marijuana.

“What we’re trying to do is make sure that this, like any other product, is safe,” Dr. Larry Wolk, a pediatrician who became state public health director last fall, told health journalists earlier this year.

But the tension between state and federal law hampers efforts to study the drug.

Federal law classifies marijuana, along with heroin, as a Schedule I drug, considered the most dangerous class of drugs with the highest potential for abuse and no “currently accepted” medical use. This limits research money and raises legal issues for scientists who would conduct research.

“There’s a lot we still don’t know about the effects of marijuana,” Wolk said.

One effect predicted by law- enforcement officials in the build-up to the vote on recreational marijuana was a dramatic increase in crime. But easier access to pot hasn’t sparked a crime wave in greater Denver, at least through the first six months of the year. Serious crime, ranging from homicides to auto thefts, is down 10 percent over the same period last year, data from the Denver Department of Safety shows. Still, police officials aren’t ready to say the legal-pot experiment is a success.

“It would be irresponsible for us to make a judgment at this point,” said Sonny Jackson, a spokesman for the Denver Police Department. “Six months is not a very good litmus test.”

Grow houses in the ’burbs

As the experiment continues, the legalized pot trade grows – and people working within it sound a lot like those in Western New York who have opened wineries and breweries.

Fairorth, the former bricklayer and current cultivation manager with Herbal Remedies, plies his trade in a Lakewood neighborhood strip mall in south Denver as well as a 6,000-square-foot grow house a few miles away, among a collection of cinder block and metal buildings in a warehouse district near downtown.

Signs at the grow house warn visitors that the grounds are under constant video surveillance. Guests are required to sign in. Workers are discouraged from smoking pot, Fairorth said, but sometimes do.

Fairorth and fellow employees call the warehouse operation “the farm.” Overhead fans cool row upon row of 38 kinds of cannabis under 1,000-watt high-pressure sodium lights. The temperature is kept at 62 degrees at night and 74 degrees during the day.

White boards along some of the walls keep track of the plant varieties and growing cycles. Nearby, buds, stuffed into Mason jars, sit on wooden shelves, and harvested plants hang upside down to dry on makeshift trellises. Fairorth said his operation has 76 lights over flowers, while other grow houses in the city have thousands.

“When I started growing pot illegally in my basement, [I] could have gotten a felony, could have gone to jail for a long time,” he said. “This wasn’t what I envisioned.”

email: sscanlon@buffnews.com and swatson@buffnews.com

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