Tough New Rules Weed Out Colorado Pot Shops

One of every five medical marijuana dispensaries in Colorado could be forced to close under tough new rules barring many convicted felons from the business starting Sunday, according to federal drug authorities.

The Drug Enforcement Administration (DEA), which has been directed by Attorney General Eric Holder to back off on medical marijuana raids in states where cannabis is legal for medicinal use, was quick to seize upon the new state rules.

The agency lost no time in reviewing Colorado’s requirements to see how many felons could be forced out of the medical marijuana business. The DEA estimates that the no-felon rule could force up to 18 percent of current dispensaries to close down.

Under Obama Administration guidelines, the DEA can still raid medical marijuana providers if they are deemed to be in violation of both state and federal laws. So the unspoken threat is obvious: if convicted felons are running medical marijuana dispensaries, they are subject to federal raids.

After years of leaving marijuana rules mostly to local governments, the Colorado Legislature this year required cannabis dispensaries to apply for state licenses by July 31, 2010 in an effort to bring regulation to the state’s burgeoning medical marijuana industry.

Dispensary owners must pay hefty licensing fees ranging from $7,500 to $18,000 and show that they haven’t been convicted of felonies in the last five years. Those with felony drug convictions face a lifetime ban from the medical marijuana business.

The felony figures, first reported by KUSA-TV, stoked fears that “former drug dealers and drug users have flocked to the industry,” which was made legal by Colorado’s voters in a 2000 referendum. What such fear-mongering doesn’t take into account is that all medical marijuana patients were, by definition, violating the law before it was changed.

Including less serious crimes, the DEA claims about 28 percent of pot shop owners have criminal records for drug offenses.

“There’s people who are in the marijuana business strictly to make a profit and not what was portrayed to the voters, which was care for very sick and imminently dying people,” said Kevin Merrill, assistant special agent in charge for the Denver field division of the DEA.

Merrill neglected to mention how people were supposed to stay in the medical marijuana business in the absence of any profits.

Patient advocates said the tough new rules would simply drive medical marijuana providers back onto the black market.

“I’m sure there are places that are going to close their doors, and what’s sad is that a lot of people are just going to go back to the underground market, and that means no taxes to the state, no quality control over the marijuana product,” said Danyel Joffe, a Denver lawyer representing medical marijuana growers and sellers, according to The Associated Press.

“They don’t think it’s fair,” Sensible Colorado Executive Director Brian Vicente said. “A lot of people have been convicted of felonies or any crime and they have done their time, they’ve paid their debt to society and now want to move on and work in this field and aren’t able to do so.”

Someone with a criminal record for marijuana may be best suited to work in the industry because it shows they have experience working with the drug, according to Vicente.

“Many of those people the DEA arrested themselves for growing marijuana legally under Colorado law, so I don’t think they’re a credible source for providing information about folks who are following state law,” Vicente said.

The DEA said it used public records, advertisements and property records to collect the names of the owners of medical marijuana dispensaries. Then agents, eager for any ammunition in what has become their public relations war against medical marijuana, ran criminal background checks to gather the data.

Industry Blooms After Feds Back Off

Colorado’s medical marijuana industry took off in 2009 after the federal government signaled it would no longer seek prosecutions against patients and providers who are following state rules.

That, along with Colorado’s decision not to restrict how many patients medical marijuana providers may care for, resulted in the opening of more than 1,000 dispensaries statewide.

That pot shop boom led to the adoption of the current restrictive rules by the Legislature.

Dispensaries are bracing themselves for an even bigger blow on September 1, when they will be required to grow at least 70 percent of the marijuana they sell.

The pot shops have often been forced to outsource production to large-scale growers because of the time, space and expense associated with cultivating cannabis.

The grow-your-own requirement could result in the closure of hundreds more small-time operators in the dispensary business, according to industry experts.

It’s not yet clear how or when the state will start forcing dispensaries to close because of the new requirements.

Rejected dispensary applicants will be allowed to ask for administrative hearings to challenge their rejections, according to Matt Cook, who will lead enforcement of pot shops licenses for the Colorado Department of Revenue.

Cook said he expects about 2,200 medical marijuana dispensary license applications.

Cook said: “We plan to track the entire commodity from seed to sale,” reports Join Together, a resource that imparts news about mind-altering substances and help against their abuse. “We will use a Web-based, 24-7 video surveillance system, and we will see virtually everything from the time a seed goes into the ground to the time the plants are harvested, cultivated, processed, packaged, stored.”