State shuts down dozens of medical pot shops in ’14 | AspenTimes.com

State shuts down dozens of medical pot shops in ’14

Will Grandbois
Glenwood Springs Post Independent

The former location of the Center, a marijuana dispensary in Carbondale which is under investigation by the state.

In late September, a sign appeared in the window of The Center, a recreational marijuana dispensary on Main Street in Carbondale, informing visitors that the shop had closed until further notice.

The Colorado Department of Revenue later confirmed that the shop was the subject of an ongoing investigation but declined to share any details. Ownership of the business had been transferred on a local level over the summer, although it's unclear whether the state recognized the change.

Now, the property is for sale, and last week, the local licenses were surrendered to town hall. Although the outcome of the investigation is still pending, it appears that The Center has joined the ranks of dispensaries to shut down after a state inspection.

While some recreational pot shops have had short closures and the state may be conducting other active investigations that are not yet public, only a handful of have received summary suspension orders from the state since recreational sales became legal on Jan. 1.

During the same time, dozens of medical shops have been closed — 55 in 2014 compared with 35 during the previous three years combined, according to records that the Post Independent obtained through a Colorado Open Records Act request.

"With the increase in staffing we are able to go in and do more compliance checks," explained Colorado Department of Revenue spokeswoman Natriece Bryant.

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Marijuana shop enforcement staffing has increased progressively since the beginning of 2014. Currently, around 55 full-time equivalent jobs allow the Department of Revenue to keep a closer eye on 305 recreational marijuana dispensaries, 375 retail cultivators, 92 infused-product manufacturers and 15 testing facilities as well as 501 medical marijuana dispensaries and 739 medical growers that have been issued licenses.

Documents detailing the closures provide a window into the tightly regulated world of legal marijuana in Colorado and the attention to detail required of operators.

The records showed closure actions against two recreational pot shops. In August, the Greener Side in Pueblo was shut down for neglecting to implement required inventory tracking for its recreational and medical dispensaries. Officials also ascertained that the company's medical side had produced and stocked nearly 4,000 ounces of marijuana beyond its per-patient limit.

In October, the Herbal Center in Denver was closed for a laundry list of infractions, including having more than 200 pounds of excess marijuana on its medical side, evidence of consumption on the premises, operating before obtaining a local license, inventory tracking errors and insufficient security.

Regulation of medical marijuana operations has taken full effect this year.

Medical pot was approved in Colorado in 2000, but limited to five patients per caregiver until 2007. Before establishment of the Medical Marijuana Enforcement Division in 2010, medical dispensaries required only a sales tax license to operate. According to Bryant, existing operations were given a grace period to come into compliance with new standards, meaning that actual shutdowns didn't begin until 2011.

In March 2011, six dispensaries were denied licenses under new regulations, each for failing to provide evidence that at least 70 percent of its stock was self-grown. That summer, several others were shut down, some due to insufficient internal cultivation and others because of local bans in Mesa County, Douglas County and elsewhere.

"For something that everybody had to have, there's a lot of political subdivisions that voted it out," said Garfield County Sheriff Lou Vallario. While most counties chose to either ban or allow medical infrastructure, Garfield County opted to ban dispensaries in unincorporated areas but allow cultivation.

The first bust not based on cultivation or local bans occurred in Carbondale in early October 2011, when David Edgar, owner of Carbondale dispensary Mother Earth, was arrested on charges of selling marijuana to unlicensed buyers and selling cocaine to undercover law enforcement agents. The shop's inventory was seized and destroyed.

Most of the closures since then have not been marked by such severe circumstances.

"I think some people don't try to make a mistake — they just get caught up and have an oversight. There are others that may have been trying to skirt the rules," said Dan Sullivan, co-owner of the The Green Joint dispensary in Glenwood Springs.

Carbondale Town Clerk Cathy Derby agreed.

"I think most of these guys are above board," she said. "They have so much money invested in these places. It's a new animal. You never know what's going to happen with it until you start riding it."

Derby said she mostly sees issues with inventory tracking systems on the local level. Statewide, some stores have neglected to install video surveillance throughout the premises, others to take out excise-tax security bond for three months of sales, and still others have missed an employee background check or not listed all of their investors. Even if a grow or dispensary gets off the ground, it might still make a misstep transferring inventory from medical to recreational — something the state allowed on a one-time basis when recreational shops were getting started — or in the nearly from-scratch process of transferring ownership.

"It's a hugely complicated business that's not for the faint-hearted," Sullivan said. "It takes a lot of oversight and good old-fashioned keeping your hands on the wheel. You have to make sure that you follow all those steps and that you've got great record-keeping. You create a thorough process, make sure that your staff is thoroughly trained in that process, and that you come back and verify."

Despite the challenges, Sullivan said he understands the state's need for regulation.

"Colorado's really leading the way," he said. "They've done an outstanding job of setting up a process and oversight to make sure that the industry is doing the right things."

Added Bryant: "Our primary concern is public safety and security."

Quite aside from the presence of controlled substances, dispensaries are obligated to operate on a largely cash basis because they're not allowed to use the federal banking system, making them potential targets for other forms of crime.

The fact that marijuana is still federally illegal also poses a quandary for local law enforcement.

"Most people in law enforcement, although we might have our own opinions, really just want it clarified once and for all, whether we can or we can't," said Vallario. "I don't make law. I enforce what's on the books, and currently what's on the books is very conflicting."

For Vallario, the regulatory environment doesn't help much.

"Anything's better than nothing, but it's not enough, he said. "In some ways, it's enabling, because it has set up a standard."

"They don't want to shut them down, because they're tickled to death about all the tax revenue," he added.

The owners of least 92 medical and recreational marijuana businesses that have faced shutdowns might beg to differ.

VIOLATIONS

The Post Independent, through a Colorado Open Records Act request, obtained records of state enforcement actions against medical and recreational marijuana shops in the state.

Some of the violations from this year:

• The Denver Marijuana Med Center was denied a license because it lacked the required bond, the premises lease was filed incorrectly, the local authority had failed to grant a license and the owner, Georgene Sanchez, had an unpaid $134.25 traffic ticket.

• Greener Side West in Pueblo was closed due to incomplete inventory tracking, with 702 plants in its possession but not in its system.

• Healing House Denver had its license suspended because of problems with licensing, security, inventory and tracking, and because it was too close to Regis University.

• Legal Meds in Pueblo was fined $5,000 after an investigation found evidence of on-premises consumption, illegal seed sales, and problems with security and inventory.

Green Thumb Organics in Denver was shut down for a number of issues, security chief among them. The premises were burglarized on four occasions: once in October 2013, again in April 2014, and twice within three days in May 2014.

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