Local marijuana businesses still planning for growth, despite federal concerns

Scott N. Miller | Vail Daily
Marijuana hemp (Cannabis sativa or Cannabis indica) leaf on white background
Getty Images/iStockphoto | iStockphoto

By the numbers

• $131.7 million: March sales by all Colorado licensed marijuana shops.

• $93.3 million: Recreational marijuana sales in March.

• $22.9 million: State marijuana sales tax collected in March.

• 48 percent: Growth in sales from March 2016 to March,2017.

Source: The Cannabist

EAGLE COUNTY — Colorado’s marijuana industry, both recreational and medical, is growing, and has set new sales records in 10 consecutive months. But the end of the current boom may be dictated by the federal government.

While more states are joining the trend toward legalizing marijuana for recreational and medical use — there are 26 as of this year — any possession or use remains a federal felony.

Starting in 2009, Obama administration officials in the U.S. Justice Department took an essentially hands-off approach to state marijuana legalization. But the law remains on the books. That means federal enforcement depends on the mood of the president and the U.S. Attorney General.

The current Attorney General, Jeff Sessions, a former federal prosecutor, has a reputation as being anti-marijuana, and has made numerous public statements to that effect over the years. There have been other conflicting signals from Washington D.C. — which legalized recreational marijuana in the 2016 election.

An encouraging sign came following a late-April meeting between Sessions and Colorado Gov. John Hickenlooper. Following that meeting, Hickenlooper told MSNBC’s Chuck Todd he believes the Justice Department has higher priorities than marijuana enforcement in states that have legalized it.

That’s an encouraging sign, but people in the business are wary of possible federal action. That said, businesses continue to grow, and to plan for growth.

Will Congress act?

Jason Mitchell is the manager at Roots Rx, one of several recreational marijuana shops in Eagle-Vail. Mitchell said that company is continuing to plan for growth, but said it’s time for Congress to act, either to loosen the federal prohibition, or at least to make banking easier for the industry.

Because virtually every bank in the country is federally chartered, those institutions all must adhere to federal rules. That means the marijuana industry operates mostly on a cash-only basis. That’s hard.

“Hard is an understatement,” Mitchell said. “You’re forcing people in a half-dozen states to do less-than-above-board financing. That’s ridiculous.”

Sweet Leaf Pioneer in Eagle is a recreational and medical dispensary owned by Dieneka and Dave Manzanares.

Dieneka Manzanares said she doesn’t expect the banking landscape to change any time soon.

“It’s time for Congress to act,” Manzanares said. “If they don’t change, banking won’t change.”

While banking remains difficult, Manzanares said it’s getting a little easier dealing with state and federal revenue agencies.

“With our payroll taxes, at least we’re able to talk to the feds now,” she said. “Before, we couldn’t even call. … I’ve talked to an IRS agent, and he helped us figure out how to pay payroll taxes.”

Despite a virtual lack of access to the banking system, the industry continues to grow.

“As a business owner, we’re moving forward with everything we’ve worked toward,” Manzanares said. “In the bigger picture, it’s not really deterring new businesses from coming in. … Companies are still buying (state) licenses and moving forward.”

Big states, more clout?

Mitchell believes that California and Nevada voters approving retail marijuana sales in 2016 could change the face of the industry, perhaps for the better.

“I think California and Nevada will press a lot of issues,” he said. “Alaska, Colorado and Washington aren’t states where you have huge crime issues. California and Nevada are a little different.”

California is the nation’s most populous state, too, and has 53 seats in Congress, along with two U.S. Senate seats. Even a mostly unified congressional delegation carries a lot of weight in the nation’s capitol.

Florida, which has legalized medical marijuana, has 27 seats in Congress. Massachusetts, where voters last year approved recreational sales, has nine seats in Congress.

“With those (states) coming on line, it’s making us feel better,” Manzanares said.

While Sessions in the past few days has ordered U.S. Attorneys to seek tougher sentences for criminals and drug offenders, that action so far hasn’t affected marijuana enforcement, which, at least for now, is governed by the “Cole Memo.” That 2013 Justice Department memorandum continued the 2009 directive for federal law enforcement to “not focus federal resources in your States on individuals who actions are in clear and unambiguous compliance with existing state laws.”

“I hope the Cole Memo stays in place,” Manzanares said. “We know what those rules are. That’s why people buying into the industry.”