Will too many pot dispensaries saturate the market?
October 30, 2009
GLENWOOD SPRINGS – No one seems to know how many medical marijuana dispensaries have opened in Colorado in recent years, although a frequently expressed estimate is that “a lot” of the centers are operating.
And along with that rather vague assessment is the belief that right here in the vicinity of Glenwood Springs – in the nearby towns of the Colorado and Roaring Fork river valleys – the density of the dispensaries may be as high, per capita, as anywhere in the state.
Colorado voters approved the medical use of marijuana, for certain ailments, by voting for a constitutional amendment in the 2000 general election.
A continuing federal prohibition against any use of pot slowed acceptance of medical marijuana in Colorado, but a recent policy reversal by the Obama administration changed all that. Attorney General Eric Holder’s statement that federal agents are to leave medical marijuana patients and providers alone has spurred a sudden surge in the industry statewide.
According to an informal count by the Post Independent, based on the advertising department’s accounts list and other reports, there are as many as 19 or 20 dispensaries serving the area between Aspen, Glenwood and Rifle.
Some, however, are interlopers from outside the immediate area, such as one in Leadville and one in South Park, which are advertising in the Roaring Fork Valley.
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The website, coloradomedicalmarijuana.com, in its “dispensaries” section, listed 30 outlets on the Front Range from Fort Collins to Pueblo.
One Carbondale dispensary operator said there are probably “hundreds” operating around the state by now.
In light of what one man called “a modern gold rush,” some are asking whether there will be any such thing as saturation of the local market.
“I think about that almost daily,” said Billy Miller, co-owner of the LEAF dispensary, which has outlets in Aspen and Carbondale.
It was Miller who likened the valley’s newest growth industry to the California gold rush of 1849, when miners known as “49ers” streamed into the state from all over the country and the world.
“I’ve been calling all of us the ’09ers,” Miller said.
Cheryl Sullivan and her stepsons, Sean, 26, and Keaton, 19, operate the Green Medicine Wellness dispensary in Glenwood Springs, which opened its doors on Oct. 26.
Green Medicine, said Cheryl Sullivan, is “not just a medical marijuana facility,” but also offers different types of massage therapy and, soon, acupuncture – a diversity of services that is not uncommon in the industry.
As for whether they worry the market is becoming oversaturated, Keaton Sullivan said, “Yes and no. I’ve noticed some of ’em are in it just for a quick buck. But we’re in it for the mission.”
The Sullivans got into the business, they said, after an uncle of the two young men died of cancer and spent the last part of his life in severe discomfort, which they felt could have been lessened if he’d had access to medical marijuana.
“It just didn’t seem right,” said Keaton, and when they moved to Colorado a couple of years ago they decided to go into the business to keep others from having the same fate.
“My issue is, there are patients out there who are suffering,” said Sean. If that remains the case, he predicted, “then there aren’t too many dispensaries.
“We believe it’s a healthier form of medicine” than pain pills or other, more traditional treatments for ailments, he continued, adding that with “vaporizers” [a less painful inhaling device] and pot cooked into food, “you don’t even have to smoke.”
Joseph Jones, who said his CMD dispensary in Carbondale was the first on the Western Slope when it opened last July, predicted that “the numbers will continue to grow” but added, “I feel there should be a limit to it at some point.”
But, like others interviewed for this story, Jones said the limit will come organically, as competition eliminates some and permits others to thrive.
“We’ll weed out the phonies,” he joked.
Different operators had differing opinions about how many customers an individual outlet needs to stay in business. Jones said 50 or so; the Sullivans believe it is closer to 100.
The sense of competition that exists seems to be on a friendly basis, to date.
“Everybody in the industry kind of knows everyone else,” Jones said.
“We’re on good terms with other dispensaries,” Keaton Sullivan said. “We’re not trying to cut each others’ throats. The sandbox is big enough for everyone.”
The Sullivans said their marketing plan includes “reaching out” to the American Cancer Society and area physicians, to discuss the benefits of medical marijuana for their constituencies. Cheryl Sullivan said that they have learned of some patients who might qualify for medical marijuana, whose doctors refused to “recommend” them for the treatment.
Concerning the potential for competitive thinning of the ranks among dispensaries, an Aspen attorney who represents a number of dispensaries is optimistic about the survival of those that are open now.
“I think competition has to take care of itself,” said Lauren Maytin, whose client-dispensaries can be found from Aspen to Rifle. “I think the market will level out, become stable.”
As for the dispensaries closest to her office, two of whom are her clients, she said, “I firmly think the four will survive in Aspen, because they’re all a little bit different.”
The consensus among the vendors interviewed for this story was that, if there is a saturation point in the local market, beyond which additional dispensaries would become a problem, it has not been reached yet.
“If there’s not enough patients, obviously, we [some of the current crop of vendors] don’t make it,” Sean Sullivan said. “We believe that the patients are here.”