My Report from Colorado on Marijuana Legalization – Number 2
by Larry Janezich
Recent visits to state recreational marijuana stores in Pueblo, Colorado, reveal that they vary widely in professionalism and business plans.
The largest, friendliest, and most transparent was Marisol Therapeutics. A talk with Michael Tapia, Bud Manager and Kitchen Manager, showed much had changed since a previous visit (See: http://bit.ly/1bWz87p) in January, when recreational marijuana supplies were limited. Tapia said that the state has licensed more growers and producers of edibles and supplies of smokeables and edibles were currently plentiful. The customer base continues to be older and well off – the dozen or so customers encountered at noon time last Thursday appeared to range in age from 30 to 60.
Marisol’s sales are comprised of about 60% smokeables (marijuana in dozens of strains and hash), and 40% edibles (hard candies, chocolate bars, sodas, and cookies). Prices have remained stable since January 1 – Tapia said that Marisol wants to maintain a predictable price so customers will know what to expect while the store builds a customer base. Current prices are $56.35 per 1/8th ounce (about 7 or 8 joints) and $468 for an ounce – although almost no one buys an ounce.
Asked about effective dosage on edibles, Tapia says Marisol follows the state’s “Best Practices” regulations. The recommended starting dose for recreational use is 10 milligrams of THC (the active ingredient in marijuana) – the same as the starting dose for medical marijuana, with 100 milligrams the maximum dose for the latter. Marisol carries nothing in its recreational product line of edibles containing more than 100 milligrams of THC per package.
For example, the chocolate caramel bars and the pretzel peanut butter bars contain 62.5 milligrams in four squares (recommended starting dose is ½ of one square) which sells for $15.
The sodas, with 30 milligrams sell for $20. The chocolate bars and the hard candies produced by Edipure are the store’s bestselling edibles. The state requires that edible products leaving the store must be in a child proof bag, which the store charges $2.00 for. Customers can reuse the bag for future purchases.
Because of lack of regulation and oversight, quality control is currently an industry problem. The Denver Post recently had a series of edibles tested. The results for some products showed a wide disparity between the amount of THC in a product as stated on the package and the amount actually contained in the product – usually, considerably less. Edipure candies had the most consistently reliable product. Marisol produces its own line of edibles and has its products tested by Phylatech Metrics and Solutions (no website) to monitor product quality. Regulations require that all products be tested and labelled for THC content by October 1.
Banking and credit cards continue to hamper the industry. Some marijuana retailers are reported to be taking credit cards using second and third parties, but despite federal government approval allowing banks to engage in business with marijuana sellers, banks are so far reluctant to do so. Colorado has recently sanctioned those in the legal profession to accept marijuana retailers as clients.
State budget officials expect sales of recreational marijuana to be volatile for some months as additional stores open, supplies increase, prices drop, and the market shakes out. In January, only two stores were open in Pueblo County – in February, there were five. Sales of recreational marijuana in the County dropped from $931,877 in January to $820,000 in February. County sales tax receipts from the 3.5% sales tax for February were 28,724 compared to 32,643 in January. That tally does not include a 1% county sales tax on all items sold in the county, or the county’s share of the state’s marijuana-specific 10% sales tax. Additional taxes include a 2.9% state sales tax and a 15 % excise taxes paid on the wholesale price when marijuana is transferred between grower and seller. $40 million from the excise tax are designated by law for school construction.
Statewide, in January, sales from 59 recreational marijuana stores amounted to about $14 million and the state collected some $2 million in taxes. The figures fell below what will be necessary to hit legislative and budget analysts’ predictions – which projected $190 million in sales for the first six months of 2014. At the current pace, sales will amount to $84 million in that period which would mean some $12 million in revenue. A broader customer base as marijuana becomes more available and increased sales during the tourist season could boost those numbers.
By the end of February, 108 additional stores had received state approval to sell recreational marijuana, though many are still in the process of receiving county and or city approval to open. Pueblo has a moratorium on sales within city limits until January 1, 2015 – if then. The city council is currently considering whether to allow recreational marijuana to be grown inside the city limits.