Boulder dispensaries react to ban on new businesses

From glee at the prospect of no new competition to dismay at the city's handling of the matter, Boulder's medical marijuana industry had a mix of reactions Wednesday to the city's unexpected ban on new businesses.

The City Council approved the temporary ban on new dispensaries and growing operations at about 11 p.m. Tuesday at the request of City Attorney Tom Carr.

The ban took effect immediately and will last at least until 8 a.m. Feb. 8. But the council is scheduled to hold a public hearing Feb. 7 to decide whether to impose a longer-term moratorium.

On Wednesday, Carr said he plans to call for at least a six-month moratorium at that meeting.

"The fact is that we wanted to get to a level where we could get through the first 120 applications that we've gotten and make sure the community was adequately served," Carr said.

Now, with 37 cultivation facilities, 32 dispensaries and six marijuana-infused product manufacturing sites in the city, Carr said, "We have more than enough businesses in town."

He said there are also concerns that growing operations are simply shipping their product to Denver dispensaries -- cutting Boulder out of the tax collections -- and that dispensaries in Fort Collins will try to relocate to Boulder after that city ordered all medical marijuana businesses to close by Feb. 14.

Carr said the temporary ban on new license applications would give the council time to review the laws governing the industry and whether changes should be made.

"We think we've been very fair to this industry," Carr said, noting that most other Front Range cities have banned dispensaries entirely. "We've tried to help this industry and support it."

The city would likely draft changes to regulations, or write new ones, if the council approves a longer-term moratorium. It's possible that the moratorium could be extended again after six months, however.

Carr said it was important not to give prior notice about the emergency moratorium so that would-be dispensary owners didn't have time to submit last-minute applications.

Some dispensary owners said Wednesday that they suspected the city would eventually close the floodgates.

"While I think it's unfortunate for people looking to expand or perhaps relocate from other areas, it doesn't surprise me," said Frank Horwich, owner of the Boulder MMC dispensary, 2206 Pearl St.

City officials said Boulder now has 12 pending applications for medical marijuana shops -- which will still be allowed through the process.

Horwich said he thinks the relatively large number of dispensaries in Boulder is driving the moratorium.

"It has felt to me that the city of Boulder has realized they have probably more than enough shops," he said. "All of the conversations that I've had in the past with officials from the city of Boulder didn't lead me to believe they were interested in having any additional (medical marijuana) businesses."

Carr, the city attorney, said the moratorium also gives his office time to see how a court case involving a Boulder dispensary owner plays out.

Last month, Boulder County District Court Judge Andrew Macdonald granted a preliminary injunction against the city that allows Jack Pease, owner of Buffalo Enterprises, to continue operating his medical marijuana dispensary, The Station, and the accompanying grow operation, Bushes.

The city had ordered the company to close its doors over compliance issues and for denying city inspectors access to his business. Pease appealed that order, saying the city didn't treat him fairly.

On Wednesday, Pease said he thinks the moratorium is an unfair overreaction to his case.

"No, I don't think it's fair to the other people -- not at all," he said. "It seems like, to me, that instead of putting it on hold and stopping the world, you deal with the situation at hand and move on."

But some businesses that already have a license see the moratorium as an opportunity.

"It's a good thing for us," said Dan Boden, general manager at Boulder Kind Care, 2031 16th St. "We're actually pretty happy about it."

He said the dispensaries that got on top of the city's stringent requirements early are the ones that deserve to stay in business.

"The people who actively put effort into complying ... are being rewarded," he said.

And the rewards can be great. According to city officials, the sale of medical marijuana in the city topped $18 million in the first 10 months of 2011. That has translated to about $654,000 in sales tax for the city.

Laura Kriho, director of the Boulder-based Cannabis Therapy Institute, said the financial incentives of keeping competition out of the market have made it more difficult to rally local businesses against things like additional regulations and moratoriums.

"The dispensaries, they want these regulations," she said. "They want their competition put out of business."

But from the standpoint of medical marijuana patients, she said, a moratorium doesn't help anyone.

"Any more prohibitions are going to go against patients," she said. "This is supposed to be liberal Boulder, so what is the problem here?"

Two potential ballot measures this fall may change the playing field for medical marijuana businesses regardless of what Boulder does.

Kriho is working on the "Legalize 2012" campaign, which seeks to legalize the drug in Colorado.

A competing measure, meanwhile, seeks to regulate marijuana like alcohol and legalize possession of up to 1 ounce of the drug for anyone over 21.

Mason Tvert, a proponent of the initiative, turned in nearly 160,000 signatures to the Colorado Secretary of State on Wednesday in an effort to get that measure on the fall ballot. The initiative needs only about 86,000 valid signatures to make the ballot.

He said the initiative would not affect Boulder's rules for dispensaries.

"The initiative explicitly allows localities to establish their own policies and to ban those types of facilities if they want," he said. "This initiative will not affect current medical marijuana rules and regulations in any way."