Since voters declined to legalize recreational marijuana sales in Colorado Springs in November 2022, dispensaries in town have started to close as proponents of the ballot question predicted.
The number of medical marijuana dispensaries in town is down from 114 to 96 since the ballot question, city data shows. Once dispensary licenses are surrendered to the city, they are no longer available and so the number can never rise.
Statewide issues, such as low prices, have hurt the industry and those problems have been compounded by the lack of recreational sales, said Liz Zukowski, a spokeswoman for Native Roots. The company operates locations across the state and in Colorado Springs.
Colorado has seen marijuana sales drop dramatically as other states have legalized it. Twenty-four states and the District of Columbia now allow recreational marijuana. A change in the 2018 Farm Bill has also given rise to the sale of THC products derived from hemp in states where recreational marijuana is not legal. For example, Delta-8 products are common in Texas and they can also be ordered online.
As marijuana tourism has fallen, so has the price of marijuana.
Those factors and others are hitting the industry hard causing stores and marijuana grows to close.
“We have seen 10,000 jobs lost,” Zukowski said, addressing the statewide trend.
She expects the consolidation will continue.
“We are not at the end of businesses closing voluntarily, surrendering their licenses or being purchased by a larger operator,” she said.
Ryan McGuire, owner of Zipz, a medical marijuana dispensary, also expects more closures in the coming months. Amid the low prices, many small dispensary owners are making cuts to try to stay open.
“I am now running my grow myself to cut costs as much as I can,” he said.
Prices dropped in the industry because after demand spiked during the COVID-19 pandemic, many companies increased their production and then demand dropped, McGuire explained.
One of the changes that could help with the flooded market is the new use-by date regulation that went into effect statewide Jan. 1, he said. State law set the use-by dates nine months from the products’ harvest or production. Shelf stability testing can support a longer shelf life, the law states.
Legalizing recreational marijuana could also help Colorado Springs dispensary owners because millions of dollars in sales are diverted to the recreational shops in Manitou Springs, he said.
City Council President Randy Helms opposed legalizing recreational marijuana sales and he is not concerned about the additional tax revenue the city could earn from expanding the industry. He is also not concerned about the current decline in the industry.
He is personally opposed to marijuana, because it is still federally illegal and, as a member of the Air Force Academy’s Association of Graduates board, he believes it is his responsibility to set a good example around marijuana use.
“I still believe there are some real issues with marijuana,” he said, noting problems with high-potency products.
The majority of the council is also still opposed to legalizing recreational marijuana, he said.
In 2022, former Mayor John Suthers and 4th Judicial District Attorney Michael Allen appeared in ads opposing recreational marijuana sales and connected them with homelessness and crime. The ads helped reverse earlier support for legalizing marijuana sales, The Gazette previously reported. The question would have allowed existing shops to add recreational sales.
While the council may not be interested, Zukowski said, she hopes Congress will allow marijuana businesses to bank just like any other industry this year. Such a change could allow marijuana business to get more traditional loans.
“Having access to capital would help companies reinvest in their business to expand or innovate,” she said.
She would also like to see greater federal regulation of intoxicating hemp products. Colorado has already banned THC products made from hemp.
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