The course of MMJ business over the last year

Over the last year, we have seen an explosion in the MMJ business. At first, it was a few brave souls who simply undertook to provide medicine to a few patients without regard to profit or large scale operations. However, once the Obama adminstration announced that MMJ would not be a federal law enforcement priority, a great many people began exploring the MMJ business. Unfortunately, most of the entrepeneurs were advised, not by my office, that the MMJ business was a “grey area” and that you could do virtually anything you want as long as the MMJ is sold to patients. This was not the case and there was little or no legal protection for these businesses. As a result, the primary business model was acquiring a few patients to justify a commercial grow operation primarily in residences or in places unknown to local governments. The MMJ was then sold wholesale to dispensaries. Selective prosecution by law enforcement gave these growers and dispensaries a feeling of relative safety in their MMJ business activities.

Quickly, the MMJ business was booming and Westword magazine capitalized by permitting large scale advertising of this fledling industry. A few business were blatant in catering to “recreational patients” and adopted names like “Dr. Reefer.” The Denver Post then got into the act by taking an active role in criticizing the MMJ industry, including by referring to dispensaries as “pot shops” and publishing photographs of young people smoking marijuana. This created a public perception of MMJ as a front for recreational drug use. The legislature quickly responded with threats to eliminate the MMJ industry with the help of law enforcement.

In the following months, many attempts to create regulations for the MMJ industry were attempted and a rash of local moratoriums on MMJ businesses were enacted. A long and arduous process soon followed. From the outset, the legislature made clear that responsible and tightly regulated businesses would be the only survivors.

In the spring, various drafts of the proposed regulations were completed and it was clear that commercial growing and wholesale sales of MMJ would be prohibited. However, the growers were advised, again not by my office, that the regulations would not pass and that business as usual would be fine. This was not the case.

In May, HB1284 was completed and required a single business, the Medical Marijuana Center, was created. The MMC was required to grow and sell all of its own medicine and the commercial grower was legally eliminated. This wreaked havoc in the MMJ business community, as the grower businesses far out numbered the retail businesses. Felons and out of state residents were also eliminated creating further havoc in the industry.

Now comes “black thursday,” July 1, which is the effective date of HB1284. All businesses must be locally approved for both the grow and retail aspects of the MMC in order to continue operating after July 1. “Shotgun weddings” of growers and dispensaries are occurring in a matter of days or hours as people struggle to comply with the July 1 deadline. In many cases, these business marriages are doomed to fail. I predict law enforcement will ramp up its efforts to squash out non-compliant businesses and less than half of the existing MMJ businesses will survive. The final chapter of this story will be written over the next several months. Let us hope that the patients are not the ones who suffer along with the fate of the businesses that support them.

About Jeff Gard
Jeff Gard is a Colorado lawyer providing practical, affordable legal advice for patients, caregivers, dispensaries and anyone interested in medical marijuana.

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