Colorado shares its success in marijuana business

by: Graham Johnson Updated:

DENVER - It is a sea of green. In a 20,000-square-foot Colorado warehouse, marijuana is legally permitted and grown on a scale not yet seen in Washington. Several rooms across two levels provide places for pot to grow at various stages of cultivation.

Voters in Colorado and Washington both legalized recreational marijuana last November, and both states are taking roughly a year to implement it. In many ways, Colorado is ahead, in part because of a more sophisticated medical marijuana system that's already in place.

While medical marijuana operations in Washington have loose oversight, in Colorado they are closely regulated by the state. Bar codes track marijuana from seed to sale, a system designed to prevent leakage into the black market.

There have also been failures. More than half the dispensaries that opened three years ago have closed. And Colorado requires medical marijuana retailers to grow 70 percent of what they sell. It's called "vertical integration."

Denver lawyer Robert Corry said it restricts the free market and makes no sense.

"If we superimpose that failed model on a market that's 10 times larger we're going to fail monumentally," said Corry, who co-wrote Amendment 64.

Colorado's legislature has not abandoned the 70 percent rule for recreational marijuana. The rule will stay in place until October 2014. Corry praises Washington for keeping producers and retailers separate from the start.

"Your law actually makes more sense in that way because it outright prohibits market domination," Corry said.

Corry said an advantage of Colorado's new law over Washington's is that it allows people to grow marijuana at home.

As both states struggle with implementation, marijuana entrepreneurs in Colorado have been quicker to dive in. The first private pot clubs opened in Denver - and the state is far ahead on cannabis tourism. Tens of thousands turned out for Denver's "420" celebration last month.

Matt Brown's new marijuana tourism company, My 420 Tours, brought people to Colorado from as far away as Australia.

"The response has been overwhelming around the world," Brown said. "We have several hundred people begging for us to come up with the next trip to give them they're ready to come in."

The move to allow recreational marijuana use by adults is opening up new markets for Dixie Elixirs, a Denver company that produces cannabis-infused products, currently for medical marijuana outlets. Managing Director Tripp Keber sees his potential customer base growing from a hundred thousand patients to a million consumers. He hopes to open a production facility in the Seattle area.

"Our intentions are to come to the state of Washington as quickly as we're allowed," Keber said.

Because it remains illegal under federal law, marijuana and marijuana products produced in either Colorado or Washington must stay within state borders. And companies that sell cannabis products can't ship them between the two states. For air travelers, while the Transportation Security Administration says it isn't actively looking for marijuana at airports, the agency warns it might refer discoveries of pot to law enforcement.

Brown advises clients not to even think about taking marijuana out of Colorado.

"Any time you leave the state borders, that is a federal offense, that is federal jurisdiction," Brown said. "You can't do it. Don't do it. Don't screw it up for the rest of us."