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Colorado Marijuana Markets Move Towards Wholesale Infrastructure

Colorado, since the beginning of the year in 2014 has been the foremost state to watch in the terms of moving forward with a systematic, inclusive, industry-wide approach to marijuana reform.  Unlike Washington State, later in the summer (although voters in both states approved recreational use in the Presidential voting year of 2012), Colorado incorporated its medical infrastructure into a new recreational plus market (unlike Washington State).

As a result, market development here has been, on the whole, much smoother, and is likely to be the model that other states tend to adopt more closely than any other functioning state market.

The model in Colorado, much like the one it was based on in California, started as a small, independent medical use market and has grown from there over a generation.  Regulations to slow growth were deliberately kept in place during the transition this year.  This includes one of the more interesting aspects of the Colorado market still unique in the country except in close parallel to other small markets like Maine.

One of the most interesting aspects of this was also the rule that has just been removed this fall by Colorado regulators, which also mandated that dispensaries had to grow 70% of the product they sold.

What this has done all year is create an environment where shortages, while they occurred most notably in the first month of legal market initiation in January, were almost unheard of after that in state.  In direct contrast, the Washington State market suffered from severe shortages after the start of the market in July, and by the end of the first month of legal sales, had already created a dangerous rift between growers and retail side merchants who complained of price gouging in a market made tight by regulation and not supply and threatened to file a federal lawsuit to pursue this claim, endangering the legitimacy of the new state law (I-502) which legalized recreational sales in the first place.

So far, in Colorado at least, this is a move that has been welcomed by the entire industry and does not appear to have upset the apple cart of forward reform.

Such lessons and comparisons are also important at a time when two more U.S. states (Oregon and Alaska) as well as the District of Columbia, multiple municipalities in Maine and the District of Columbia begin to prepare for market expansion next year in the wake of the November wins of regional reform initiatives.  While Oregon in particular is gearing up to be a high volume state (users will have the ability to possess and grow the greatest amount of legal cannabis for any purpose in any state), the Maine and D.C. markets will continue, just because of population, to look like the small market development of Colorado of yesteryear, particularly after 2010.

Part of the other worry, particularly expressed by medical patients and their caregivers in every state, starting with Colorado, however, as the industry moves inexorably towards full and federal legalization, is that these small growing coops will be legislated out of existence if not priced out by large scale, wholesale operations now clearly taking over the marjority of all legal, market bound pot in the U.S:

It is too early to tell if that is a chimera or not, but in the meantime, the fact that Colorado has now gone wholesale will also impact other regulations in the state and beyond as the country moves into its second year of fully functional and federally left alone state marijuana markets.

by Marguerite Arnold

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