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Lawmakers Grapple with Booming Medical Marijuana Business

4 years ago
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Dr. Reefer.com's neon sign glows across the street from the University of Colorado in Boulder. Medicine on the Hill, which serves up pot-laced ice cream, is across the street from a Boulder police annex. And in Denver, a former member of President Barack Obama's national finance committee runs Apothecary of Colorado, a medical marijuana dispensary with the motto, "healing with a higher purpose."

Ten years after Colorado voters approved a medical marijuana measure, business is booming. There are an estimated 63,000 people with patient ID cards allowing them to buy pot for illnesses ranging from cancer to "severe pain." To serve all these consumers, entrepreneurs have opened hundreds of dispensaries – no one knows how many because there's no central regulation. In the university town of Boulder, for instance, there are between 60 and 70 medical marijuana shops, more than twice the 25 retail liquor stores.Meanwhile, the state, cities and counties are struggling to regulate the industry, which until recently has had little government oversight. And, the proliferation of patients and pot dispensaries has given more legitimacy to the drug. Like their California counterparts, Colorado voters could potentially see a ballot measure in November asking them to legalize marijuana, even though federal law makes it a crime to possess or distribute the drug.

Fourteen states have legalized marijuana for medical purposes, while Maryland allows a medical defense in criminal cases. Once medical marijuana is legalized, though, governments face issues such as which health conditions warrant its use, who determines that a patient needs marijuana, who grows it, and who sells it.

"One way the states have tried to handle this is through the registration process," said Robert Mikos, a Vanderbilt University law professor who studies marijuana laws. "The other way to do this is to control this as a prescription drug. At this stage, nobody has ever proposed going that far. No pharmacy is going to carry this stuff."

Mikos points to New Mexico as a state that's done one of the best jobs of regulating the industry. That state allows patients to possess up to six ounces of marijuana, while caregivers may serve a maximum of four certified patients.

Colorado's relatively sudden herbal blossoming results from two factors, medical marijuana proponents say. In 2007, a court overruled a limit of five patients for each provider. Then, last fall, the U.S. Department of Justice issued a memo recommending against federal prosecution of providers or users in states that allow medical marijuana.

"Essentially it was a low-key issue for a number of years," said Mason Tvert, executive director of SAFER, a national, nonprofit group aimed at educating the public about marijuana.

But the issue is no longer low key. Cities are struggling with zoning for dispensaries, while the state Legislature is considering measures to regulate who can prescribe and sell medical marijuana.

At the local level, several cities in Colorado are trying to prohibit marijuana dispensaries altogether. Others, most notably Denver and Boulder, are enacting zoning and licensing regulations. Boulder, for instance, is considering an initial license application fee of $3,000 for a dispensary applicant, plus a license fee of $3,000 with a $2,000 annual renewal. Denver charges $2,000 for an application, with a $3,000 annual license fee. The cities also collect sales tax on medical marijuana, with Boulder collecting $52,000 through November 2009, most of it in the latter half of the year.

"Our members all agree on maintaining local authority," said Mark Radtke, a policy advocate for the Colorado Municipal League. "That's everything from zoning control, siting these establishments, density, all the public safety and health issues."

At the state level, the Legislature is considering several measures to regulate medical marijuana providers and the doctors who certify patients. Sen. Chris Romer, a Denver Democrat championing regulations, at one point likened the situation to a "Wild West explosion."

One measure would require doctors who certify medical marijuana patients to have a "bona fide" health care relationship -- a response to concerns that a handful of doctors are certifying the majority of patients. It also would prohibit doctors and dispensaries from having financial relationships with each other. Another proposal would require state, as well as local, licenses for dispensaries. That bill would also regulate how and where providers grow marijuana, and more.

"Everybody agrees that the state has to come up with rules as to how do you license a caregiver, how do you handle a grower situation," Radtke said. "We're really talking about drug laws here."

Providers are among those actively advocating regulation, in part because they see it as a form of legitimacy. Plus, regulated dispensaries mean patients don't need to rely on drug dealers to get marijuana. They've hired lobbyists at the state level and formed groups to work with local governments on regulations.

"We're pushing for a system of regulating dispensaries," said Brian Vicente, executive director of Sensible Colorado, a group advocating legalization. "For us, the chaos is sending cancer patients to street corners and public parks to get medication."

And there are plenty of patients. Medical marijuana users must be certified by a doctor to have one of several conditions, ranging from severe pain to cancer. As the number of providers exploded, so did the number of patients in the state, more than doubling in the last quarter of 2009.

That created a backlog for the state agency charged with registering patients. Last month, the Department of Public Health and Environment announced it would no longer accept walk-in applications for patient cards. The agency estimates it's receiving 1,000 applications a day, up from 270 a day last August. It hasn't updated its statistics on the number of medical pot users since the end of September, when there were more than 17,000 on the rolls. The current estimate of 63,000 is through the end of February. Officials estimate 40,000 Coloradans will apply to use medical marijuana in 2010-11 (the state charges a $90 application fee).

Colorado's consternation over regulation contrasts with California, where there's so few rules that Mikos said marijuana might as well be legal.

"California is the regime that's most out of control," Mikos said. "They have no mandatory registration. They don't even require a written recommendation, an oral recommendation is fine. There are no quantity regulations. The counties are trying to take some steps ... but it's really tough to get a hold on this."

That state is taking the next step in the fall, when voters will be asked to legalize marijuana on the premise it will raise money to offset billion-dollar deficits.

For Wanda James, the Obama national finance committee member, manager of U.S. Rep. Jared Polis' successful 2008 congressional campaign and co-owner of the Apothecary of Colorado dispensary, legalization is the ultimate goal.

"My husband and I have been battling with America's pot laws for 20 some years," she said. "It's affected members of our families in negative ways."

Denver residents voted to make marijuana legal for adults in 2005. That effort was largely symbolic because the city's police brass vowed to enforce tougher state anti-drug laws. In 2007, voters passed a measure urging that such enforcement be the lowest priority. Meanwhile, the ski town of Breckenridge voted to make pot legal last November. The tiny mountain town of Nederland voted for legalization Tuesday, while the Western Slope town of Fruita enacted an extra 5 percent sales tax on medical marijuana.

"There's a growing level of support for making marijuana legal and regulating it and taxing it like alcohol," Tvert said. "More and more cities and towns are passing these measures."

Tvert, Wanda James and others are working on the fall measure. It would legalize and regulate marijuana for adults, and "would treat it very similarly to alcohol," Tvert said.

"We've done polling," James said. "It's about 50-50 out there in Colorado right now."

Mikos said it was possible medical marijuana proponents foresaw legalization as an ultimate goal all along.

"I don't think everyone who voted for these things necessarily thought that at the outset," he said. "But it's a fair test; if you legalize marijuana for one purpose does the world end? If it's OK to use this for these other medical conditions ... maybe we ought to think about full-scale legalization."

In California, marijuana legalization proponents say taxing pot could bring in $1.4 billion a year, an estimate Mikos and others say may be overly optimistic. Even taxes on medical marijuana aren't making much of a dent in Colorado revenues, Radtke said.

"Cities and towns are beginning to apply the sales tax to any sales of this," Radtke said. "But it's going to be a small piece of anyone's revenue picture."

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