What’s the next phase of cannabis tourism going to look like in Colorado, and how can equity be at its core?
That question was in the spotlight as Denver held its second Marijuana Licensing Work Group meeting last week, virtually, bringing together regulators, city council members, and representatives from Governor Jared Polis’ office, the city attorney’s office, the Mayor’s Office of Social Equity and Innovation, and Denver Public Schools. One recurring question was how hospitality-related cannabis businesses can be financially viable with cumbersome zoning regulations and other rules that could inhibit revenue growth.
(The first meeting, which Cannabis Wire covered, focused on delivery. After the group reviews and discusses delivery and hospitality policies, the work group will create proposals for Denver Mayor Michael Hancock and the City Council for approval.)
In November 2016, Denver residents approved Initiative 300, a pilot program that allowed for businesses to apply for a license to allow for on-site cannabis consumption. Sales were not allowed; in other words, BYOC. In May of 2019, the Colorado General Assembly passed House bill 1912 30, which would allow for “marijuana hospitality spaces” in jurisdictions that opt in. In addition to spaces where cannabis could simply be consumed on site, the bill allows for spaces where cannabis is both sold and consumed on site.
The first question posed to the group was: should Denver opt in, and therefore expand what’s allowed when it comes to cannabis hospitality and businesses?
Jessica Scardina, chair of Vicente Sederberg’s Colorado regulatory law practice, encouraged stakeholders at the meeting to keep in mind how to make these licenses “viable,” given requirements like setbacks and zoning.
“I think that these licenses have the potential to really benefit the city with respect to tax revenues and cutting down on public consumption. And so I think that it would be a good step for Denver to take,” Scardina said.
Councilman Chris Hinds encouraged meeting attendees to think more about “the access [for] the people rather than on profitability for businesses.”
Truman Bradley, of the Marijuana Industry Group, called the Initiative 300 rollout in Denver a “pretty clear fail.”
“It just doesn’t work. It’s virtually impossible to make money doing this. And that’s why there are so few of them in conjunction with the zoning. And so why go through all this trouble?” Bradley said, adding, “From a social equity lens, if new applicants have a license, but they can’t benefit from it, it’s kind of useless.”
Ashley Kilroy, the director of Denver’s Department of Excise and Licenses, asked Bradley if he would not support “hospitality without sales.”
“I’m not opposed to it. I just would never do it as a business person because I don’t know how to make it worth my time, to be honest with you,” Bradley said. “So to me, it’s kind of a moot point.”
Ean Seeb, who owned one of Denver’s first cannabis shops, Denver Relief, and, later, Denver Relief Consulting, and who is now Governor Jared Polis’ adviser on cannabis, said that “the state’s excited about any local jurisdiction that wants to engage in hospitality and delivery.”
“We’re actively working with other local jurisdictions, meeting with them and talking about ways that we can move this forward. The hope is that local jurisdictions would consider this, but of course, they need to do what’s best for them. But the state is fully willing to support and work with any local jurisdictions that wish to employ either of these,” Seeb said.
Henny Lasley, of Smart Colorado, challenged the notion that the hospitality licenses might clean up Denver, which has seen people smoking cannabis outside on the 16th Street Mall, for example, which is not permitted.
“I would like to know if there’s any data that’s been done to support that claim that this is going to take people off the streets and out of the park and actually come into a consumption area,” Lasley said.
Lt. Andrew Howard, of the Denver Police Department, said that enforcement would likely be “complaint-based.”
“I can’t imagine that we’re going to have officers in the area standing by for that reason,” Howard said.
Another question that the group considered: What barriers to entry exist when it comes to operating these types of establishments and what are the equity considerations?
Sarah Woodson, of Color of Cannabis, suggested that licenses be handed out on a “one to one” basis, or that every other hospitality license go to an equity candidate.
“I can tell you that the zoning piece is a huge barrier to entry. If you find a landlord that’s open to the idea, nine times out of ten, the zoning won’t work,” Woodson said. “You can only have these businesses in a lot of warehouse districts, which doesn’t make it really accessible to the public, and hard for people to access especially if we’re talking about wanting to have these so people can get out of parks.”
On the topic of barriers to entry, Scardino, of Vicente Sederberg, suggested nixing the public hearing requirement for mobile cannabis hospitality licensees.
“As someone who charges people to conduct public hearings and go through the testimony and do the presentation with them, I can tell you that it is very expensive. That is a pretty significant barrier to entry. I think the mobile premises has a better potential to lower barriers to entry,” Scardino said. “And so maybe the city could consider not requiring public hearings since there wouldn’t be a permanent premise that could impact the neighborhood significantly.”
The group also discussed possible hours of operation.
Woodson, of Color of Cannabis, suggested that policymakers take into consideration the tourist side of Colorado’s cannabis industry.
“For most of us, these businesses, it was tourists that visit. So being able to stay open until 2 a.m. on a weekend when a tourist is in town and people want to visit is going to be imperative vs. earlier on in the week when business is slow,” Woodson said.
The next question focused on what types of cannabis consumption would be permitted at hospitality establishments. For example, under the state law that was passed allowing hospitality establishments, local jurisdictions do have the option to exempt these establishments from the Colorado Clean Indoor Air Act.
“From a public health plan, and it feels really difficult to roll back a pretty established public health measure with the Clean Indoor Air Act,” said Sarah Belstock, a behavioral health planner at Denver Public Health, “I would really caution us to think about the health implications of doing that for consumers, as well as for employees that are going to be working in the space. And I think what we’ve learned from tobacco is that a lot of the ventilation measures are really insufficient …. So I think we would really want to proceed with a great deal of caution and consideration for the health implications for allowing smoked products.”
Woodson, of Color of Cannabis, responded by highlighting the balance between public health and business.
“Today’s challenge is people not being able to smoke combustibles,” Woodson said. “It’s a consumption lounge. They have to be able to smoke in the traditional manners and methods that people consume. And that’s going to be combustible. So if Denver decided that they would not allow that, there would be … no opportunity for social equity people to take advantage of this because the whole purpose of [this] business is consumption.”
Hinds, the City Councilman, said that public health should be put before business considerations, but lent his support—under an important condition.
“We want to give people a place where they don’t have to break their lease to consume. And that would be in a spot that is sanctioned—as long as there is proper ventilation. And so that’s the reason I would support smoking and vaping in this particular environment as long as there’s proper ventilation.”