Colorado’s cannabis industry is about to be transformed.
On Monday evening, Denver’s City Council voted unanimously in favor of legislation that will allow for cannabis hospitality businesses and delivery, and for the first new shop licenses since 2016. It would also give social equity applicants exclusive access to the delivery and new shop licenses, as well as new cultivation and manufacturing licenses, for six years. Mayor Michael Hancock is expected to immediately sign the legislation, which will catalyze a boom in the epicenter of the state’s cannabis industry.
This marks the most significant change to Denver’s cannabis industry since sales began in 2014, and officials are calling it “marijuana 2.0.” Cannabis sales in Denver and statewide hit an all time high in 2020: $716 million and $2.2 billion, respectively.
“We appreciate the City Council demonstrating their commitment to social equity and modernizing Denver’s cannabis rules and regulations with their passage of this historic legislation. It’s satisfying to see the outreach our agency did for more than two years to craft these changes has resulted in the passage of this legislation,” said Denver Department of Excise and Licenses Executive Director Ashley Kilroy in a statement. “Now the even harder work begins as we dedicate our efforts to getting the licenses ready for applicants and begin the outreach necessary to create more equitable access to Denver’s nearly billion dollar cannabis industry.”
One year ago, the Department kicked off a series of workgroup meetings on potential licensing changes. Along the way, the Department also released a survey that found a lack of diversity in the local cannabis industry. Specifically, it found that 75 percent of local cannabis business owners are white.
“This study sadly confirmed what was widely suspected,” Kilroy said in a statement at the time. “Just like what has been seen across the state and in other legalized markets across the US, Denver does not have a diverse marijuana industry.”
In December, three draft bills were released for public input and were subsequently revised until the final versions went to the City Council in March.
This process began after Hancock called on officials in 2018 to “develop a plan to address equity within the cannabis industry,” according to a presentation given by the Department, and, in 2019, state law changed to allow for these new license types. The state law also defined who qualifies as a social equity applicant, which Denver will follow, and established an accelerator program that allows a “social equity licensee” to “operate respectively on the premises of” existing cannabis cultivation, manufacturing, and retail businesses, and requires that a social equity licensee maintain at least 51 percent of the beneficial ownership.
During the final work group meeting last year, there was intense focus on how Denver officials would provide financial support to social equity applicants, with suggestions ranging from a fee on current licensees to pulling from law enforcement’s budget.
“The conversations we’ve had have been really nuanced,” Abbey Borchers, a policy analyst for the City and County of Denver, said at the time. “We’ve spoken to partners in Los Angeles and Massachusetts and they have acknowledged some of their successes and some of their challenges and have had some really good advice about what kind of things to think about when we’re creating an equity program. But I don’t know if anyone’s prepared to say that they’re a success.”
On the hospitality side, while Denver has had a consumption pilot program since 2016, it was restrictive and largely unsuccessful. The new rules would allow for sales at consumption locations, instead of a BYOB model, and would allow for smoking and vaping indoors, including in tour buses. Social equity applicants also have exclusive access to tour bus licenses for six years.
Though, it’s worth noting that retail licenses will not be awarded for the five neighborhoods with the highest number of cannabis shops. There are currently 205 cannabis shops in Denver.