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Despite legalization, marijuana could be in short supply 

A run on the dank

Considering the attention the issue's been receiving for months, it's a fairly good bet that this week will see Colorado inundated with curious cannabis-seekers from near and far. Since our City Council opted Colorado Springs out of recreational sales, that won't mean much here, outside of a new wave of confused tourists dropping in to local medical-marijuana centers.

Elsewhere, though, like in Denver and Pueblo County, dispensaries await an epic economic squeeze. Supply is already an issue, says Mark Slaugh, marijuana advocate and founder of local regulatory advisory company iComply, and demand is about to freak out.

To fully understand the supply side of the situation, you have to understand how the medical-marijuana system has been working. Patients can designate an MMJ center to grow their allotted plants on their behalf. It's a loose setup, though, with one patient maybe signed up at five different centers, each one using his or her six plant-allotment (or whatever) to grow the product. Centers are supposed to call and notify one another when a patient has moved, but that doesn't always happen. Patients are also supposed to always reveal when they're signed up somewhere else, but that doesn't always happen, either.

Well, in the last month the state has brought online its brand-new system, called Marijuana Inventory Tracking Solutions, which will actually follow every plant for every patient from seed to sale using radio-frequency identification tags. This alone will cause supply to contract some, says Slaugh.

But then there's also the fact that retail centers won't have been able to grow recreational marijuana, because it hasn't been legal to sell until Wednesday. The workaround is that the state is allowing centers to convert a certain portion of their medical crop to recreational.

"So, you cause a shortage in that sense — in medical — by doing the conversion, which leaves you a production gap you have to catch back up to because you've converted that inventory now over to retail," Slaugh says. "And then you have that six- to nine-month retail production gap, until you're producing at levels which satisfy retail demand. So, you have a shortage in retail, naturally, because nobody's producing in it, and then a shortage in medical because you have to convert the medical over to retail."

In a December Huffington Post story, Toni Fox, with Denver's 3D Cannabis Center, told the website: "I'm going to run out of cannabis; it's just a matter of when." In the same piece, Andy Williams, owner of Denver's Medicine Man, said he raised prices months ago to limit how fast his pot goes out the door. The latter's exactly what Slaugh expects from dispensaries in Pueblo County and, eventually, Manitou Springs.

"I really think the procurers and sellers of marijuana need to be very cognizant and realize they either need to ration how much they sell," he says, "or they need to increase prices." Though it's hard to speculate, the advocate says he could see prices on an ounce increasing from the roughly $99 level today to between $175 and $300.

Either way: "I imagine that it would go very fast, especially with the news media coverage and the media hype right now," Slaugh says. "The reality is people are going to be flocking to Colorado for it."

So, stores will sell early and sell often, but they'll probably sell out. Plan accordingly.

bryce@csindy.com

  • A run on the dank

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