Asked to describe the climate for medical marijuana center owners in Colorado Springs, Dr. Eric Hatch of Hatch Wellness Center offers a one-word response: "Horrible."
"We didn't want to get into the growing end of it — we're forced to now," says Hatch, who also owns a center in Highlands Ranch. "Under the state law, you have to produce 70 percent of your own [product]. So, voila, I have to move down here and get a warehouse."
Hatch, 45, says he's shelled out $150,000 for his Springs business in the past five months, including a $17,000 deposit for building rental, $12,000 to bring the building up to code, and $25,000 per month in losses.
"I'd rather take that money and go open up a Starbucks or something, you know what I mean?" he says. "But I'm a doctor, and these are my patients, and we committed ourselves to this."
It's a citywide problem: Of the 451 medical marijuana-related sales tax licenses issued by July 1, only 174 are still active, according to the city's sales tax department. While the department doesn't track the breakdown among centers, grow operations and infused-products manufacturers, Tanya Garduno, president of the Colorado Springs Medical Cannabis Council, estimates that roughly 100 of the initial 176 centers have survived the state's regulatory actions.
And some of those will still fail, too: "Colorado Springs was pretty saturated when we had about 80 functioning centers, so that's where we figure things will get back to."
Others have noticed the downturn as well. At the start of the city's budget process, the Colorado Springs Police Department requested one additional code enforcement officer and three additional detectives devoted to monitoring the MMJ industry. Within weeks, that was downgraded to just one detective, at the request of City Councilor Sean Paige.
"The industry's footprint seems to be contracting at the moment, and until we see how it all shakes out, I want the city to proceed cautiously on staffing up," Paige told the Indy at the beginning of November. (When contacted, three different city officials were unable to confirm the current status of the request.)
It's not just the monetary requirements causing hardships. State laws have catalyzed partnerships, and growers, infused-products manufacturers and businesspeople have teamed up quickly, with mixed results.
"That's where I've seen the biggest fallout, is these people came together for these teams, and they don't work very well together," says Garduno. "Pieces are falling out, and members aren't getting along with one another, so the business implodes from the inside."
A statewide moratorium on new businesses expires in July 2011, when the Department of Revenue is expected to have its regulations finalized, and to turn its trove of applications into actual licenses. In the court system, industry professionals expect to see lawsuits against some of the municipalities that have chosen to ban MMJ centers. Meanwhile, the Patient and Caregiver Rights Litigation Project is suing the state with intent to overturn House Bill 1284 and Senate Bill 109 and what they view as law-enforcement-centric regulations.
It's all leading to a revolution in the industry, says Hatch.
"There's nothing more powerful than an idea whose time has come. Like when slavery was over, like when women can vote now, like when people want access to medical marijuana in a safe, professional discreet atmosphere, like we have here," he says. "And I don't know what they're going to do [when the backlash comes]."