Friday, October 25, 2019

Push could pull cannabis clubs from legal limbo

Posted By on Fri, Oct 25, 2019 at 10:03 AM

By Jeanne Davant

Marijuana advocates are working with members of Colorado Springs City Council to craft an ordinance that could remove cannabis clubs from their current legal limbo.
click to enlarge The now defunct Lazy Lion marijuana club. - FILE PHOTO
  • File photo
  • The now defunct Lazy Lion marijuana club.

Colorado Springs’ two cannabis social consumption clubs allow users to bring in pot and consume it on the premises. The council in 2016 required club owners to apply annually for special licenses until March 22, 2024, when they would have to close permanently.

But the passage by the state legislature of HB19-1230, which authorizes marijuana “hospitality spaces,” provides a more sustainable business model these clubs could adopt if the council approves it, says Jason Warf, executive director of the Southern Colorado Cannabis Council.

There have been as many as 15 cannabis clubs in Colorado Springs; Studio A64 and the Speakeasy Vape Lounge and Cannabis Club are the only two that remain.

The state legislation permits licensed hospitality spaces to sell small quantities of cannabis products for consumption onsite by patrons. Besides the cannabis clubs, restaurants and other businesses could license part of their premises for marijuana consumption — if the council opts in and creates the city’s own hospitality space license.

That would have to happen by the end of this year, Warf says.

“I would say [the chances are] pretty good,” he says. “I’m personally working with city council on the issue, and it’s been an ongoing discussion for a few months now. It’s just a matter of figuring out what works best.”

Warf would not name the councilors he’s been working with but says, “We’d like to bring something to the table that’s palatable for every council member. We’re adding ongoing meetings to get it ready, and we’d like to see it in the next month.”

The effort will likely face opposition from Mayor John Suthers, who has been outspoken in his disapproval of these clubs.

“It would take a dramatic change of direction by the council” to approve a hospitality space ordinance, Suthers told the Business Journal in May. “You’re talking to someone who thinks it’s a very good situation that we do not have marijuana consumption clubs and have people out on the streets driving and all that sort of thing.”

HB19-1230 was one of more than a dozen cannabis-related bills the legislature passed during the 2019 session.

One of them, HB19-1090, Publicly Licensed Marijuana Companies, could have a big impact on the cannabis industry.

This bill allows greater investment flexibility in marijuana businesses and eases access to capital for the majority of the industry.

It repealed a provision of state law that prohibits publicly traded corporations from holding a marijuana license and creates new ownership concepts of controlling beneficial owners, indirect financial interest holders and passive beneficial owners.

“There aren’t really any hands-on marijuana companies that are traded publicly in the United States, but there are a boatload of them in Canada,” cannabis business consultant and attorney Charles Houghton says. “That was a real big step in allowing that kind of capital infusion in Colorado, which up to now had been unavailable to Colorado operators.”

SB19-218, Sunset Medical Marijuana Program, and SB19-224, Sunset Regulated Marijuana, merged and revamped the two sets of regulations for medical and recreational marijuana facilities that sunsetted this year.

“It should streamline the system a little bit and make it easier for people that are in the industry to be compliant and to understand the regulations, because there’s now there’s only one set,” Houghton says.

One of the biggest changes is that medical marijuana centers are no longer required to grow 70 percent of the product they sell.

“That’s changed the market dynamics a little,” Houghton says. “We’re seeing an increase in wholesale prices. I don’t know if it’s exactly related to that, but I think that medical patients and the industry as a whole are going to be served better by removing that required vertical stack.”

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