Legal Weed Is Expensive to Sell, Competition Is Fierce, and the Supply Is Running Low
For Ramirez, planning for retail marijuana sales began in February of 2012, when Walking Raven officially endorsed Amendment 64, the legalization initiative that won at the ballot that November. Even with almost two years of planning behind him, he finds that there are still a lot of hurdles to overcome. It wasn't until May of 2013 that Ramirez and other dispensary owners knew what would be expected of them by the state. Even with state legislation settled, Amendment 64 allows for municipalities to come up with even stricter rules for retail marijuana stores.
Denver started working on its own regulations in September, and wasn't done when the Chronicle spoke with Ramirez in late December. Though he was only the seventh person in the city of Denver to apply for a license, the constant changes mean that he won't be able to open until about January 10, over a week beyond the official start of recreational marijuana sales. In late December Ramirez was still getting calls about changes to marijuana laws at the city level.
The process has been similar for dispensary owners all over Denver, which means it might be one of the few places where a legal retail marijuana shortage will happen right away. The licensing for retail locations and retail grows is happening at the same time. This would be a problem for those trying to open on January 1, except that the state has allowed a one-time transfer of medical marijuana to retail. This transfer is how all stores will start, and it gives a little something extra to the consumer as well.
The edible companies have to go through the same process as other marijuana facilities, but some are opting out in the early stages. During the one time transfer, marijuana stores can make some edibles retail that otherwise wouldn't be available. This means some store owners are stockpiling certain items that they feel will be popular with retail consumers.
Ramirez has opted out of stockpiling because he simply can't afford it. The cost of selling retail marijuana is incredibly high, which prices smaller dispensaries out of an immediate switch. All told, Ramirez has spent $60,000 dollars going through the process of getting licensed and prepared to make the switch. Before he actually gets his license he expects to spend about $10,000 more.
Money is a huge concern for retail marijuana dispensaries, and Ramirez is unsure of whether they will be able to make it all back during the first few months of retail sales. He acknowledges that the supply for retail just won't meet the demand, and worries that owners will see the same marijuana shortage that caused some of them to temporarily close their doors in 2012. This, of course, affects the people who work behind the counter. Ramirez wants to make sure that all of his employees are well-taken care of, but he acknowledges that he may have to cut back on hours at some point.
The marijuana shortage has another effect on the market. With marijuana prices possibly going as high as $70 for an eighth, Ramirez says that retail marijuana "won't get rid of the black market until supply meets demand."
In the meantime, his store and many others will have to compete with the grey market that has sprung up on Craigslist since the passage of Amendment 64.
Despite the many difficulties in his way, and the five inspections that he has to go through, Ramirez is confident that he is making the right choice. While he cannot sell retail marijuana at present, he is concerned to ensure that marijuana is still available for his current customers: medical marijuana patients.
"Patients definitely still need medicine," he says, and that's why he's sure to always have some on hand, segregated from retail marijuana for non-patients.
Retail and medical marijuana are sold in the same store, but they have to be kept in separate containers. Medicinal users can purchase retail, but retail consumers cannot get any of the medical marijuana regardless of a possible shortage. Despite eventual plans to sell only 10% of his product as medicinal, Ramirez is determined to always be able to take care of the patients.
They are, after all, the ones that supported him before the end of prohibition in Colorado.
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