If you want to know how we will chill tomorrow come to Colorado, the first state to legalize recreational marijuana. I met with Elan Nelson of Medicine Man, one of Denver’s largest dispensaries, to discuss this fledgling industry. Before I even got in the door, I realized that buying marijuana is unlike any other shopping experience. Medicine Man is not located in a shopping center; it’s in a light industrial district near the airport. The sign is corporately sedate rather than retail bold. The bars over the windows are severe. The security guard inside is polite but clear. He checks every ID, requires a sign-in, and says, ”We are unable to process credit cards right now” as he points out the ATM machine. Marijuana is a cash only business.
An information window lies straight ahead, but most customers – there are dozens on this Wednesday morning – know where to go. Retail sales are to the left, medical sales to the right. The retail side doesn’t have any merchandize on display. Four clerks stand behind a counter, like in a plumbing supplying house, taking orders, retrieving product from back of the house, and completing transactions. The medical side is gentler. There are a few leather chairs for customers who need to rest. Sales people stand behind glass counters with product on display beneath and behind them. It’s more like visiting your pharmacist.
The customer area is a small fraction of Medicine Man’s vertically integrated 40,000 square foot marijuana facility. Elan explained that the State of Colorado requires companies grow what they sell, and only sell what they grow. She toured me through a conditioned warehouse / factory / farm that employs 68 people who produce – and sell – a lot of marijuana.
The facility is divided into multiple grow rooms, each with racks and lighting designed to optimize growing conditions for different strains. One of the first steps in the growing process is tabbing seedlings as medical or recreational. Every plant is RFID tracked until it is processed and sold. Elan explains that the plants are identical, but the taxation streams are different. Medical marijuana is taxed 7.62% when it is ‘sold’ from the back of the house to the front; recreational weed is taxed 15%. The State then taxes an additional 21% on recreational marijuana at the point of sale.
Marijuana is heavily regulated: Medicine Man has had three random visits by the Department of Revenue Marijuana Enforcement Division this year. One limiting factor is the limitations on plant count. Medicine Man is licensed to grow 10,600 recreational plants plus six medical plants for every patient who has assigned their prescription to Medicine Man. The company focuses on optimizing quality product from each plant. Elan toured me though their latest expansion, where the light and humidity controls are more sophisticated than in the original grow rooms. She also explained how they use different parts of the plant for different products. Small leaves are cured and ground into joint mix. Larger leaves are sold to cannabis kitchens to create hash, edibles, and topicals.
Medicine Man is a leader in indoor marijuana growing. They often consult with start-up operations on how to set up indoor processes. However, Elan predicts that as Medicine Man grows they will transition to outdoor growing. It has different security concerns, but is much less energy intensive than growing marijuana indoors.
Medicine Man’s biggest challenge – the biggest challenge for the entire industry – is being a cash business. Selling marijuana is illegal at the federal level, and banks are federally regulated. Colorado passed legislation to establish a Coop Bank, but the Federal Reserve will not support it. Right now, Elan says that Medicine Man has some bank capacity, but she is understandably vague about it. Given that this is America, where money talks loud and recreational marijuana is now legal in three states, this problem will be addressed. But when and how, is still not clear.
How will we live tomorrow?
“A lot of people will see the example of Colorado as well-regulated and well run. People will realize that recreational marijuana is safer than alcohol. People will find that this is a safe pain reliever. There will be more research and it will lead to more acceptance.
“But right now, I suggest you go home and change your clothes. When you get out of here, you are going to stink of weed.”