Denver council will seek to structure city’s budding pot business

Lingering legal questions and ambivalent feelings on the part of Colorado’s citizenry have made launching a medical marijuana dispensary a significant business risk. But that hasn’t stopped a rapidly growing number of medical marijuana entrepreneurs from opening clinics around the state. Real estate developer Ed Kieta, for one, is betting big, having sunk more than $60,000 into the high-end “wellness center” he’s opening in the Highland neighborhood of Denver. Kieta likes the fact that he’s getting in on the ground floor of the industry, but he hates that the rules governing the industry are murky and incomplete. Kieta is therefore looking forward to the Denver City Council meeting scheduled for Wednesday that aims to put up zoning restrictions and set out basic regulations for the record.

Ed Kieta's Alternative Wellness Center in Highland, Denver (Photo: Joe Boven)
Ed Kieta's Alternative Wellness Center in Highland, Denver (Photo: Joe Boven)

Sited in the row of shops that dot the corner of 38th and Clay, Kieta’s Alternative Wellness Center and Medical Marijuana Dispensary is an impressive space. The feel is definitely more casual clinic than it is teenage head shop.

“It will host massage, acupuncture, Reiki and Rolfing along with the dispensary attributes,” said Kieta.

Those attributes will be at the center of the operation. There will eventually be a doctor on staff to provide assessments and prescriptions, though that service is currently only offered by appointment. Kieta also plans to offer a wide selection of marijuana strains, all which customers can view through a microscope that displays on LCD panels.

“I want to make certain that the buyer can get exactly the medication that they need for their problem.” Kieta said. He plans to hire a trained staffers that will be able to provide advice.

“If you need to do some light work, for example, and you only have minor ailments, we would suggest perhaps a sativa strain as opposed to indica,” he said.

A former board member of the Federal Partners, one-time president of Jefferson Park United Neighbors boards, past owner of Colorado Commercial Real Estate for more than 20 years, and a board member for years with the Agricultural Hemp Association, Kieta explained that he is looking to transform the image of medical marijuana dispensaries in Denver.

Amendment 20 and its aftermath

Colorado voters made medical marijuana legal through a ballot initiative nine years ago. The amendment said nothing about how to set up shop, and businesspeople like Kieta have struck out on their own.

Kieta explained that the Highland intersection where the Center sits now hosts three dispensaries. One of them is only a door away. Kieta wants to see zoning laws prevent this kind of clustering.

The Colorado Medical Marijuana Registry page confirms that there are no state regulations outlining how to start a dispensary, but a recent count by the city places the number of new dispensaries at more than a hundred. More than that, a state-wide survey suggests medical marijuana is the fastest-growing business in Colorado, currently consuming retail space faster than the restaurant and apparel retail industries for example. Although it’s unclear exactly what constitutes a dispensary, citizens and city council members are concerned that the proliferation of pot businesses could lead to new crime regions or that they could simply crowd out other businesses. Many dispensary owners agree.

Keith Howard past president of Sunnyside United Neighbors Inc., where Kieta’s dispensary is located, said he was concerned that there were now three dispensaries sharing the same Highlands corner.

“There is a lot of cash and marijuana in those stores,” Howard said. “That leaves open the potential for increased numbers of robberies that could endanger members of our community.” He said that any related crime could scare off businesses and residents looking to move into the area.

First District Councilman Rick Garcia told the Colorado Independent that he wasn’t thrilled that three dispensaries were sharing the corner. It’s time for regulations to address such problems and, he said, City Council will be debating proposed regulations on Wednesday. Garcia said new rules would see the number of pot clinics on the streets trimmed by half, moving them at least 1000 feet from one another and at least 500 feet from schools.

That will be tricky, though, given that businesses are already up and running. Shops that “commenced operation” on or before the first of December, Garcia said, will be exempted.

“What is meant by ‘commenced operation’ is what is going to be determined,” Garcia said. Is it the day their article of incorporation went into effect? The day they filed paperwork? The day they made their first sale? Tune in Wednesday, Garcia said.

“I believe that it’s well within the purview of the city to exercise a specific license process, regulate business sites and times of operation in relation to public places and schools,” Garcia wrote in a release. “In other words, the public should know where a medical marijuana dispensary is located and that its owners are following the law. In addition, these medical marijuana products are commodities and should be taxed at the same retail level as any other consumer product is taxed.”

Ed Kieta (photo: Joe Boven)
Ed Kieta (photo: Joe Boven)

‘Regulate me, please’

Kieta is looking forward to the regulations. In fact, he said he’d like to see the barrier to enter the market increased as a way to reduce potential citizen backlash in the face of “fly-by-night” operations.

“Tax us, regulate us, please,” Kieta said. He sees proper regulation and taxation as key to long-term stability. “I’m not afraid of competition. I’m afraid of community backlash.”  He also believes community awareness campaigns will make a difference.

“Make the permit $2,000 or $5000. Someone who has to spend $5,000 up front is going to be serious about the business.”

The new proposed fees would cost $2,000 for the application and $3,000 per year to operate a dispensary.

Allowed to carry 2 ounces and 6 plants per patient, Kieta said that the concerns for regulating the quality of the medication are real. He noted that already two or three potential suppliers drop into the Center every day, pitching their product. Fact is, the market just isn’t dependable yet, he said. To be legal, for example, the pot has to be grown in Colorado. As it is, his consultants reject more than half the pot he has them test, either for lack of quality or because it appears to be grown out of state.

There’s also some confusion over the fact that both growers and dispensers have to be “primary care givers” under the current law. Can a grower and a dispenser both be primary care givers to the same patient?

Keita is currently discussing the matter with his lawyer Barry Fink, who works alongside Warren Edson, coauthor of Amendment 20. Kieta wants to know if he should hire growers as employees or bring them on as partners. “Long term, I’m looking to create a grow site and cut out 58 percent of my costs for marijuana.”

Winning over the mommies

Members of the web-based community group Highland Mommies have mixed feelings about Kieta’s business. He only recently began communicating with the group to try and ameliorate concerns, inviting them to use the community events and outreach space he has allotted at the Center space and to attend an open house. He said he took some time to reach out because he wasn’t ready.

“I wanted to be able to put my best foot forward and say that this was not going to just be a couple jars of marijuana on a shelf. I wanted them to see what it could be like if something was done right.”

Despite the way interest in the business has grown here over the past nine years, much changed only recently based on the way the political environment changed since President Obama took office and since Attorney General Eric Holder declared in October that the feds would no longer seek to arrest law-abiding medical marijuana users and suppliers. Kieta said he hoped that new regulations and tax policies will make the marijuana industry one worth not just tolerating but protecting.

Will state lawmakers see it that way? “That’s the big question,” he said.

The Denver law on the slate for Wednesday’s Council deliberation states: “The issuance of any license pursuant to this article shall not be deemed to create an exception, defense, or immunity to any person in regard to any potential criminal liability the person may have for the cultivation, possession, sale, distribution, or use of marijuana.”

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