War on the Poor

The Marijuana Industry’s War on the Poor

Denver’s booming pot industry may be trendy, but it’s giving poorer neighborhoods a headache.

By Jon Murray

ake a stroll past the gray stucco-clad building in northeast Denver and it’s not hard to figure out what’s going on behind the bright green doors. On a recent afternoon, outside Green Fields Cannabis Co., a sweetly pungent, slightly skunky odor filled the air before a light rain began to rinse it away. Just a block south on Brighton Boulevard, past a salvage yard and a Mexican grocery, the smell of what’s growing inside Starbuds is sometimes noticeable before you arrive in front of the medical and recreational marijuana chain’s original location. Even drivers whizzing by on Interstate 70 catch a heady whiff of Denver’s hottest new product as they zip across town.
But they don’t have to live here.

In working-class neighborhoods like Elyria-Swansea, Globeville and Northeast Park Hill there’s a growing sense among residents that they have been overrun by a new drug trade, legal but noxious all the same. These communities once offered plentiful jobs in the city’s smelters, meatpacking houses, brickyards and stockyards, but those industries are mostly gone now, along with Denver's cow town image. In the past few years, the city's newest growth industry has moved in—and not in a subtle way. In Elyria-Swansea alone, more than three dozen businesses are licensed to grow and sell marijuana and another dozen companies manufacture edible pot products. To the people living in the modest homes near the grow operations that supply the dispensaries and shops in better-off parts of town, the smell is not only an inconvenience but a reminder of their lack of political clout.

“One of the things that we thought was going to happen when [recreational] marijuana was legalized was that drugs would be taken out of our community,” said Candi CdeBaca, an education and community activist whose longtime family home is steps from a commercial grow operation in Elyria-Swansea. “What happened was that the drugs stayed—and the drug dealers changed.”

Two years after legal sales of recreational marijuana began in Colorado, the biggest fears that once preoccupied Denver city officials—higher crime, more drug use among teens and a drag on tourism—have not come to pass. Instead, the expanded industry, with 21-and-over recreational sales joining a longer-sanctioned medical marijuana trade, has pumped millions of dollars into government coffers. It's swathed the city in a trendy glow that likely attracts as many outsiders as it repels. But in lower-income neighborhoods of Denver, the explosion of smelly commercial cultivation operations, which crank out tons of high-priced weed for sometimes-chic, sometimes-earthy dispensaries in more fashionable parts of town, has rekindled long-standing grievances about being ignored by City Hall. And residents are beginning to demand big changes.

Earlier this year, they identified a point of leverage they hoped would help them extract meaningful concessions from city officials. When temporary restrictions limiting entry to the city's recreational marijuana market came up for review, CdeBaca was among an army of residents who pushed back loudly against granting new licenses to the numerous pot entrepreneurs who were lining up to jump into the market. They were asking for relief—and even a rollback—from what they see as oversaturation near residences and schools. Citywide, 210 stores sell medical or recreational marijuana (or both), including 63 that grow marijuana on site. Another 211 standalone grow operations are clustered in mostly poorer and heavily minority sections of the city.

Colorado, whose voters legalized recreational marijuana sales in the 2012 election, now has one of the most thriving legal marijuana industries in the world. Sellers of both medical and recreational marijuana reported just shy of $1 billion in sales statewide last year, up 42 percent over their haul during 2014's recreational rollout. Denver businesses hold nearly half of state licenses, generating $29 million last year in marijuana sales tax and licensing proceeds for the city, including $7.7 million from a special 3.5 percent sales tax on recreational marijuana. The state capital has become, in the eyes of legalization advocates, a testing ground for innovation and smart regulation.

“It’s created what I consider to be the most robust economy in the country in terms of product, in terms of thought leaders, in terms of regulatory design,” said Christian Sederberg, an attorney who helped campaign for 2012’s Amendment 64. “We are so much further developed than any of the other states.”

But the neighborhood activists' outcry has forced a reckoning that jolted city officials, industry representatives and business owners, resulting in a wave of new restrictions that were borne out of a fierce debate—and left both neighborhood advocates and some industry players dissatisfied. A new local law, approved last month by the City Council, aims to limit industry growth by capping the number of locations of stores and grow operations, parceling out any licenses that become available via an annual lottery. The city also will stop licensing new medical grow facilities and dispensaries, which have continued to thrive in the recreational age.

Mayor Michael Hancock views the neighborhood outcry as unsurprising. City rules required grow operations—which favor warehouse-like structures—to locate in industrial-zoned areas. "Certainly, nobody wants to live under the clouds of those odors everyday," Hancock said, adding that it’s incumbent on the marijuana industry to work with communities to reduce the negative effects of their operations.

In recent weeks, Hancock signed off on an ordinance change that will require businesses seeking new licenses or renewals to submit "good neighbor" outreach plans. And next year, grow operations, which take widely varying approaches to reduce the smells they emit, will have to present odor-control plans to the city.

Some City Council members had pressed for more severe restrictions on the industry's size. As it stands, the number of grow operations will be ratcheted back slightly in coming years as some go out of business. And future grow operations can't open within 1,000 feet of a residential zone—a rule, it's worth noting, that would have prevented the opening of roughly 60 percent of existing grow operations had it been in place from the start.

But among neighborhood activists, the new ordinances are greeted with skepticism or outright dismissal, in part because the new industry caps allow in the near term for the opening of more than three dozen new stores and grows that already were awaiting license decisions, including a couple in Elyria-Swansea.

"They screwed it up when they rolled out the recreational marijuana rules and now they're trying to correct it," said Drew Dutcher, an architect and activist who lives two blocks from the Starbuds pot shop. "It's too little, too late."

For years, city and state leaders have navigated without a playbook. Indeed, in many ways they have written the playbook.

The ragtag local medical marijuana market had developed largely unfettered since Colorado voters passed a constitutional amendment legalizing pot for medicinal purposes in 2000. But the city began licensing businesses in 2009 to rein in the industry, and the state quickly followed suit, creating Colorado's dual licensing scheme.

These laws allowed for commercial cultivation operations, brought about rules such as keeping new storefronts 1,000 feet from schools and day care centers, and instituted heavy state oversight, including barcode tags on each marijuana plant and surveillance cameras inside each grow facility.

That level of oversight gave Colorado voters confidence when they approved the recreational marijuana amendment in 2012, despite opposition from prominent elected officials, including Hancock and Governor John Hickenlooper. The then-new mayor worried publicly about detrimental social and economic effects should Denver became nationally synonymous with pot. City voters approved Amendment 64 with 66 percent support—11 percentage points higher than statewide.

Hancock and City Council members took that margin as a mandate, even as most of the city's suburban neighbors have decided against allowing recreational sales. For the first two years after sales began in January 2014, the city allowed only medical marijuana licensees who were in good standing as of late 2013 to jump into the recreational market.

Still, the rollout was rapid. Two months into 2014, the city and the state had licensed 47 recreational shops in Denver, according to the city's alt-weekly, Westword. By April 2014, the total was 65. The growth continued, and as of the start of this year, city figures showed 143 Denver shops were licensed for recreational sales.

Other states have watched the Colorado experience with apprehension. In Washington state, which began allowing legal recreational marijuana sales in mid-2014, state leaders opted for a slower, state-controlled rollout. That was in large part because that state's unruly medical-marijuana market was largely unregulated. Even now, Seattle has just a few dozen recreational stores within its boundaries.

"Washington was interested in having a more structured and cautious approach," said Sam Méndez, executive director of the Cannabis Law & Policy Project at the University of Washington School of Law. Within his office, some consider Colorado—and Denver—a cautionary tale most places would be foolish to follow. "I don't think this industry should move too quickly," Méndez said. "If you do, there's potential for backlash, and this whole grand experiment could fail."

But in Denver, city officials are more confident in their track record, though still sensitive about the extent to which legal marijuana molds outsiders' perceptions of the city. "In terms of the things we were all concerned about—in terms of increased crime and increased use among our young people—we have not seen those things materialize," Hancock said.

That confidence in Denver's regulatory efforts isn't shared in areas that feel overrun by marijuana. Elyria-Swansea was among a few neighborhoods identified by the Denver Post early this year as having roughly one marijuana business for every 91 residents—a clustering that intensifies problems like smell, but that also claims precious real estate.

"We have people who have tried to start businesses, and they weren't able to lease the spaces because the marijuana industry came in and could make a higher offer—and do it instantly," said CdeBaca, the neighborhood activist, at a news conference by activists in April. "We've borne the burden of the state and city's growth at the cost of our residents."

The weed explosion, paradoxically, happened just as the city had begun paying more attention to improving the downtrodden neighborhood. An upcoming $1.1 billion city-led project aims to transform the grounds that host the annual National Western Stock Show and Rodeo into a year-round event, education and agricultural innovation center. In two years, a commuter rail line will connect the neighborhood to downtown. "We went through a neighborhood plan that has all these great visions of nice neighborhoods," said Dutcher, the architect who lives two blocks from a marijuana shop. But he fears the marijuana influence will undercut any improvements.

Then there's that smell—only the latest industrial byproduct to cloud the neighborhood over the decades. On a clear day, the odor jockeys for attention with the odor from a nearby pet food plant. "When you can't smell Purina, it's the 'headache' marijuana smell that gets you more than anything," said Albus Brooks, the city councilman who represents Elyria-Swansea and neighboring Globeville, during a tour of the biggest offenders in both areas. Until recently, Brooks' own home in another nearby neighborhood was about 800 feet from a grow operation.

Channeling his district's frustrations, he joined the minority in the council's 7-5 vote last month on the new industry location caps, arguing they didn't go nearly far enough.

Meg Sanders is among business owners who say the industry has a responsibility to step up. She is the CEO of a company called Mindful, which has a grow facility in northeast Denver and a store selling medical and recreational product on the city's resurgent East Colfax Avenue. It has three other stores across Colorado, two more on the way and a dispensary soon to open in Illinois. Mindful holds job fairs at a nearby recreation center, and several times a year, its employees hand out vegetables grown on a 3,000-square-foot plot outside its grow facility. It's also testing new odor-suppression technology. She says she wants her businesses to help build communities, not detract from them. She was among industry representatives who suggested the new city requirement that marijuana licensees submit community engagement or "good neighbor" plans.

But Sanders, a believer in the good that marijuana can do for those who are suffering, still resists the idea that the city should restrain the industry's growth. "We don't limit Walgreens going up on every other corner or other pharmacies," she said. "So why would we here?”