Pot Shops in Denver Open Door to $578 Million in Sales

Photographer: David Paul Morris/Bloomberg
Colorado projects $578.1 million a year in combined wholesale and retail marijuana sales to yield $67 million in tax revenue, according to the Legislative Council of the Colorado General Assembly.

Toni Fox plans to open the doors of her Denver marijuana shop at 8 a.m. tomorrow to a line of customers including some who camped overnight to be the first in the U.S. to legally buy pot for recreational use.

Fox has arranged for canopy tents, heaters and a food truck to offer donuts and pastries to patrons waiting for the state-appointed hour. She expects sales at her 3D Cannabis Center, operating since 2010 as a medical-marijuana dispensary near the Denver Coliseum, to surge to at least $250,000 a month from $30,000, she said.

“We’ll have people out the door,” Fox, 42, a Salida resident, said by telephone. “It’s going to be a very festive atmosphere. We all feel like we’re walking on sunshine right now.”

Fox’s shop is among 14 in Denver that got state and local licenses in time to sell marijuana to anyone 21 or older starting Jan. 1, just over a year after Colorado and Washington voters made their states the first to legalize recreational use. Washington’s shops are expected to open later in the year.

Colorado projects $578.1 million a year in combined wholesale and retail marijuana sales to yield $67 million in tax revenue, according to the Legislative Council of the Colorado General Assembly. Wholesale transactions taxed at 15 percent will finance school construction, while the retail levy of 10 percent will fund regulation of the industry.

‘Large Lines’

“There are a lot of people interested to see what these stores are all about,” said Brian Vicente, co-author of Colorado’s recreational-marijuana ballot measure and an attorney with Vicente Sederberg LLC, a Denver-based law firm representing the marijuana industry. “There will be pretty large lines for these facilities.”

Licenses for 136 marijuana stores, a majority in Denver, were mailed Dec. 23, the Colorado Revenue Department said in a statement. Recreational marijuana businesses can open only after receiving both a state and local license, said Julie Postlethwait, a spokeswoman for the Marijuana Enforcement Division.

Only existing medical-marijuana retailers can apply for the licenses until July 1, she said. In Denver, home to the state’s largest number of such dispensaries, that deadline extends through Jan. 1, 2016.

The city’s newly licensed shops feature names such as The Green Solution, The Healing House Denver and The Denver Kush Club, according to a map on the Denver city government’s website.

Ounce Limit

Colorado residents with a photo identification showing they are at least 21 may buy as much as one ounce of pot in a single transaction, while those from out of state can get a quarter ounce, Postlethwait said. Customers can’t consume the product in public, including at the shops.

Medium-quality marijuana sells for an average of $196 an ounce in Colorado and $192 an ounce in Washington, according to the Price of Weed website, where pot buyers can post what they paid.

“It will be an interesting time in Colorado in the next few months,” Postlethwait said. “We’ll have things shake out and settle. That will give us an opportunity to study what the face of the two segments of the marijuana industry will look like.”

Marijuana possession and sale remains illegal under federal law. In August, the U.S. Justice Department said it wouldn’t challenge the legalization laws in Washington and Colorado provided the states prevent out-of-state distribution, access to minors and drugged driving, among other restrictions.

867 Applications

In Washington, retailers will begin selling marijuana around June, according to Brian Smith, a spokesman for the State Liquor Control Board, which is overseeing the industry. The agency, which limits retail licenses to 334 statewide, had received 867 applications as of Dec. 24, he said.

Washington’s pot producers, processors and retailers each must pay the state a 25 percent sales tax, unless they hold both producer and processor licenses, which allows them to pay the levy once.

Washington isn’t including revenue from marijuana growth, processing and sales in its fiscal projections “due to the continued uncertainty over the rules and structure of the market,” according to a November report by the state’s Economic and Revenue Forecast Council.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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