Economic Engine (Colorado)

Our industry creates a tremendous impact on our economy

“When you consider all the jobs created directly and indirectly by the medical cannabis industry, I think it’s safe to say that we’re talking tens of thousands of jobs,” says Aaron Smith, executive director of the Washington D.C.-based National Cannabis Industry Association. “Shutting down the industry would be like shutting down a huge corporation. Imagine if every Costco closed its doors—imagine what kind of economic impact that would have. That’s what we’re talking about in medical cannabis.”

Smith fears the unfolding federal assault on medical marijuana will not only severely disrupt the industry, but have a ripple effect on the economies of the states with compassionate-use laws. The industry is so big—a $1.7 billion market by the latest estimate—it serves as an engine for other industries that have blossomed around it. But he’s particularly worried about what the crackdown might do to Colorado, which, combined with one other MMJ state, accounts for some 92 percent of medical marijuana sales nationwide.

“I just read yesterday that Colorado Springs is taking in $60,000 a month in sales-tax revenue from dispensaries alone,” he says. “That’s two government jobs right there being paid for by the industry.”

Few U.S. states can boast of having benefited more economically from the medical cannabis boom as Colorado. The Rocky Mountain State has largely embraced it with open arms. Consider that city officials in other states actually invited federal intrusion over the question of dispensaries. In Colorado, the decision by U.S. attorneys to crack down on medical marijuana centers was met by scathing rebukes from state officials, most notably the attorney general.

The result of this different approach is not only a thriving industry serving the needs of patients, but one that serves all Coloradans through increasing revenue from taxes and fees. By thinking forward and setting up an elaborate framework covering every aspect of the medicinal pot industry, Colorado realized $5 million in taxes from dispensaries alone in 2011.  That’s twice the tax revenue the state’s medical marijuana centers paid forward the year before, and less than what Denver expects to receive in 2013.

The tax largesse could not have come at a better time for Colorado, which has a projected budget shortfall of $450 million for this coming fiscal year.

But that $5 million figure doesn’t begin to cover the size of the economic lift medical cannabis provides the state. For starters, it doesn’t include all that heavenly income from the fees charged to each and every one of the 163,856 patients who have signed up so far for on Colorado’s Medical Marijuana Registry. The registry generated $11.2 million for the state in 2010 alone.

Nor does it include the dollars generated by state licensing fees paid by each of Colorado’s 800-plus “official” medical marijuana centers. Colorado charges $18,000 for licenses to dispensaries serving 501 and more patients, $12,500 for centers with 301 to 500 patients, and $7,500 for 300 or fewer patients. That helped the cash-strapped state rake in some $7.34 million when its first license application deadline hit in August 2010. Then there are all the local licensing fees, which, in the case of Denver alone in 2010, brought in $1.7 million.

Medical cannabis growers (which the state calls “cultivators”) and edible makers (“infused-product manufacturers”) are charged a $1,250 licensing fee apiece. Combined, that squeezed another $16 million out of the industry in 2010.

If these numbers seem fantastically high now, then wait another five years when, according to the financial news and analysis firm See Change LLC, the U.S. marijuana market is expected to double. Coincidentally, Colorado’s Medical Marijuana Enforcement Division presently has license applications pending for 818 Colorado prospective medical marijuana centers, 1,218 cultivators and 318 infused-product manufacturers. If all were approved, it would roughly double the medicinal pot industry in the state.

But there are challenges: Efforts to eliminate any and all marijuana operations that U.S. attorneys feel are located too close to schools have thus far resulted in at 48 dispensaries shutting their doors. Further, Republicans in the state legislature continue to push forward bills that would dramatically scale back patient access to marijuana medicine.

That’s frustrating to activists like Aaron Smith, who says that for every job created by the medical cannabis industry in which the employee directly works with cannabis, two more jobs are created in businesses that do a lot of work with the industry. One estimate says 90 percent of the growth realized in the hydroponics industry alone is directly related to the boom in medical cannabis.

“We’re seeing all sorts of industries benefiting from medical cannabis, from security alarm installers and safe installers to CPAs and folks that make software for point-of-sale systems,” Smith says. “You’ve got all those testing labs and attorneys . . . It goes on and on. It’s extremely difficult to compile all that, but we’re working on it.”

But it’s particularly galling to Dan Rush, director of the United Food and Commercial Workers’ National Medical Cannabis Division. One of the largest commercial unions in the nation, the UFCW has been working steadily to bring Colorado’s estimated 8,000 full-time medical cannabis dispensary workers and 20,000 production workers into the fold.

[The federal crackdown is] “devastating to any industry’s economy,” Rush says, “and hurtful to the struggling mainstream economy.”