July 1, 2014

CO Welcomes New Rec Applicants, Axes Vertical Integration Rule

coloradocannabis

Colorado’s recreational marijuana industry is finally opening its doors to newcomers and abolishing one of its most stringent cultivation rules.

The new dynamic could create a noticeable shift in Colorado’s recreational industry, changing how some businesses are run and introducing new competition to an already-crowded market.

Today, the state begins accepting applications for business licenses from entrepreneurs who were not part of the medical marijuana industry.

Up to this point, only owners of licensed medical marijuana businesses could apply for and obtain permits to run recreational cannabis stores and grow sites. Now, anyone can submit an application, provided they are a resident of the state.

Additionally, Colorado no longer requires vertical integration, so recreational businesses can operate specifically as wholesale cultivators or retail shops. Previously, retail stores had to grow 70% of their inventory, while stand-alone cultivation operations were not allowed.

Entrepreneurs therefore had to balance their time and money between grow houses and marijuana storefronts – which require different skills and expertise.

mjfactbook14storyhorizontal336 e1397581896865 CO Welcomes New Rec Applicants, Axes Vertical Integration RuleNow, entrepreneurs can devote their entire business to either growing cannabis for the industry or selling it to consumers via storefront retail shops. Those that take this route also won’t have to obtain and renew two separate types of state licenses, though retail stores can still grow their own if they want.

The wholesale market for cannabis could grow significantly as a result of the changes, which could help push down prices.

As of mid-June, 292 entrepreneurs had filed notices with the state saying they planned to apply for business licenses starting July 1, according to the Denver Post. The earliest they can begin operating is October. But bans on recreational businesses across the state and zoning restrictions will severely limit where these operations can locate.


5 Comments:

  1. This is great news for the CO cannabis industry!

  2. Well there you go! Before you know it the Colorado law will emulate the Washington law which is superior in most respects.
    Mandating vertical integration was a mistake from day one as was the lack of a testing requirement and rules covering edibles which has become all to evident with the multitude of problems which have tarnished the rollout of rec cannabis.
    Colorado will also be forced, under pressure from the feds, to institute a canopy limit that restrict how much can be grown. Growers will LOVE this, retailers, not so much!

  3. Nash is right!! this is great news for Colorado patients! They will finally be able to get some professionally grown medicine
    All you Colorado growers better look out ! The true pros from Cali will be moving in…..your all done :))

    Well we will let hydro Hillary stay, she is a cutie

  4. Darrell Speights

    Residency is still a requirement . There are professional growers in Colorado that rival anyone in the world , who have no desire to become involved in retail . These individuals could very well enter the pot business , now that the rules are changing . Individual counties need to take these new rules in to consideration as well.Now what Colorado could consider is state licensed marijuana auctions , for licensed wholesale farmers to supply product to the Colorado licensed retailers ,and manufacturers at compettetive prices . The auctions could have inspection and testing services on site , as well as tax authorities . The Colorado legal wholesale buyers would be able to bid legally and intelligently on the spot, with all the boxes checked . State compliance ,taxes, quality,potency,and integrity being insured. This win would be for everyone concerned. I am looking forward to some form of this type of infrastructure to be considered, planned and set in motion for the Colorado Marijuana Industry , by Colorado State lawmakers .

  5. Vertical Integration was used as a barrier to entry to ensure that CO didn’t have the same issues that CA did. Now that CO has a pretty good grasp on the situation, it only makes sense to open up the market. Most CO dispensaries are fully vertical now and completely closed off to the idea of trading with other growers and dispensaries. Everyone was in a rush to become 100% self-sufficient-which was a smart move at the time. The problem is that now there are new dispensaries coming into the market who do not have to be vertical. It would seem to some that the new entrants are at a disadvantage, having to rely on other growers and each other to supply their product. But in reality they are set to take over the industry because they will be buying the best product for the lowest price. They will be open to selling their inventory state-wide. And they will be open to buying from any producer as long as the price is right and the quality is there. Once the industry goes to an online marketplace -and that is just around the corner- these dispensaries and growers will be the ones taking over. The current idea that the CO dispensary owner has of “I don’t need anyone, I’m self sufficient and have something no one else offers” will be their downfall. The market WILL open up. It WILL go online and vertical integration and the resulting attitude from it WILL cause the new entrants to succeed and the old guard to fail.

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