A decade in, Colorado's marijuana industry offers glimpse of how legalization could change Minnesota

DENVER — Inside a discreet warehouse on this city's outskirts, one of Colorado's largest marijuana companies cultivates nearly 30,000 plants and processes them into products sold at its retail dispensaries.

Workers clad in safety gear shuffle between plants in the Green Solution's facility, treating them and gauging when they'll be ready for harvest and sale. In another room, employees inspect harvested flowers and show off a machine they say can roll 10,000 joints a day.

The Green Solution's smooth-running facility illustrates the maturity of Colorado's marijuana industry, which has generated $14 billion in sales and nearly $2.4 billion in tax revenue since recreational products hit shelves in 2014. But the state's industry is contracting amid cooling demand and a crowded market. Even the largest cannabis companies are feeling the squeeze.

"The problem for Colorado is, there's already too many dispensary licenses. People are going out of business," said Adam Goers, senior vice president of corporate affairs for Columbia Care, a multi-state marijuana company that bought the Green Solution in 2020. "If you have too many people growing and too many people selling, nobody's making any money."

The twists and turns of Colorado's nearly decade-old marijuana industry offer a time-tested look at how legalization could play out in Minnesota. A Democrat-led recreational marijuana bill has already cleared most committees in the Legislature and could be voted on next week.

In Colorado, tax revenue has skyrocketed since legalization, while marijuana business margins have remained tight. More drivers have been cited for marijuana impairment, but teen use of the drug has stayed flat. Some cities have dispensaries at every corner, while others have opted out of the industry entirely.

"If we hadn't been successful in creating this system, I don't think legalization would be in 21 states right now," said Molly Duplechian, executive director of Denver's Excise and Licenses office.

Duplechian defines the early years of legalization as a period of regulatory "trial and error." First, she said, regulators focused on shutting down unlicensed marijuana operations. Then they had to monitor potentially hazardous pesticide and oil-extraction practices.

After a rash of dispensary burglaries, both Denver and Boulder began requiring marijuana shops to lock their products and cash in a bolted-down safe overnight.

Denver, which has granted more marijuana licenses than any city in the state, imposed a limit on the number of new licensees for a few years, lifting it only to give exclusive access to applicants who meet social equity criteria.

Marijuana sales in Colorado reached their highest monthly total — $226 million — in July 2020 at the onset of the COVID-19 pandemic, state data shows. Monthly sales have fallen sharply to about $125 million this past February.

Market conditions are exacerbating an already difficult business, Goers said. Marijuana businesses can't write off their expenses because of the drug's federal illegality, creating a tax burden that can eat up their profits. Cannabis companies also struggle to get loans since most banks won't do business with them.

Those challenges often hit small, locally owned marijuana businesses hardest. In recent years, more publicly traded marijuana companies from out of state, such as Columbia Care, have increased their footprint in Colorado.

But even Columbia Care is being buffeted by the current headwinds. The company closed three of its 26 Colorado dispensaries earlier this year.

Goers urged Minnesota and other states considering marijuana legalization to limit how many businesses they license.

"Exuberance is what's really bringing down this market," Goers said.

In a suburb west of Denver, the chief of the Colorado State Patrol rattled off the problems authorities have grappled with since the state legalized recreational marijuana.

Illegal growing. Interstate smuggling. And worst of all: the growing number of marijuana-impaired drivers, State Patrol Chief Matthew Packard said.

Colorado state troopers issued 684 impaired-driving citations involving marijuana in 2014. Six years later, troopers handed out more than double that number, according to a Colorado Department of Public Safety report.

Yet in that same span, overall DWI citations issued by the State Patrol fell sharply amid a decrease in alcohol-only tickets.

Packard firmly believes more marijuana-impaired drivers are on Colorado roads today. But he said he can't definitively gauge how many more because the state didn't collect enough data before legalization for comparison.

And Colorado law enforcement agencies have since trained more personnel to spot drug-impaired drivers.

"It makes common sense to me that if that many more people are keyed in to looking for that, you're going to arrest more drivers," Packard said.

Nearly one in five Colorado adults reported using marijuana in 2021, a notable increase from 2014, state data shows.

At the same time, teen use has not increased, according to the state's best available data. The share of Colorado high schoolers who reported using marijuana in the past 30 days fell sharply in 2021.

However, marijuana-related poison control reports are up significantly, many of them involving young children who ate edibles.

"It's scary and it's uncomfortable for the kid. But that's something that's treatable and, certainly, no one's died from an overdose of cannabis," said University of Colorado Boulder Prof. Angela Bryan, who studies marijuana's health impacts.

The black market has fluctuated, with more activity earlier when the state was among the few with legalized marijuana, authorities said.

Some public safety leaders said they felt Colorado's allowance for home-growing led to more illicit activity, though others were skeptical of that claim. Minnesota Democrats' marijuana bill allows home-growing.

"The black market isn't driven by home-grow," Colorado Springs Police Chief Adrian Vasquez said. "It's driven by large organizations, typically thought of as cartels, having the money and resources to do it on a scale that can demolish any other type of activity."

Nestled near Pikes Peak, one of America's most famous mountains, Colorado Springs is home to nearly 500,000 people and several U.S. military bases. And the city doesn't allow recreational marijuana sales.

The state's second-largest city tops the ever-dwindling list of Colorado municipalities that have opted out of the marijuana industry. While possession and home-growing are legal everywhere, Colorado's law let cities choose whether to allow marijuana sales in their limits.

The Minnesota marijuana bill would not let cities opt out.

Vasquez and Colorado Springs Mayor John Suthers said recreational marijuana is not a good fit for their city, whose large military population must abide by federal law.

A majority of Colorado Springs voters agreed in November, rejecting a ballot measure that would have allowed recreational sales.

"Everywhere they go, they paint this idyllic picture of Colorado," Suthers said of marijuana supporters. He is an ardent opponent of marijuana legalization who believes it worsened crime in his city. "It's just not that picture at all. It's got all kinds of downsides."

The rejected ballot measure dealt a blow to the more than 100 medical marijuana shops in Colorado Springs, which had hoped to sell recreational products like their competitors in neighboring cities.

A similar story has unfolded in Estes Park, a small tourist town at the eastern edge of Rocky Mountain National Park. Voters in this community, known as a base camp for park adventurers, rejected a ballot measure in 2019 that would have permitted marijuana sales.

Marijuana use is prohibited in the sprawling national park, which operates under federal law.

"There's some very real concerns about the interface with the federal lands," Estes Park Town Administrator Travis Machalek said.

Cities that have embraced legal marijuana, such as Boulder and Denver, appear to have few regrets.

Boulder County Sheriff Curtis Johnson said the city hasn't experienced much marijuana-related crime. If anything, he said, downtown bar crowds consisting largely of students from the University of Colorado have become smaller and less rowdy.

"We used to really have to police bar close downtown," said Johnson, who worked for the Boulder Police Department for 27 years. "Anecdotally, to me, it seemed like college kids were more content to smoke pot and play video games at home than go out to the bars."

In Denver, Colorado's first licensed marijuana party bus recently began hitting the streets. A few miles north of the city in Adams County, the state's first marijuana bar serves up cannabis-infused drinks and smokable products to customers in a cozy setting with bean-bag chairs and classic arcade games.

For all the gags made about marijuana in Colorado and the "mile-high city," Duplechian, Denver's top marijuana regulator, said the legal industry has not overshadowed the state's active, outdoorsy reputation.

"You come to Colorado to ski. You come to Colorado to go to the Rocky Mountain National Park. And maybe when you're here, you'll stop by a cannabis shop," Duplechian said. "But it's not really the sole reason people are coming."