Ready or not, Colorado’s medical marijuana industry enters a new phase this Friday, when state regulations go into full effect.  The change has many businesses scrambling.  And as Colorado Public Radio’s Megan Verlee reports, a new set of inspectors is already hitting the streets to make sure they comply.

Here is a transcript of Megan Verlee's report:

PAUL SCHMIDT: "Hello, how you doing ma’am?  Paul Schmidt from Medical Marijuana Enforcement Division..."

MEGAN VERLEE: Standing in the entry room to the Denver Kush Club, Agent Schmidt flashes his ID at the young woman manning the front desk.  She buzzes him and two other inspectors into the center. 

SCHMIDT: "Today you are the lucky recipients of receiving a random, unannounced visit from us."

REPORTER: Schmidt’s been making a lot of these unannounced visits recently, dropping in on marijuana centers and grow operations to see how they’re doing on compliance.  Before he starts asking questions though, he takes some time to introduce himself to the Kush Club’s owner, Darin Jones.

SCHMIDT: "So many people think we’re out here with stakes and driving them through people’s heart."
DARIN JONES: "I gotta say, when I saw armed guys walking through the door I got a little scared at first, but..."
SCHMIDT: "Exactly.  And that’s really one of the reasons we’re out here is so industry can meet us and we get to meet industry and that just takes the fear [away], because the fear is the unknown."

REPORTER: Schmidt’s boss at the Medical Marijuana Enforcement Division, Dan Hartman, says his office won’t be shutting down centers for small infractions.

DAN HARTMAN:  "We’re not there to go in and “Gotcha!” and do all of those things.  We’re there to make sure that they understand the rules through education, through training classes.  Even the process of an inspection will be an education tool."

SCHMIDT: "...The other thing, walking in here, we don’t see anybody having is your employee IDs."
EMPLOYEE: "We’re getting..."
SCHMIDT: "Oh you guys.  Now remember: IDs, just like the gaming industry, have to be on your person at all times."

REPORTER: Called out by agent Schmidt, employees at the Denver Kush Club say they’ll get their IDs, ASAP.  They’re generally welcoming to the investigators, if a tad wary.  Plenty of medical marijuana businesses are unhappy about the new regulations.  Several owners complained that rules are heavy handed and intrusive. They wouldn’t even talk on tape because they are afraid of retribution for speaking out.  But even owners who agree with the rules in general say the process hasn’t been easy.  Barb Visher stands in the lobby of her business, Tender Healing Care, in Denver.  She points to the glass bubble of a camera in the ceiling.  It was installed before the state set its final security requirements.

BARB VISHER: "We went with a more expensive, higher end system.  And what has actually occurred is, the system we got is just one step below what’s actually necessary.  And so after putting in just under ten-thousand dollars on a security system a year and a half ago, we’ve got to redo that."

REPORTER: The cost of compliance is a big concern for fledgling business owners.  State and local registration fees alone can run to the tens of thousands of dollars.  There is one way Visher thinks regulation will help her business; it will force all of Colorado’s marijuana centers to play by the same rules.  For instance, some Denver shops currently use a loophole to stay open later than the state allows.  That will have to stop on Friday.  Nick King owns Alpine Herbal Wellness in Denver.  He sat on the task force that drafted the final regulations.

NICK KING: "Most of us really want the regulation in order to create a level playing field for everybody that’s in the business.  So if people are not playing by the rules, they should be removed from  he business in one way or another."

REPORTER: Back at Denver Kush Club, the inspection seems to be going well.  The agents move from the center to its grow operation, housed in an old pasta factory near I-70.  Industrial air conditioners ripple the leaves of hundreds of pungent marijuana plants growing in big plastic buckets and grouped together in dozens of blue kiddie wading pools.  As he looks over operations, Schmidt discusses fertilizer mixes and lighting cycles with the center’s grower, and even passes on a few tips from what he’s seen at other operations.  At the end of the nearly four hour inspection, there are handshakes all around.
 
SCHMIDT: "Good luck you guys."
EMPLOYEE: "It's very nice to meet you."

REPORTER: After the inspectors leave, Denver Kush Club manager Joaquin Ortega says the experience was really different than what he expected.

ORTEGA: "This was great.  It seems like they’re actually trying to meet us halfway and help us get through the whole process.  It doesn’t look like they’re nitpicking whatsoever.  But we’ll see.  We’ll see."

REPORTER: Agent Schmidt says the Denver Kush Club is in pretty good shape.  As Schmidt and the other agents inspect Colorado’s thousand-plus medical marijuana businesses, they say they’re cutting people some slack right now.  But they also warn that won’t last forever.

Megan Verlee, Colorado Public Radio News