Under Trump, What’s The Future Of Marijuana In Colorado?

Photo: Marijuana dispensary in Boulder (AP Photo)
Budtender Miles Claybourne sorts strains of marijuana for sale into glass containers at The Station, a retail and medical cannabis dispensary, in Boulder, Colo., Thursday, Aug. 11, 2016.

Just a few short years after Colorado voters approved recreational marijuana, it’s now a billion-dollar industry. Now with Donald Trump about to be sworn in as president, there’s a big question hanging over the cannabis business and Colorado policy makers: What will his administration do about marijuana?

Update 1/10 2:30 p.m.: Sessions Sidesteps Marijuana In Confirmation Hearing

During the campaign, Trump said he supported medical marijuana and indicated that he’d respect states that have legalized the drug. Yet, he took aim at Colorado’s recreational industry at the Conservative Political Action Conference in 2015.

"If they vote for it, they vote for it. But they've got a lot of problems going on right now in Colorado. Some big problems,” Trump said. He didn’t detail what he thought those problems were.

Colorado voters, of course, approved Amendment 64 in 2012. The state law went into effect in 2014. It’s still against federal law, though federal law enforcement agencies are currently deferring to states on the matter. A 2013 Department of Justice memo essentially said the federal government wouldn’t interfere with states’ marijuana legalization as long as they implemented strong regulatory systems.

But Trump’s pick for attorney general, Sen. Jeff Session, R-Ala., could reverse that policy if he’s confirmed by the Senate. Sessions has repeatedly criticized marijuana reform and the DOJ memo. Sessions’ two-day Senate confirmation hearing starts Tuesday.

How likely it is that Trump will shut down legal marijuana -- recreational, medical or both -- is an open question. It would go against public opinion and be very costly, Time pointed out. Politico, on the other hand, warned of Sessions’ “coming war” on legal marijuana. Meanwhile, U.S. Rep. Jared Polis, D-Boulder, plans to introduce legislation that would make the federal government regulate marijuana as it does alcohol. It’s failed twice already.

Colorado is not the only state with much at stake. Eight states and the District of Columbia have legalized recreational marijuana, and many more allow medical use.

Four states voted to legalized recreational pot in the 2016 election. The current total of jurisdictions with recreational pot, following Election Day, is seven states and Washington D.C.

Jim Hill/CPR News

Under more normal circumstances, one expert said, that would make marijuana an unlikely target for a policy change by a new administration.

“But these are unusual times,” said Sam Kamin, a marijuana legal expert and law professor at the University of Denver.

"We have a president that is so unpredictable that the assumptions we made a few months ago may not hold true,” he added.

The issue, Kamin said, boils down to whether Trump or Sessions takes the lead on drug policy. Advocates and local government leaders say they’ll keep a close eye on any announcements out of Washington, D.C. that may offer clues about the future of Colorado’s marijuana industry. Thousands of jobs and millions of dollars in tax revenues are on the line, they say.

A Boon For Government

Total sales of medical and recreational pot hit $1.1 billion for the first time in 2016, with two months of data still to report. That's $2.8 billion in cumulative sales in the three years since recreational pot was legalized. Recreational dominates, now accounting for 70 percent of monthly sales.

The state has collected $315 million in taxes, licenses and fees related to recreational marijuana in those three years. It’s brought in $59 million from medical marijuana-related taxes, licenses and fees in the same time. That number is smaller because medical is only subject to sales taxes whereas recreational has special taxes added on.

Most of the tax revenue goes into the state’s general fund, though some is shared with local governments that allow marijuana. Some local municipalities also collect their own taxes.

Pueblo County jumped on the pot bandwagon early. The economically depressed area south of Denver has embraced marijuana grows; it’s now the top wholesaling county in the state, county commissioner Sal Pace said. The county’s 2 percent excise tax on cannabis cultivation will bring in in more than $1 million this year, Pace said.

Forty percent of all commercial building permits issued in 2016 were marijuana related, Pace said. In November, Pueblo’s jobless rate finally dropped to pre-recession levels.

"Any employer where you see a packed parking lot is a welcome sight in a community that has the historically has the highest unemployment and the lowest per-capita income in Colorado's major counties,” Pace said.

But just months after advocates successfully fought off an attempt to shut down the recreational marijuana industry in the county, they are now facing another threat in the form of the incoming Trump administration.

"There is this perceived threat,” Pace said. “But we've been through this perceived threat several times over the last decade. I think ultimately there's too many jobs and the voters have spoken loudly and clearly across the country. It's going to be politically not very [expedient] for the Trump administration to change the current trajectory."

Still, Pace said he and other local officials are concerned with Sessions’ nomination. The county is considering hiring a federal lobbyist to fight for its marijuana industry, Pace said. And he’s implored Pueblo’s congressional delegation to take up the issue in Washington.

While Pueblo County has capitalized on recreational cannabis, Denver is home to most of the state's marijuana businesses. It has collected about $80 million in taxes, licenses, fees since legalization. Of that, the city has budgeted $59 million into the general fund, which pays for anything and everything. The remaining $21 million is spent on marijuana-specific things like regulation, enforcement, education and public health.

Schools See Relatively Few Dollars

During the campaign for Amendment 64, advocates often touted the money the measure would bring in for governments -- and schools. “Let’s have marijuana tax money go to our schools, rather than criminals in Mexico,” one commercial said.

It’s true that some tax revenue goes to schools: The first $40 million collected each year in excise tax goes to the Building Excellent Schools Today program, which helps fund school construction and renovation projects.

But it’s not been the panacea for schools that some thought it would be. While pitching a referendum to local voters last fall, Montrose County School District Superintendent Stephen Schiell said he was constantly asked why more money for schools was needed.

“They thought that everyone would get lots of money, that there would be windfalls [after marijuana was legalized]. There isn't,” he said.

The district received a $12.4 million BEST grant this fiscal year to build a new middle school. The grant is covering about a third of the total cost, with local voters ponying up for the remaining $21 million.

In reality, marijuana revenue makes up just 5.4 percent of the BEST program’s funds as of September 2015. Excise tax collections have doubled since then, but the lion’s share of BEST funding comes from School Trust Lands. And the BEST program is a tiny piece of the overall funding that supports the state’s schools.

Still, Schiell said he’s thankful for the grant and the infusion of marijuana-related cash -- however small it may be.

“I have no problem -- the state deemed it legal,” Schiell said. “It's helping us. [But] if marijuana went away, I'm sure the program would still exist and it would still help schools.”

Industry ‘Cautiously Optimistic’

Statewide, there are 30,866 employees registered to work in marijuana businesses as of December 2016. There were fewer than 7,000 at the end of 2013, before the first recreational marijuana business opened. This is not an exact number of employees, as not everyone associated with the industry must be licensed by the state.

As of Jan. 1 2017, there are 1,318 recreational marijuana licenses, which includes stores (441), grows (623), product manufactures (241) and testing facilities (13). There are 1,516 medical marijuana licenses, many co-located at recreational stores facilities.These are not necessarily unique locations of businesses -- one business can have a recreational and medical store, grow, and product manufacturing licenses all at one address.

All of that adds up to a sizable industry that federal leaders would be remiss to dismantle, said Kristi Kelly, executive director at the Marijuana Industry Group.

"It could result in a recession in the state,” Kelly said. “It would open up the potential for cartels and illegal markets to replace this model of taxed and regulated business."

Many in the industry are holding their breath waiting for word on what will happen after Trump takes office, Kelly said. But she added that the type of investor that gets into cannabis, an outlaw substance nearly everywhere until very recently, are used to taking risks.

She’s “cautiously optimistic” that Trump’s team will realize the medical and tax benefits of the drug before taking any drastic actions. But she admitted that what will happen next is anybody’s guess at this point.

"I'm not entirely sure what to expect,” Kelly said.

CPR News' Ben Markus contributed to this report.