Durango marijuana enthusiasts have almost a dozen places to buy cannabis, but there aren’t any public venues to consume it. That may change next year, but only if city leaders decide, or are prodded by residents, to do so.
Colorado lawmakers passed a law this year allowing marijuana hospitality establishments, or cannabis consumption clubs, across the state. The rule changes Colorado Constitutional Amendment 64, which legalized recreational marijuana, by overriding a state ban against smoking in commercial establishments and affording businesses and governments an opportunity to monetize consumption of cannabis.
But local governments must opt-in to the measure and have the ability to craft their own rules and regulations concerning cannabis consumption clubs, said Kevin Bommer, executive director of the Colorado Municipal League. The state law allows for cannabis consumption in approved clubs, dispensary and lounge combinations or eateries where marijuana consumption is allowed separate from normal operations.
Local governments could decide to ban smoking and allow only consumption of concentrates or edibles, for instance, Bommer said. Or, policymakers could disallow mobile consumption lounges, like a party bus for marijuana use, Bommer said.
“Since Amendment 64 passed, the whole premise of marijuana in Colorado was based on local standards in the manner in which communities chose to move forward with it,” Bommer said. “This is consistent with that.”
Which raises the question: Is there enough political will, business interest and public acceptance to introduce marijuana hospitality spaces in Southwest Colorado?
Where there is a will ...It is too early to know when cannabis consumption clubs might come to Durango or what they might look like, policymakers and business people said. Gov. Jared Polis signed the bill into law May 29, but the law doesn’t go into effect until Jan. 1, 2020.
In an email to The Durango Herald, Mayor Melissa Youssef said allowing cannabis clubs “would be a substantial policy change that would require a thorough public vetting process.”
“We have an engaged and involved community that cares a lot about the character of our town, and we would need to understand and discuss the implications on our community identity, as well as consider the implications on our youth,” Youssef said.
Jack Llewellyn, executive director of the Durango Chamber of Commerce, said if sales-tax revenue for recreational marijuana is any indicator, there may be a viable market for cannabis clubs in Durango. Both Youssef and Llewellyn said there needs to be a thorough and careful review to determine if marijuana laws should be expanded in Durango.
The same sort of careful policy crafting happened in Durango when the state legalized recreational marijuana in 2012. Although Durango voters supported legalization of recreational marijuana, “the process to develop regulations was contentious,” according to a September 2018 report from the International City/County Management Association about the local impacts of commercial cannabis that included Durango as a case study.
Durango city officials identified setbacks to keep dispensaries away from parks, schools and day cares; wrestled with concerns about an overcrowded central business district; and addressed grow lights, security camera requirements and fire code compliance issues, according to the report.
Two years after recreational marijuana was legalized, Durango officials established a licensing process that increased fees for a new marijuana business from $50 to up to $10,000. And although Durango doesn’t have a dedicated sales tax for marijuana, the city’s standard 3% sales tax raised $825,000 in revenue from cannabis sales in 2017.
“The marijuana black market in and around Durango was much larger and more active than the city realized, evident from the higher-than-predicted sales tax revenue,” researchers wrote in the report.
Would clubs be a tourist draw?Justin Trouard, owner of The Homestead dispensary in Durango and Mammoth Farms marijuana grow operation in Saguache, said, “Any normalization of marijuana is good for sales,” including an opportunity to consume somewhere with strangers.
Introducing cannabis clubs will likely increase tax revenue as tourists flock to Durango for its new public marijuana consumption market, Trouard said. But he is not overly eager to get involved.
A big question yet to be answered is how cannabis clubs will be taxed, Trouard said.
The product he produces at Mammoth Farms is taxed at 20% when it leaves his facility, and another 18% when a consumer buys the product. The question he has is whether cannabis clubs would be allowed to purchase directly from Mammoth Farms, avoiding the 18% retail tax, or if they’d have to buy it from a retail location that gets its product from a cultivator.
Regardless, Trouard said he sees cannabis clubs as a tourism draw, as long as it is illegal to fly with cannabis.
“I think Durango is friendly to cannabis; their taxing is friendly,” Trouard said. “They encourage non-black market sales. (Cannabis clubs) might be incentivized in that way.”
Former City Council candidate Jaime McMillan ran his campaign, in part, on a platform of making Durango the cannabis capital of the Southwest. Cannabis clubs were a cornerstone of his proposal. The financial manager said he is looking into the possibility of opening his own cannabis club in Durango, but like many others, it’s too soon to say whether it would be a successful business venture.
McMillan said he could see his business operating on a membership model – a $50 per month membership fee with 50 members would generate $2,500 in gross revenue, about what it costs to rent a 1,000-square-foot room downtown, McMillan said. And with CBD legal nearly nationwide, infused drinks may be “a potential multiplier for that tourist dollar,” McMillan said.
And for McMillan, it comes down to social interaction. People have been meeting in bars for social and business reasons forever, he said. Why shouldn’t it be the same for cannabis, he said.
“I know what it’s like to be in an area where you’re using but you’re not able to have that cross community connection,” McMillan said. “We’re just missing out. There’s a social aspect. I think it would help provide clarity for tourists, and the business opportunity is there.”