AS DISPENSARIES POP UP, DENVER MAY BE POT CAPITAL, U.S.A.

Denver now appears to have more marijuana dispensaries than liquor
stores, Starbucks coffee shops or public schools, according to city
and corporate records.

A push by City Council members to regulate the medical marijuana
industry and restrict where dispensaries can locate appears to have
prompted a surge in sales-tax license applications, city officials say.

As of last week, Denver had issued more than 300 sales-tax licenses
for dispensaries. That number slightly exceeds the number of
Starbucks coffee shops in Denver and surrounding areas, calculated
within a 50-mile radius. It is roughly twice the number of the city's
public schools. It exceeds the number of retail liquor stores in
Denver by about a third.

The pace picked up, acting City Treasurer Steve Ellington said, after
the council put the public on notice that restrictions are coming on
where new dispensaries can set up shop. (The increase also followed
an opinion from Attorney General John Suthers that medical marijuana
was not exempt from sales-tax laws.)

At least 170 of the dispensaries got sales-tax licenses in December.

Ellington said his office is getting about 25 sales-tax applications
a day for dispensaries.

That pace prompted the National Organization for the Reform of
Marijuana Laws to recently name Denver "America's Cannabis Capital."

On a per capita basis, there are now slightly more medical marijuana
dispensaries with a sales-tax license in Denver than there are
dispensaries in the city of Los Angeles, where medical marijuana has
attracted national media attention.

To receive a Denver sales-tax license, dispensaries must show they
have a location where they plan to do business and must show they
plan to open up within 90 days.

Possessing a license doesn't mean a dispensary is operating, but that
its owners have applied to collect taxes at a specific location within 90 days.

The state constitution's Amendment 20, passed by voters in 2000,
legalized medical marijuana. The amendment created a patient registry
but did not specify how the system of "caregivers" would be set up.
As a result, dispensaries have cropped up across the state, offering
medical marijuana with little or no regulation or zoning.

New regulations under consideration could reshape the dimensions of
the medical marijuana industry in Denver.

A majority of the Denver City Council seems intent on restricting
dispensaries from locating within 1,000 feet of one another. Most
council members also want to ban dispensaries from operating within
1,000 feet of schools or child-care facilities.

The council met in committee recently and grappled with determining a
deadline for when those new restrictions should take effect. The
committee ended up forwarding to the full council a proposal that
would allow those dispensaries that had a sales-tax license on or
before Jan. 1, 2010, to escape the new distance requirements.

Some council members wanted an earlier deadline, which would winnow
down the number of dispensaries.

If the council moved the sales-tax deadline up to before Dec. 1, more
than 100 of the dispensaries would be in violation of the new
distance regulations, the treasury department determined.

Councilman Charlie Brown, who is pushing the package of regulations,
said he now wants to move the active sales-tax deadline to Dec. 15 as
a compromise between council members wanting a tighter deadline and
those who want looser restrictions. The treasury department is
preparing a new analysis that would determine how that Dec. 15
deadline would affect dispensaries.

Brown said he thinks the marketplace will end up thinning out many of
those rushing to get into the dispensary business anyway and will
bring the number of dispensaries down to a lower level. He adds that
new criminal background checks that the council probably will require
also probably will shut down some operators.

The full council is scheduled to meet Monday to give initial
consideration to the regulations, which would bar people who have
completed any portion of a felony sentence within the past five years
from opening a dispensary.

The regulations also would bar on-site consumption of medical
marijuana at dispensaries.

The council is scheduled to meet again Jan. 11 for a public hearing
and final consideration of the new regulations.