COLORADO OFFICIAL WORKS TO REGULATE, LEGITIMIZE MEDICAL MARIJUANA INDUSTRY

DENVER -- When Matt Cook was coaxed out of early retirement to become
Colorado's chief revenue enforcer three years ago, he assumed his
time would be spent overseeing the casinos, liquor stores and car
dealerships he had been keeping an eye on for much of his career.

If he had hoped for a quiet few years before heading for the golf
course, his timing could not have been worse.

Cook, senior director of enforcement at Colorado's Department of
Revenue, returned just as a new kind of business rolled into town
promoting a controversial product. Medical marijuana was legalized a
decade ago in the state, but retail-style dispensaries began
springing up only in 2007.

The trickle of new outlets has turned into a flood. Officials think
more than 1,100 dispensaries are operating statewide. As the numbers
grew, dispensaries offered ever more cannabis strains,
marijuana-infused products and delivery services.

When alarmed lawmakers decided they wanted to curb the burgeoning
industry, all eyes turned to Cook. "It was last Christmas that I saw
this was heading our way," he said. "Merry Christmas."

Relatively late in his career, Cook has become a pioneer in the
medical marijuana industry, drawing up a stringent regulation scheme
that aims to turn the industry into a legitimate -- and respectable
- -- enterprise.

"We plan to track the entire commodity from seed to sale," the
53-year-old said. "We will use a Web-based, 24-7 video surveillance
system, and we will see virtually everything from the time a seed
goes into the ground to the time the plants are harvested,
cultivated, processed, packaged, stored."

The regime may be copied by the 13 other states that already have
legalized medical marijuana and the 14 additional states that could
soon allow its use. Cook's counterparts in other states, as well as
the District, have been seeking advice.

Legislation passed by the D.C. Council in May permits the
establishment of up to eight dispensaries. Virginia and Maryland do
not permit medical marijuana use.

"I didn't find tough regulatory schemes out in any of the other
states," Cook said. "The numbers of dispensaries they have are very
limited. It is the most intensive period of work I have had at any
point in my career."

A drive down Denver's Federal Boulevard, an industrial stretch
running through the inner city, illustrates why his expertise was
needed. New dispensaries, with their marijuana-leaf signs, are
providing the latest source of urban regeneration.

Herbal Wellness, just down the street from a derelict movie theater,
has a steady flow of patients. The pungent smell of its produce wafts
through the front door. A sign displayed by the roadside tells
passing drivers: "Sale! $250 an ounce." Chronic Wellness, Daddy Fat
Sacks, Doctors Orders, Earth's Medicine and Mr. Stinky's are among
the other vendors found along the strip.

Denver and Colorado Springs could have as many as 500 dispensaries
each, officials estimate. Dozens also have opened in Boulder.

However, the new regulations have stopped the boom and are widely
expected to cut the number of outlets significantly. No new
dispensaries can be opened until next summer. Existing owners wanting
to remain in business have to apply for a license by Aug. 1.

Anyone wanting a license has to fill out a 22-page form detailing
immediate family and personal financial history. People with
drug-related felonies are disqualified. When all the rules kick in on
July 1 next year, practices such as giving away free joints will be
outlawed. Delivery services will be allowed only in rare cases.

In the first year, even the smallest dispensaries must hand over at
least $7,500 for a license, while bigger operations will have to find
as much as $18,000 to stay in business.

Cook's starring role in shaping legal marijuana sales is all the more
remarkable given that, 30 years ago, Cook was a narcotics enforcement
officer who threw Colorado's cannabis growers behind bars. His Drug
Enforcement Administration training certificate, dated 1980, hangs on
his office wall. On a table, three volumes of Colorado statute sit
next to a copy of Cannabis Connoisseur magazine.

He says his past made his new task a "big pill to swallow" but
insists it is all aimed at ensuring genuine patients receive the best
treatment.

Some in the industry have decided to get out before the wave of new rules hits.

"We've been jumping hoops since the beginning to get compliance, and
it is getting tiring," said Charlie Van Valkenburg, who is selling
his 5280 Wellness dispensary.

Cook says the new licensing requirements will shut down some shops.
On a visit to the Tender Healing Care dispensary, Cook stood next to
a glass counter filled with marijuana strains as he outlined some of
the new rules to Geoff Graehling, the dispensary's co-owner. Cook
explained that 70 percent of the marijuana sold in the store will
have to be grown there and that each jar of cannabis will need to be
labeled with the chemicals used during its production.

Despite the paperwork, costs and modifications, Graehling and his
fellow owner, Barb Visher, say they are embracing regulation. "I
think it was needed to deal with some of the bad apples that are
operating," Graehling said. They are not alone in welcoming the
chance to earn respectability. "Compared to the Wild West we've been
in, the regulations are actually going to put some legitimacy on the
medical marijuana laws," said Andy Cookston, owner of Cannabis
Medical, Denver's first dispensary.