MEDICAL MARIJUANA INDUSTRY BUDS

DENVER - Forget about yuppie coffee shops. Colorado's new growth
industry is marijuana, with a workforce of at least 1,800 people.

Hundreds of medical marijuana shops have opened their doors since
2009, yet it has been difficult to figure out how lucrative the
business truly is.

Advocates frequently tout the economic boost from the medical
marijuana industry, but no study exists to show how much money legal
marijuana brings into the state economy.

"If I had the time, I'd do that study myself," said Rob Corry, a
lawyer who specializes in marijuana law.

Until this month, no one even knew how many medical marijuana
dispensaries existed in Colorado.

But a new state law required marijuana businesses to apply for state
licenses. As of the second week of August, 809 dispensaries had
applied for licenses, said Matt Cook, director of the Colorado
Department of Revenue's new marijuana enforcement program. An
additional 309 businesses had applied for an "infused product" license
to allow them to make brownies or other products that contain marijuana.

And 1,219 applications for marijuana-cultivation operations have
arrived at the department of revenue, Cook said.

The department has to do 1,861 background checks for people involved
with the medical marijuana industry, Cook added.

Before the license law took effect, medical marijuana advocates like
Brian Vicente of Sensible Colorado estimated the number of shops to be
around 500. But Attorney General John Suthers said the Drug
Enforcement Administration told him there might be 1,000 or more
dispensaries.

The department has been trying to collect the 2.9 percent state sales
tax all along, said spokesman Mark Couch.

"There's a fair degree of compliance work that still needs to be
done," he said.

Between July 2009 and February 2010, the state collected $631,000 in
taxes from dispensaries. That money includes all products, like
T-shirts and hemp shoes, and not just marijuana. But it works out to
more than $21 million in sales during those eight months, even with
half the known dispensaries paying no tax at all.

The state's figures probably are not complete, though. The city of
Denver has the most dispensaries of any municipality and also appears
to have the most comprehensive records.

Between March and July, Denver has accepted 304 marijuana dispensary
applications and granted 70 licenses. Sales tax revenue from December
2009 through April was slightly more than $1 million. Based on the
3.62 percent city tax rate, that means stores in Denver alone sold $28
million in goods from December to April (for all products, not just
marijuana).

But the projected annual sales taxes will make up less than 1 percent
of the city's sales tax revenue, said city spokeswoman Sue Cobb.

Harvard economics Professor Jeffrey Miron estimated in a paper
published in February that the Colorado state government would gain
$35 million to $47 million from a full legalization and taxation of
marijuana (not just medical marijuana). He based his analysis on the
state's population and drug use rates.

In comparison, in 2009 the state government collected slightly less
than $36 million in sales and excise taxes for alcohol. Medical
marijuana can be more expensive than many alcoholic drinks. Colorado
dispensaries advertise marijuana for $25 to $50 for an eighth of an
ounce.

Doctors, lawyers and lobbyists have benefited, too. And
marijuana-themed magazines, like Kush, carry ads for hydroponic
gardening stores.

Vicente estimates that more than 10,000 people statewide are employed
in the marijuana business, either at the dispensaries and cultivation
operations or in related businesses. His law office, with a staff of
four, works on nothing but marijuana cases.

Doctors were initially reluctant to get involved, but now several
write recommendations for medical marijuana.

Some doctors can charge $200 for a 10-minute consultation with
potential medical marijuana patients, Corry said.

"Do the math. A doctor can do pretty well with that," he
said.

Lobbyists raked in the money, too. Secretary of State records show
dispensaries spent at least $50,000 since December to hire lobbyists
on House Bill 1284, one of the two medical marijuana bills the
Legislature considered this year. The total doesn't count lobbyists
from the Colorado Municipal League, individual cities and law
enforcement groups that spent time lobbying for or against the bill,
or simply keeping tabs on it.

Dispensaries sprang up over the last year thanks to recognition from
the Legislature, policy changes by the state Board of Health and a
decision by the Obama administration not to prosecute them under
federal drug laws - as long as they follow state medical marijuana
laws.

Aside from the legal changes, dispensaries have a big market because
Coloradans use more drugs, including marijuana, than people in most
other states.

In 2007, Colorado had the sixth-highest rate of marijuana consumption,
with 8.24 percent of residents over age 12 using the drug in the past
month, according to a survey by the U.S. Substance Abuse and Mental
Health Services Administration. More than one in five Coloradans
between the ages of 18 and 25 reported using pot in the month the
survey was taken.

Rhode Island residents reported the highest rates of marijuana use,
followed by Washington, D.C., Virginia, Montana, Maine and Colorado.

Nearly 100,000 Coloradans can now buy marijuana legally, as long as
they follow the medical marijuana law.

The constitutional amendment that voters approved in 2000 set up a
state registry of medical marijuana patients. For years, only about
2,000 people were on the registry, said Ned Calonge, chief medical
officer of the Colorado Department of Public Health and
Environment.

But 2009 brought a "perfect storm" of legal developments that made the
industry blossom. Late last year, about 800 people a day were applying
for the registry, and the numbers have tapered off only slightly,
Calonge said.

The department estimates 94,000 people have applied to the registry in
the last year, including a backlog of about 70,000 applications, said
CDPHE spokesman Mark Salley.