BUSINESSES APPLAUD NEW MEDICAL MARIJUANA CLEANUP BILL

Amid federal uncertainty over the medical marijuana industry, Gov.
John Hickenlooper's somewhat quiet signing of additional regulations
Thursday signified a friendly smoke signal for local business owners.

"We're excited Colorado is continuing forward to help legitimize the
industry," Tanya Garduno, president of the Colorado Springs Medical
Cannabis Council, said Friday. "Everyone's been afraid with the
federal warnings, so Colorado making sure there are unambiguous
questions about our laws gives us a little more of a sure feeling."

Among other provisions, House Bill 1043 extends the moratorium on new
businesses for another year, until July 1, 2012. The ban took effect
July 1, 2010, in order for the state's Department of Revenue to create
rules based on legislation that was passed last year and get a handle
on what had become an explosion of businesses entering the market.

The state will promulgate its new rules in less than a month, on July
1, and begin processing more than 2,000 applications for permanent
licensing of medical marijuana centers, grow operations and
infused-product manufacturers that were filed before last year's
moratorium started. Local jurisdictions, including El Paso County and
the city of Colorado Springs, also will enact permanent licensing and
policies.

"I'm guessing the Department of Revenue has their hands full with all
of the pending licenses. To allow more businesses would be a paperwork
nightmare. It also wouldn't be fair to bring in a lot of new business,
when the rest of us have been struggling to come into compliance,"
said Jeff Sveinsson, owner of Cannabicare, a medical marijuana
dispensary that opened about a year ago off Marksheffel Road.

Businesses have been preparing for the changing landscape of July 1,
when nearly 100 pages of regulations will be enforced. Sveinsson said
to come into compliance with the new regulations, he's investing about
$15,000 more, on top of $40,000 he has spent on a security and
inventory tracking system consisting of 30 cameras and individual bar
code tags on each plant.

The restrictions cover every aspect of the business, including
surveillance of the property, employee background checks, labeling,
disposal of stems and transporting products.

The local market has been saturated with businesses, Garduno said.
There are about 137,000 patients registered with the state; about 11
percent of those live in El Paso County, she said.

Before last year's deadline, the state received applications for 206
centers and infused-product manufacturers in Colorado Springs and 11
in El Paso County, plus several grow operations, which the state does
not disclose.

But now, Garduno said, "Things are falling out considerably."

At the end of April, Colorado Springs had about 94 medical marijuana
businesses, Garduno said. As of last week, the number had dropped to
60, she said. A few businesses also have closed in unincorporated El
Paso County.

"People are dropping like flies. They didn't realize the headaches
from the government and the uncertainties," Garduno said. "A lot of
businesses are closing or up for sale."

Even with the moratorium, businesses can be sold to new owners, who
can relocate them.

Sveinsson predicts that more businesses will go under in coming weeks
because "they can't come up with the $5,000 to $20,000 to come into
compliance by July 1."

Even with the state's exhaustive regulations, the industry remains in
flux. Approved by Colorado voters in 2000, medical marijuana is still
illegal on the federal level. Businesses began proliferating after
President Barack Obama took office and announced he would relax
federal prosecution. But in April, the 15 states that have legalized
pot for medicinal uses began receiving warnings.

Colorado U.S. Attorney John Walsh wrote in an April 26 memo to state
legislators that his department "would consider civil actions and
criminal prosecution regrading those who set up marijuana growing
facilities and dispensaries."

Chairwoman Amy Lathen said El Paso County's board of commissioners has
received numerous letters from federal authorities, stating that it's
a federal crime to manufacture and sell a controlled substance.

Commissioners have asked the county attorney's office to investigate
the federal government's apparent reversal on the issue.