HIPPIE TOWN CHAFES UNDER COLORADO'S MEDICAL POT RULES

NEDERLAND, Colo. The Green Rush has gone bust in the town Rolling
Stone dubbed "Stonerville, USA."

Kathleen Chippi, who runs the One Brown Mouse boutique but recently
shut down her medical marijuana dispensary and smoking room, cursed
as she blamed the government.

"I refuse to give up my ... constitutional rights to the Colorado
Department of Revenue," she fumed, indignant over what she called
intrusive oversight and abusive taxation of marijuana.

More than 8,200 feet high in the Rockies, state regulation arrived in
this famously mellow, pot-friendly town after Colorado passed
landmark legislation over the past two years to tax, license and
govern the state's wild, for-profit medical marijuana trade.

Colorado now has the most heavily regulated marijuana industry in
America. Even Nederland's Board of Trustees imposed a $5,000 local
fee on new cannabis stores, hoping to cash in on pot prosperity.

But it has meant heartache for this hamlet of 1,400 people.

In 2010, Nederland voters passed a symbolic measure, declaring all
marijuana legal in the hippie haven and former silver town renowned
for its high-grade cannabis. In practice, the town already had
permitted seven medical marijuana stores. As many as 14 were said to
be operating one for every 100 residents.

Now Nederland has three marijuana stores left. A bonanza in local
sales taxes is drying up, and the town's marijuana growers are fed up.

Rather than pay state licensing fees and hefty costs for video
security and other state mandates for selling medical marijuana,
Chippi closed the doors of her Nederland store last year.

"This is insane. It's 'Reefer Madness' run amok," she said.

In Colorado, industrial marijuana cultivation thrives in warehouses
in Denver and nearby Boulder. But Nederland's medical cannabis
growers have been all but cut off from selling their product to the
retail market by state rules requiring stores to grow their own
plants or buy from other commercial centers.

The new regulations were a double blow to Nederland resident Mark
Rose, 51, a former hospital trauma technician.

A marijuana grower fiercely proud of his "Chem Dawg" and "Sweet
Island Skunk," Rose was forced out as a partner in the town's
Grateful Meds pot store.

Years ago, Rose spent 10 days in jail after he was caught driving a
pound of his personal Nederland stash to Ohio, where he briefly
moved. Now Colorado's new medical marijuana rules ban people with a
felony drug offense from working in the industry.

Rose sees a more universal indignity in the new cultivation rules
that he says hurt small pot growers.

The rules were a buzz kill to high economic times that took off here
after the U.S. Justice Department signaled in 2009 that it wouldn't
target marijuana patients in states where medical use is legal.

Nederland sprouted with marijuana stores eagerly buying local weed.
By 2010, town coffers brimmed with new marijuana income.

Some $80,000 in marijuana sales taxes accounted for 10 percent of the
town's total. Pot tourism spiked overall sales taxes by some 50
percent as marijuana seekers from from as far away as Durango seven
hours to the west also filled restaurants, shops and the town's hotel.

"It was like a dream," Rose said. "Everybody in town was making extra
money. We had everyone from 21-year-old snowboarders to 72-year-olds
supplementing their Social Security income. But the state didn't like
that. They wanted the Henry Ford (production) model ... It's
antitrust. It's a power grab."

The boom days unnerved some local officials.

"We had people from all over the country coming in and wanting to set
up shop," said town clerk Teresa Myers. "Some were clearly
questionable. And they saw ... a live-and-let-live kind of town."

Colorado would later ban out-of-state residents from working in its
medicinal pot industry. And Nederland enacted local rules, including
licensing fees on new pot businesses and renewal charges on existing stores.

As a result, no new stores came in. Most left. Local marijuana sales
taxes are off by a third this year.

Nederland retains its mythical lure of legal weed symbolized by a
Florida man who stopped in recently at a local business, saying he
heard this was the place he could score some pot. State law may
supersede the town's legalization vote, but a sense of permissiveness persists.

"This town is chill," said Jessica Harris, 26, who sells pastries and
coffee while people get their bicycles fixed at Randy's Happy Trails
Bike Shop and Coffee. "People are happy, free to do what they want."

But next door, the Tea Alchemy Wellness Center once part of the
medical marijuana boom is closed.

"Everybody wanted to get rich," said Harris. "That's the whole story.
But state law is changing every second. It's made it pretty hard."

The new climate is challenging for Mike Tardiff, a construction
worker who started Grateful Meds with Rose. Not only did he lose his
partner, but Tardiff has had to lease Denver warehouse space to grow
for the store blasphemous in Nederland.

Chippi, who just a year ago had "2,200 patients double this town's
population" and "over 80 strains of A-plus medicine" at her
dispensary, remains defiant. She said she is suing the state and will
reopen her pot shop under her rules, not Colorado's.

Rose is headed to meet with medical marijuana advocates in Michigan.
He said he will argue against following Colorado's "big business"
regulatory model.

"They just couldn't stand the idea," he said, "of some hippies
sharing the wealth."