(MintPress) – Marijuana legalization advocates in Colorado and Washington rejoiced when the poll numbers tallied up, proving the states’ residents had approved legalization amendments, paving the way for legal recreational marijuana use.
But the buck didn’t stop — or start — with the passage of ballot measures.
Businesses hoping to operate under the new laws, either as lounges or dispensaries, have been wary of jumping into the market, citing concern from landlords that the overreaching hand of the federal government could swipe away their herb.
Under federal law, the sale of marijuana for medicinal or recreational use is labeled as drug trafficking, regardless of the rules of the state. The same goes for the cultivation of the drug — growing more than 100 marijuana plants could land the grower in prison for five years, with an additional $25 million in fines.
So, while state laws regard it as legal, the risks are still high.
Paul Lovato knows this scenario all too well. Following the passage of the amendment, he jumped at the opportunity to open the state’s first marijuana cafe. But it seems he jumped too quickly, prompting his landlord to shut down his operation.
Smaller communities, where votes in favor of legalization weren’t necessarily pouring in, have drafted local ordinances that would ban such businesses entirely. Erie, Colo., a community of 18,000 just east of Boulder, Colo. voted to temporarily ban marijuana-related businesses. The same was down in Broomfield, a town of nearly 60,000.
According to the Times Call newspaper of Colorado, Broomfield temporarily halted marijuana-related business permits to give the community time to see how their neighbors throughout the state work out regulations and handle the ropes.
In Washington, where voters also voted to legalize recreational marijuana in November, the concern was similar. Just weeks after the ballot measure passed, the state’s governor, Chris Gregoire, made his way to Washington D.C. to discuss how the state should move forward with the new laws.
After meeting with U.S. Deputy Attorney General James Cole, the governor wasn’t any closer to uncovering whether the state’s liquor control board should start issuing permits for marijuana-related businesses.
“They are ‘looking at the issue,’” she told Bloomberg Businessweek. “That was about the only reaction we got.”
Businesses jumping — and waiting
It’s not exactly smooth sailing right now for marijuana business men and women. But that isn’t stopping those looking to be part of the next wave of Coloradan business success.
Even before Colorado voters approved a measure in November that opened up the doors to recreational marijuana use, businesses were lining up their plans to enter the burgeoning market, looking at first entering the medicinal marijuana industry and perhaps expanding to recreational use in the future.
According to Medical Marijuana Business Daily, Colorado has been under a marijuana-related business moratorium for the last two years, providing an opportunity for the state to create regulations relating to the industry. When the ban was lifted in July, the applications came rolling in.
Since July, the state has received 31 applications for medicinal marijuana businesses. While already legal, it’s speculated that those now involved in medicinal dispensaries will transform to appeal to all Coloradans, in the wake of legalization.
The Medical Marijuana Business Daily reports that, of those applications, eight relate to dispensaries, 20 relate to cultivation sites and three are for infused products manufacturers.
One operation in Colorado has been successful, at least so far. Club 64 operates under a members-only policy, allowing it to skirt around the regulations posed by the state. It classifies itself as a private lounge.
“Club 64 is a gathering of individuals in a free country who like to exercise their constitutional rights together,” Club 64’s attorney, Robert Corry, told the CBS affiliate in Denver, “which the voters of Colorado wisely gave us.”
And while it’s seeing success, there’s no guarantee from the federal government that its operation will continue without interruption.
Federal involvement?
At this point, aspiring marijuana entrepreneurs are just going to have to take the president’s word for it. For many, that’s not too comforting.
In an interview with ABC’s Barbara Walters, President Barack Obama said his administration had “bigger fish to fry” when discussing whether the federal government would interfere with legalization laws in Colorado and Washington.
“It would not make sense for us to see a top priority as going after recreational users in states that have determined it’s legal,” he said.
Yet history, at least for Obama’s administration, doesn’t speak truth to that sentiment. Just months before his comments to Walters on Colorado and Washington’s marijuana laws, Obama was defending his administration’s hard-lined approach to state medicinal marijuana operations.
“I can’t nullify congressional law,” he told Rolling Stone Magazine in an April interview. “I can’t ask the Justice Department to say, ‘I ignore completely a federal law that’s on the books.’ What I can say is, ‘Use your prosecutorial discretion and properly prioritize your resources to go after things that are really doing folks damage.’ As a consequence, there haven’t been prosecutions of users of marijuana for medical purposes.”
When campaigning for his first term, Obama was a staunch critic of a federal crackdown on state medicinal marijuana operations.
“I’m not going to be using Justice Department resources to try to circumvent state laws on this issue,” he said in 2008.
Yet he changed his tune drastically when he took office, with an increase in federal raids on state’s medicinal marijuana operations. According to several reports, from October 2009 to April 2012, the Justice Department carried out more than 170 raids in nine states where medicinal marijuana is legal. The actions resulted in 61 indictments.
It’s not a reputation everyone is willing to hold on to when leasing to or investing in marijuana-related businesses. Yet it seems some are still willing to take the risk, creating a market that would require greater federal resources to take down.