The world's first government-licensed recreational marijuana stores will open in Colorado on Wednesday. About 20 pot shops, half of them in Denver, are expected be open for business on New Year's Day, with more following during the next few weeks as they get local approval. But January 1 is also the first day these businesses, which are legally required to produce at least 70 percent of their inventory, will be allowed to grow marijuana.
Which raises an obvious question: Where will the pot come from? The answer suggests that cannabis consumers should be prepared for shortages and price increases, at least until the first harvest of newly legal recreational marijuana this spring.
On Monday the Colorado Department of Revenue issued licenses to 136 marijuana retailers. All of them already operate medical marijuana centers, which are the only businesses eligible to apply for licenses at this point. They are also the only businesses that have legal inventories of marijuana.
A dispensary is allowed to grow up to six plants for each patient who names it as his designated provider. But that does not mean every patient consumes that much marijuana. Wiggle room is built into this system, since patients do not have to buy exclusively from their designated providers and dispensaries may sell as much as 30 percent of their marijuana to other outlets.
Any dispensary interested in the recreational market has had more than a year since voters approved Amendment 64, Colorado's marijuana legalization initiative, to maximize production under the existing quotas. Each dispensary will be allowed a one-time transfer of medical marijuana (plants and buds) to its new recreational outlet; otherwise the two sides of the business are supposed to be strictly segregated. "A lot of the businesses are going to be making a big transfer," says Michael Elliott, executive director of the Medical Marijuana Industry Group. "That's how they'll have product on the shelf on January 1."
Figuring out how much pot to transfer will be a challenge. Right now, Elliott observes, "110,000 patients can legally purchase from medical marijuana businesses in Colorado, and we're opening up the market to about 4 billion people in this world who could come and purchase from one of these businesses." Visitors who are 21 or older will be allowed to buy up to a quarter of an ounce at a time, compared to an ounce for Colorado residents. "It's really tough to know what tourism is going to be like," says Elliott, "and it's tough to know even in the state of Colorado what demand is going to be like."
Meanwhile, supply is fixed until about five months from now, when marijuana from the first plants grown for recreational sale will be ready. "We are anticipating shortages," says Elliott. "Everything that's brought over to the recreational side will be sold, so there's not going to be much of a wholesale recreational market."
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