Business
Denver Weed Delivery Services Face Mile-High Challenges
Social equity cannabis delivery services in Denver are facing steep challenges to their success, but a city proposal may help them survive.
When city officials in Denver, Colorado authorized home delivery of cannabis products in April of last year, licenses for cannabis delivery services were reserved for social equity businesses for a period of three years. Under the plan, delivery services owned by entrepreneurs who have been negatively impacted by the War on Drugs would partner with the city’s licensed marijuana dispensaries to complete customer deliveries.
The goal of the plan was to help create a diverse cannabis industry in the city while giving people who had been harmed by marijuana prohibition policies a path to business ownership in the regulated market. To qualify, owners or a family member had to have an arrest or conviction for a marijuana offense, or applicants had to meet certain residency requirements. But more than a year into the program, the social equity cannabis delivery service business owners in Denver are facing challenges that threaten the viability of their enterprises.
The business owners and regulators cite high licensing costs, a saturated cannabis market and a lack of support from retailers as some of the barriers to success in the industry. Of the 206 licensed cannabis dispensaries in Denver, only nine have opted to partner with a social equity business to provide delivery service for their customers. Molly Duplechian, the executive director of the Denver Department of Excise and Licenses, said that many dispensaries might be waiting for the three-year exclusivity period for social equity delivery services to expire before launching their own home delivery programs.
“What we’ve heard is that some of the existing industry may have been waiting the exclusivity period out, or they could have been investing in a social equity transporter and then planning to move to do their own delivery in two years,” Duplechian told local media.
The High Cost of Getting People High
Some retailers cite the high permitting fees associated with launching home delivery services while others note steep delivery fees and difficulties updating existing software for placing orders to integrate with the delivery partners’ operations. Others say with so many weed shops in town, most customers would rather shop in person than pay extra to have it delivered. Whatever the reason, the challenges have become unsurmountable for some delivery business owners.
In August 2021, the marijuana delivery service Dooba made news when it became the first company to deliver cannabis in Denver legally. Ari Cohen, the owner of the business, qualified as a social equity applicant because of a past marijuana conviction. But less than a year after the initial headline-grabbing delivery, Cohen’s business is faltering and he is shutting Dooba down.
“About a month before licenses were due for renewal, we decided not to go forward,” Cohen told Westword. “There were significant costs associated with it, and we’ve had limited and stagnant growth.”
“The more regulations we have to follow and fees that pile up, the harder it is for businesses, and the more resources it takes to meet those requirements,” explained Cohen. “Cannabis is one of Colorado’s most highly regulated industries, and that comes with a lot of high costs. Businesses are closing down because they can’t make ends meet. You’re seeing it with store groups and cultivations out here already.”
At least one additional business, Mile High Cargo, is also declining to renew its license, according to Eric Escudero, a spokesperson for the Excise and Licenses Department. Michael Diaz-Rivera, a social equity owner who operates the Denver-based Better Days Delivery, said that the fact that Dooba is ceasing operations does not bode well for other cannabis delivery services in Denver.
“[Cohen] had the business chops. … He had more dispensary partners than me,” Diaz-Rivera told Politico. “Am I just throwing money into a bottomless pit because I’ve been sold this dream of generational wealth that might already be gone?”
Noting how few cannabis dispensaries in Denver have partnered with social equity delivery services, Diaz-Rivera believes that many retailers are waiting for the three-year exclusivity period to end before they launch their own cannabis home delivery services.
“A year and a half has already gone up [with] this exclusivity. And the dispensaries are just waiting it out,” Diaz-Rivera said. “What good does it do for us if they know that they can just wait?”
Denver Proposes Extending Social Equity Exclusivity for Cannabis Delivery
To help support the city’s social equity cannabis delivery services, Denver officials have proposed making licenses for cannabis delivery services exclusive to social equity businesses on a permanent basis.
“We’re one year into one adopting delivery, but also adopting our social equity program. And based on feedback we’ve heard from our transporters and the industry, there’s just not a high level of industry participation,” said Molly Duplechian, Denver Department of Excise and Licenses executive director. “So what we want to do is we want to provide certainty to our social equity transporters that they have a path going forward beyond just the next two years.”
The proposal also includes a reduction in licensing fees for social equity delivery services and the retail dispensaries that partner with them to provide home delivery.
“Some fees are going from $2,000 all the way down to $25. So we’re really trying to reduce and remove any barrier that stands in the way,” Duplechian said.
The Excise and Licenses Department expects to finalize its proposed changes to the social equity program before presenting them to the Denver City Council. If the proposal is adopted by the council, it would go into effect within a few weeks, according to media reports.
Source: https://hightimes.com/news/denver-weed-delivery-services-face-mile-high-challenges/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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