Colorado Dispensaries Struggle with Legal Issues Post Legalization – Criminal Defense Lawyer’s Perspective

I have blogged in the past about Washington State’s marijuana decriminalization. However, our stores are not slated to open up until later this year. Colorado’s marijuana stores opened last week on January 1st, thereby giving us a glance of what is to come. Here is what we have learned:

The federal government allowed the stores to open.

Because marijuana is still illegal under federal law, many wondered if the federal government would permit the stores to open in Colorado. The federal government could have sought injunctive relief through the courts, or could have simply raided the stores and made arrests.

A sample receipt of a purchase of marijuana in Colorado.

However, the Colorado stores have been open a week, and over 5 million dollars worth of marijuana has been sold. In 2013 the federal government hinted that they would not take action if the state of Colorado kept marijuana out of the hands of minors. The Colorado law prohibits possession by minors and limits the ability of stores to advertise in publications read by minors. Time will tell if this satisfies the federal government. The stores currently sell marijuana infused products such as brownies or cookies.  This raises the possibility of accidental ingestion by minors.

Stores struggle with access to banks.

Despite the fact that the marijuana stores have brought in over 5 millions dollars in the first week, they still do not have access to commercial banks as any other legal business would have. That is because under federal regulations, banks cannot legally process the proceeds of an “illegal” enterprise. This leaves the stores to pay their taxes in cash, compensate their employees in cash, and only accept payment from customers in cash. Maintaining their assets in cash makes the stores vulnerable to robbery and poses innumerable practical problems.  The federal government has warned armored car companies to not work with marijuana stores. Either the federal government will loosen their restrictions or the marijuana stores will have to develop alternative economies. It is possible the stores would seek to open their own credit unions, would accept alternative currencies such as bitcoin, or work with overseas banks.

Marijuana sells for a rate above the black market.

The stores in Colorado have been selling marijuana at a price of about $500 per ounce, when marijuana on the black market sells for about $300 per ounce.  A lot of the customers to the stores seem to be people interested in the novelty of buying marijuana at an actual legal store.  Many of the customers in Colorado are visitors from out of state.  But is it realistic that people will pay such a high rate long term?  Unlike Washington State, Colorado law still permits residents to grow small quantities of marijuana for personal use.

Although the stores in Colorado have answered some of our questions about the practicalities of legalization there are still a lot of unanswered questions.  Will consumption increase about minors?  Will the local officials crack down on the black market?  Will the IRS allow deductions for business expense surrounding the sale of marijuana?  Will medical patients still be forced to pay the same taxes on marijuana as recreational users?

 

 

 

 

 

 

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ABOUT THE AUTHOR….
Photo of Steve Graham Steve Graham is a criminal defense lawyer, and he splits his time between Spokane and Seattle, Washington. Visit his website by clicking: www.grahamdefense.com
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