Denver Post AP Writer, Kristan Wyatt recently wrote in an article explaining just how deep the expenses of running legal marijuana distribution operations in Colorado will find it’s way into your pockets. The subject will be discussed and likely determined at an approaching three days of hearings held by the regulatory board dealing with the legislation passed legalizing recreational marijuana in Colorado.
It’s been stated that costs involving the new start-ups will begin at the application process with a $5,000 fee.
In addition to the staggering costs of even putting your hat into the ring, there will be an operating fee in the neighborhood of $3,750 to $14,000. With background and residency checks to be required as well.
Colorado prides themselves on their potential to regulate the recreational marijuana based on the success they’ve had with medical marijuana industry. While the business model will vary with more competitors and entrepreneurial spirit, fundamentally there will be striking similarities.
A few things to consider when taking into account the fees that will accompany recreational marijuana:
(1) The price of licensing or operations in any industry can be staggering. Any time you have state or government regulation involved, there will be substantial fees associated with doing business.
(2) The cost of a doing business in the recreational marijuana industry is no different than obtaining a liquor license. Securing a liquor license in some states in certain counties can run in the $100,000+ range. Also, regulatory agencies for alcohol only issue a limited number of liquor licenses and businesses are EXTREMELY reluctant to let them go once obtained.
(3) Will banks still refuse to invest in businesses involving recreational marijuana given their past history with respect to federal law? The answer is probably yes to this one, but after banks see the profitability involved they’ll likely find any loophole possible.
(4) There is a silent majority that hasn’t been accounted for yet. An entire generation of professionals that has been reluctant to be vocal or very involved with the legalization process for fear of losing their job or any negative connotation that will come from marijuana stigma. So with respect to revenue, the projections in Colorado are likely grossly understated for volume of business.
There is a huge hurdle ahead for Colorado to get recreational marijuana right on the first attempt. The potential for Colorado to be a frontrunner and create the blueprints for recreational marijuana regulation and operations is better than ever. But with so many skeptics, Colorado really needs to knock this out of the park on the first pitch.