Colorado legal marijuana sales spurred new industry, inspired reform

Sean Azzariti, of Denver, an Iraq war veteran suffering from post-traumatic stress disorder, made the first purchase of recreational marijuana under legalization at the 3D Cannabis Center in Denver on Jan. 1, 2014. Colorado became the first U.S. state to allow the sale of recreational marijuana. (Photo by RJ Sangosti/The Denver Post)

The world’s first legal sale of recreational marijuana happened in Denver on Jan. 1, 2014. In fact, it happened twice.

Mason Tvert was managing the onslaught of media that descended on the Mile High City to witness the historic moment, set in motion by the successful legalization campaign he’d led. So many camera crews and reporters showed up that morning that Tvert decided to rotate two groups through the dispensary’s sales floor — with each transaction billed as the first time anyone 21 or older could legally buy weed simply by walking into a store, showing ID and paying for it, no doctor’s note necessary.

Cannabis enthusiasts also flocked to downtown Denver that day. Lines outside the new rec stores stretched down city blocks. Buyers exited with purchases in hand, holding them overhead like victory trophies. Rumors even swirled that some stores had sold out, only adding to the fervor.

“It was wild,” Tvert recalls.

Monday’s anniversary of the first sales marks a decade since the state inaugurated its new recreational marijuana industry and stepped into the international limelight as a sometimes-reluctant trailblazer. Colorado voters’ passage of Amendment 64 in November 2012, less than 14 months earlier, had launched the state on a journey without a roadmap — forcing regulators to write the blueprint for overseeing the new market, local communities to choose whether they were in or out, and politicians who’d opposed the voter initiative to lead its implementation.

That industry has since raked in more than $15 billion in sales over its first decade, delivering a boon to the state’s economy. The success of Colorado’s tightly regulated system has helped reshape the public’s perception of cannabis and ignited a cascade of reforms across the country.

Today Colorado is hardly an outlier. In November, Ohio’s voters made it the 24th state to legalize marijuana for recreational purposes. Now just over half of Americans live in states where cannabis is legal.

“A lot of the opponents told us the sky would fall and the state would collapse — it didn’t,” said Skyler McKinley, who served as deputy director of Colorado’s Office of Marijuana Coordination during the first three years of legalization. “I think Colorado succeeded in making marijuana boring.”

Boring was hardly the watchword a decade ago. Colorado had the legal cannabis marketplace all to itself for six exhilarating months — distinguishing Denver and the state as an early marijuana tourism hot spot — before pot sales in Washington started in July 2014. That state’s voters had legalized marijuana in the same election in November 2012, but its rollout was slower.

Advocates find it hard to overstate Colorado’s impact as the first domino to fall when it came to legal sales.

Morgan Fox has spent years lobbying for changes in drug policy on the federal level as political director for the National Organization for the Reform of Marijuana Laws (NORML). Before 2014, politicians, flooded with a range of perceptions and stereotypes, had trouble visualizing what a regulated cannabis market might look like — or even how it would take shape.

“For a very, very long time, we would get laughed out of a lot of offices trying to talk about this issue,” Fox said. Once Colorado showed how a legal market could work, “it definitely allowed us to make conversations with federal lawmakers a lot more realistic.”

Alongside the expansion of recreational legalization, residents in 38 states now have access to medicinal cannabis in some form. Yet cannabis enthusiasts admit there’s still a long way to go to fully normalize a plant that long was demonized and criminalized, especially by the decades-long war on drugs that gained steam during President Richard Nixon’s administration.

Advocates say the stigma still associated with cannabis has led to over-regulation that’s cutting into already-thin margins. Sales have decreased and prices have fallen since the pandemic, causing worry that business may become impractical without changes to state and federal laws.

Pot remains federally illegal, classified as a Schedule I drug under the Controlled Substances Act. That means it is considered by the U.S. government to have no accepted medical use as well as a high potential for abuse, alongside drugs such as heroin and LSD.

The absence of federal legalization leaves Colorado’s cannabis industry operating in an amorphous gray area, said Ricardo Baca, a longtime legal marijuana proponent and former Denver Post reporter who helped launch The Cannabist website in 2013.

At times, the unpredictability has kept businesses on their heels. In 2018, early in President Donald Trump’s administration, the legal pot landscape in the state was thrown into disarray when Attorney General Jeff Sessions briefly directed federal prosecutors to crack down on the legal trade.

“There is an absence of federal regulation and oversight of an industry that desperately needs it,” said Baca, now the CEO of Grasslands, a marketing agency with a roster of cannabis business clients.

But things are slowly changing. In August, the U.S. Department of Health and Human Services recommended that the Drug Enforcement Administration downgrade marijuana from Schedule I to Schedule III, classifying it alongside anabolic steroids, testosterone and ketamine — and loosening federal scrutiny. And in late December, President Joe Biden pardoned thousands of people for marijuana crimes, his second round of pardons for federal charges.

Colorado “had to imagine an entire industry from scratch”

While attitudes have demonstrably shifted on the national level, helping to clarify the future of legal weed in Colorado, a mere decade ago things were very different. When voters decided to forge a path toward recreational legalization, the move was seen as radical — not just nationally, but across the globe — despite the state having legalized medical cannabis in 2000.

“Colorado didn’t have a playbook to work from — it had to imagine an entire industry from scratch,” said Truman Bradley, executive director of the Marijuana Industry Group, a Colorado trade association.

Then-Gov. John Hickenlooper was outspoken in his opposition to Amendment 64 in 2012, and so was Denver’s mayor at the time, Michael Hancock. Their worries echoed opponents who warned the move would increase drug use among youth. The Denver Post’s editorial board also urged readers to vote against the measure because of the conflicts it would cause between state and federal laws.

But Amendment 64’s proponents touted marijuana as safer than alcohol and promised tens of thousands of dollars in tax revenue to support schools and other civic expenses.

The measure passed with about 55% of the vote.

In the years that followed, McKinley was in the thick of the chaos at the state’s marijuana coordination office, dodging and weaving as a new industry took form and regulations were put in place. State officials may not have had a playbook, but they did take lessons from earlier mistakes with medical marijuana — including building a meticulous seed-to-sale inventory-tracking system.

“We were stood up in 2014 to handle any unforeseen issues that would, and in fact did, arise as the commercial market started,” said McKinley, who now directs public affairs for AAA Colorado.

While Colorado experienced inevitable hiccups, he said, the sector today is, for the most part, just another industry helping to power the state’s economy.

Even advocates initially underestimated the industry’s potential.

Weed-hungry customers spent more than $683 million on marijuana in 2014, the inaugural year of retail sales. Rec sales accounted for just 44% of all pot purchases initially but soon would dwarf sales of medical marijuana. In 2021, the industry saw its highest sales year, raking in more than $2.2 billion, with retail sales accounting for 82% of that.

In October, sales statewide surpassed $15 billion since legalization.

The state has collected about $2.6 billion in tax and fee revenue since 2014, with a portion of proceeds from its 15% retail marijuana sales tax shared with local governments — some of which, like Denver, collect their own marijuana taxes. The money has supported projects in the municipalities where the industry operates, including a government complex in Edgewater and a recreation center in Aurora.

Those dollars have also helped fund school construction, as was required by the language embedded in Amendment 64.

And retail and medical cannabis sustained 40,000 jobs at the industry’s peak a couple of years ago, Bradley said, though that number has dropped by around 25% due to recent growing pains experienced by the industry.

“As it stands now, these jobs can’t be outsourced to China or anywhere else,” he said.

But the industry and state government still are grappling with how to retroactively undo harms from the war on drugs through social equity efforts. Wanda James, a Black cannabis pioneer in Colorado who owns Simply Pure dispensary in northwest Denver, lauds the concept, which includes prioritizing people who were targeted and disproportionately impacted by criminal drug laws for retail, delivery or hospitality licenses.

But the effort came too late, she said.

“Everything was fully mature before Colorado thought about the concept of social equity,” James said.

Still, she applauds the reduction in marijuana arrests since possession and use no longer violate state law — though Black Coloradans are still more likely to get in trouble for cannabis than whites.

“I’m proud we’ve helped normalize the use of cannabis among adults,” James said.

State adapts to challenges, including tigher edibles rules

The rollout of legal cannabis wasn’t without its flaws.

Educating the public, some of whom were new to marijuana, about safe consumption habits proved difficult. In one tragic example, a college student named Levy Thamba jumped to his death from a hotel balcony in 2014 after eating a marijuana cookie with 65 milligrams of THC — more than six times the recommended dose.

That incident helped lead to new rules concerning edible serving sizes and packaging requirements. Other laws were also written in response to situations regulators didn’t anticipate. Denver, for example, imposed new rules for storage and security after an uptick in marijuana store burglaries in 2020.

But for all the pro-and-con campaigning in 2012, the worst fears about legalization’s impact on children and underage youth have not come true.

Since 2014, the Colorado Department of Public Health and Environment has been monitoring drug use in adolescents and adults. In a 2019 survey, the agency noted the frequency of youth consumption has “not changed since legalization.” However, how young people consume changed over time, with the agency reporting increases in dabbing concentrates and vaping weed oil.

The percentage of Colorado high school students who used marijuana in the 30 days preceding the survey (20.6%) was similar to the national average (21.7%). It was lower than the share of students who drank alcohol (29.6%) and used e-cigarettes (25.9%) during the same period, CDPHE found. The state’s biannual surveys of high school and middle school students have found largely stable 30-day marijuana usage patterns, with a decrease in 2021 during the pandemic.

But Alton Dillard, a spokesman for an advocacy group called One Chance to Grow Up, pointed to other dangers. He cited a 2022 study published by the American Academy of Pediatrics that found a 1,375% increase from 2017 to 2021 in nationwide poison control reports of accidental marijuana ingestion in children younger than 6. One Chance to Grow Up says its mission is to keep kids away from “today’s marijuana,” which is more potent than in decades past.

“We want to make sure people are aware that today’s products are not the ditch weed of their youth,” Dillard said.

Colorado, he said, has “made strides with the universal symbol and demarcation of edibles” but has missed the chance to make the drug less appealing to youths.

“If this is an adult product, the bottom line is that it should be in capsule form that is not attractive to kids,” Dillard said. “While that ship has sailed in Colorado, it’s a big challenge. Colorado kids are still enticed by THC-spiked sweets.”

Some communities still resist legal weed

Cannabis isn’t universally available statewide, despite Colorado boasting more than 1,000 medical and recreational dispensaries, some of them in combined storefronts.

Amendment 64 put power in the hands of local governments, or their voters, to decide whether to opt in to allow marijuana sales, cultivation and manufacturing.

Because of that, there remain pockets of the state where consumers cannot buy weed, including Douglas County and Arvada. In Colorado Springs, voters in 2022 rejected allowing retail stores. The city does allow medical marijuana dispensaries.

“For me, it really goes back to the science — that it is harmful to young brains,” said Dave Donelson, a city councilman in Colorado’s second-largest city — one of its most politically conservative communities.

And unique to Colorado Springs, Donelson said, is the presence of several military bases. Recreational marijuana could jeopardize their standing in the eyes of U.S. military decisionmakers, he said, especially when it comes to issuing top security clearances to military personnel.

For local voters, the councilman said, easy access to marijuana conjures up associations with elevated crime and vagrancy.

“Look at downtown Denver with its more lenient policies towards drug use — is that what we want?” he said. “That was a concern of our citizens. I think a lot of people in Colorado look back and wonder if we did the right thing.”

Two hundred miles to the west, Grand Junction City Councilman Scott Beilfuss said cannabis initially was taboo in conservative Mesa County, too. But after watching nearby small towns, including De Beque and Parachute, successfully support retail stores — and reap the tax benefits — sales in Grand Junction became more palatable.

“All the communities along I-70 didn’t have problems and were using tax money for community improvement things. That was a big sell on my part,” Beilfuss said.

In 2021, Grand Junction voters approved a ballot measure opening the door for retail sales with the promise that taxes would pay for a new recreation center. Though city officials fumbled the rollout, allocating licenses via a lottery despite advice to the contrary, four retail stores have opened within city limits.

Officials hope to break ground on the rec center next year.

Normalization advances — to a point

While the embrace of marijuana varies across the state, legalization unquestionably ushered in broader cultural acceptance of cannabis.

Thornton native Arend Richard began shopping at dispensaries as a medical patient in 2011, and he distinctly remembers recreational sales bringing out a more diverse crowd — one that broke the stoner stereotype.

Post-legalization, enthusiasts could talk openly about their use and the canna-curious could easily try marijuana, all without fear of being arrested. CDPHE’s surveys have found the proportion of people 65 and older using cannabis within the previous 30 days more than doubled between 2014 and 2021, from 3% to 7.6%.

“It showed how this newly recreational plant wasn’t just for stoners,” Richard said. “We sparked the fire that lit the joint.”

That shift is evident in pop culture, too. While indo-smoking icon Snoop Dogg may be the most obvious marijuana-enthused musician who comes to mind, artists from R&B singer Frank Ocean (“Solo” in 2016) to country star Miranda Lambert (“Actin’ Up” in 2022) have songs that mention getting high in Colorado.

As the proprietor of a forthcoming cannabis lounge, Richard is hoping to join in a second wave of normalization.

At his Cirrus Social Club in Denver, guests will be able to bring marijuana and consume it using the venue’s variety of “seshware,” such as bongs and volcano vaporizers that will be served tableside. The goal: to offer a nightlife experience that focuses on weed, Richard said, filling a missing gap in the current scene.

Public places to consume cannabis, known as hospitality establishments, are few and far between in Colorado. Notable exceptions include JAD’s Mile High Smoke in Adams County, where patrons can belly up to the bar and order a wide selection of products for use on-site, and smoke-friendly tour bus companies that are becoming more common, such as The Cannabis Experience.

Aurora came close to allowing lounges, tasting rooms and pot tour buses citywide in 2021 before rejecting the idea in a tight city council vote. Some private clubs have popped up in Denver over the years, but the movement to build cannabis-friendly destinations has yet to take off — thanks, in part, to regulations that make it a costly endeavor to comply with the state’s strict indoor air law.

Bradley, with the Marijuana Industry Group, considers the dearth of places to consume marijuana socially one of the big failures of Colorado’s experiment with legal weed.

“People have been consuming cannabis for millennia,” he said, “but there are less than a handful of legal places to publicly consume cannabis — which is insane, considering we are a decade into legalization. I want to be able to sample it at a farmer’s market or buy a joint at a bar. I want Colorado to have the Great Cannabis Festival, not just the Great (American) Beer Festival.”

Facing headwinds, industry “still hasn’t found that bottom”

Public-use spaces aren’t the only struggle in the industry — after a decade of extraordinary growth, it’s now experiencing a downturn.

Sales have plummeted in the last couple years, following a pandemic-fueled surge, as more states got in the game and the price of marijuana dropped. Established brands, such as edibles maker Coda Signature and multistate operator Curaleaf Holdings, discontinued business in the state altogether in 2023, citing economic challenges.