Medical marijuana has become a growth industry in Colorado

Medical marijuana has become a growth industry in Colorado
By Joel Warner
published: February 05, 2009

Michael Lee tends to his latest crop of medical marijuana.

Scott Carr (above) is the THC Foundation's regional manager in Colorado; Warren Edson (right) co-authored the state's medical marijuana law.

Subject(s):
medical marijuana, dispensaries, Cannabis TherapeuticsSee photos of 12 strains of Cannabis Therapeutics' supply at westword.com/slideshow

Behind a locked, unmarked door in a Colorado Springs strip mall, the state's largest marijuana dispensary is open for business.

The operation's aromatic showroom is packed floor to ceiling with pot and anything and everything related to it. "Welcome to Cannabis Therapeutics. Intended for prescribed medical use only!" announces a large sign on the wall.

Glass cases display Baggie upon Baggie of pot — 35 varieties in all. Those looking for cheap medicine can go for the $250-an-ounce, bargain-basement Holland's Hope or upgrade to $300-an-ounce Thunderstruck or $400-an-ounce Purple Haze. Big spenders can opt for top-shelf meds such as a crop of Chocolate Chunk priced at $500 an ounce. It's all available to buy loose or ready to smoke in pre-rolled blunts. And, for green thumbs, cloned marijuana seedlings sit in a bubbling tray of water, waiting for the right buyer.

Today an older woman is here buying some Silver Skunk to help ease lingering pain from a shattered right femur she suffered in a car accident, as well as recurring migraines and fibromyalgia. "I don't like marijuana, but I have no choice," she says as she pays part of her $136 bill in cash and puts the rest on a debit card.

A mother in a track suit leaves her teenage daughter pouting in the lobby while she shops; a younger fellow in baggy jeans and a hoodie samples some Mexican True Blue.

A staffer is ready to help newbies who've just coughed up their $25 annual membership fee establish what mixture of sativa and indica, the two core strains of medical marijuana, is appropriate for their particular illness. For multiple sclerosis, it's best to go with a cross breed that's at least 65 percent indica, known for its relaxing physical high. Sufferers of debilitating stress, on the other hand, typically opt for sativa, which provides more of a mental high.

To administer the medicine, there is a smorgasbord of colorful glass pipes and bongs available, courtesy of a Manitou Springs glass blower. For those who don't want to smoke their determined dosage, there are vaporizers to help clients inhale it, as well as THC pills, THC oils, THC butter, THC fudge, ice cream, bubble gum, hot chocolate mix, cheese, fountain drinks, roll-on pain relievers and bubble bath. Stashed away in a cabinet are jars filled with marijuana marinating in Don Julio and Cazadores tequila.

"It's not about getting high," says Michael Lee, the owner of Cannabis Therapeutics. "It's about getting medicated." Lee founded the operation three years ago under the auspices of Colorado's Amendment 20. The constitutional amendment — approved by voters in 2000 — allows people with cancer, glaucoma, HIV, AIDS, muscle spasms, severe pain, severe nausea and other medical conditions to use marijuana.

With a recommendation from a licensed Colorado doctor, patients can obtain a state-issued Medical Marijuana Registry identification card to show to police — though it does nothing to change the fact that the federal government still considers marijuana illegal. Patients may cultivate their own medicine or designate a primary caregiver to provide it for them. Lee and his colleagues at Cannabis Therapeutics, for example, are designated caregivers to more than 600 patients around the state.

This arrangement has proved lucrative: Lee, 44, says his dispensary earns about $105,000 a month, $75,000 of which he says goes back out the door for more monthly product. This onetime owner of a Colorado Springs flooring company insists, however, that his current occupation is more than a business.

"I clinically died. I can't lie. I won't lie," he declares, gesturing to a faded news clipping on the wall. It describes a car crash years ago in Santa Barbara, California, in which a young passenger was killed, and notes that "the driver, Michael Lee, 19, suffered head and internal injuries, and his condition is listed as critical."

After being clinically dead for 41 minutes and spending eleven days in a coma, he turned to marijuana for healing. Years later, lingering pain and muscle spasms led Lee, who is also a member of local mega-churches New Life and Radiant, to become one of Colorado's first certified medical marijuana patients, and he soon found himself helping other people who used marijuana for pain and illness. Now there's no more established operation around for getting medicated.

Lee has signed contracts with seven Colorado growers — all legal under Amendment 20, he promises, because they're registered caregivers for some of his patients. Each grower provides him with roughly a pound and a half of dried marijuana per month. Cannabis Therapeutics is also insured, says Lee, who convinced his insurance agency to design a dispensary policy just for him.

He also has a good relationship with the Colorado Springs police, having invited them in for a tour in 2006 after the cops caught wind of the operation.

"It was very educational," says Lieutenant Catherine Buckley of the visit. "It was not something the officers see on a daily basis."

When the Environmental Protection Agency poked around in response to a complaint about alleged chemical dumping, they couldn't find a single health or safety violation. All in all, says Lee, who goes by the nickname "the Herbologist" on websites like www.rollitup.org and www.weedtracker.com, everything here is square with Amendment 20. After all, his lawyer, Warren Edson, co-authored the law.

That leaves Lee in the center of a booming state industry. The number of patients who've received a medical marijuana ID card recently crested 5,000, twice what it was a year ago. And while it's hard to determine the absolute number of active dispensaries, there are at least two dozen, along with clinics dedicated to helping people obtain marijuana ID cards, lawyers and tax attorneys hanging shingles as authorities in pot law, even an ad hoc university churning out potential new dispensary owners and employees.

"In the last year, it is my understanding that the number of dispensaries in Colorado has grown from two to about thirty," says Keith Stroup, founder of the national pot lobbying group NORML. "Without question, there are more medical marijuana dispensaries in Colorado than in any state other than California."

But the cottage industry is fraught with problems. Many doctors refuse to recommend marijuana, in part because possessing and smoking pot is still a federal offense, while a bad few could be exploiting the medical marijuana laws for financial gain. As an unregulated and gray-area industry, there are also inconsistent practices, high prices, oversized egos, safety concerns and possible black-market involvement — not to mention disregard, if not outright hostility, from law enforcement and city officials.

A major change could be on the way. On March 18, the Colorado Board of Health — the advisory board for the Colorado Department of Public Health and Environment — will consider new medical marijuana regulations.

Along with expanding Medical Marijuana Registry application requirements, the proposal would require caregivers to offer additional services to their patients besides providing them with pot. Most significant would be the reinstatement of a five-patient-per-caregiver limit the state health board put in place after Amendment 20's passage, a restriction that deterred the growth of Colorado dispensaries until it was overturned in Denver District Court in 2007.

The new rules "could have an impact on the large-scale operations," says Ron Hyman, registrar of vital statistics for the CDPHE. "I would say it probably will."

The changes could make business more difficult for Lee — but by that point, he may have already moved on. When an anonymous caller threatened to kidnap his young son several months ago, it was one frustration too many. Lee moved his family, got a German shepherd to guard his son and started thinking about selling his dispensary.

"I'm done. I don't care anymore. I've seen a dark side to this," fumes Lee. "I clinically died. I demand life to be fair!" His face turns crimson and his temper bubbles to the surface. Exasperated, he decides to let off some steam. Excusing himself for a minute, he gestures to an employee to fetch him his foot-long Technicolor pipe.

"I'm gonna go medicate."


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For a bunch of supposedly lazy stoners, Colorado's marijuana activists are a committed bunch. At 9 a.m. on a recent Saturday, hundreds of people gathered at Regis University in northwest Denver for the Colorado Marijuana Reform Seminar and Activist Boot Camp.

"I think this speaks volumes about our movement," Brian Vicente, executive director of the drug-policy reform organization Sensible Colorado, told the group.

There were nicely dressed middle-aged folks, older couples in knitted sweaters and younger guys wearing backpacks decorated with Grateful Dead patches. A full day of activities lay ahead: sessions on lobbying strategies and media relations, plus panels featuring Denver City Councilman Chris Nevitt, Colorado State Representative Paul Weissmann and Colorado ACLU Legal Director Mark Silverstein. Lunch would feature sandwiches donated by Cheba Hut, a restaurant chain offering its signature "'Toasted' Subs" in Boulder and Fort Collins.

And just so everybody knows, Vicente reminded the group, "This is a non-smoking workshop. We are here to change the laws, not break the laws."

Vicente and his colleagues have big plans for Colorado, building on years of victories. In 2005, Denver became one of the first cities in the country to have its voters "decriminalize" marijuana by making it legal for people over 21 to possess up to an ounce of it. Two years later, the city's voters agreed that law enforcement should make adult marijuana possession its lowest priority. Part of the plan today is to strategize about ways to pass similar initiatives in other Colorado communities. While an attempt to pass a state law decriminalizing up to an ounce of marijuana failed in 2006, activists here believe it's only a matter of time before such legislation passes.

"This will be the nail in the coffin of the drug war," Vicente continued. "Colorado will be seen as the place that ended the government's ninety-year prohibition of marijuana."

It all started with Amendment 20. The law allows a person suffering from certain illnesses or that individual's caregiver to possess up to two ounces of marijuana or six marijuana plants, but it doesn't specify much about the relationship between patients and caregivers. To help fill in the holes, in 2004 the CDPHE developed a five-patient maximum for caregivers, says Hyman. "We were trying to determine how many patients a caregiver could provide for that would be significant and reasonable," he explains.

But when Chief Denver District Judge Larry Naves suspended that limit in 2007 because it lacked public input, caregivers were allowed to take on as many patients — and their marijuana quotients — as they liked, even make a business out of it.

That, it turns out, was part of the plan all along for Amendment 20, the only medical marijuana law in the nation that's a constitutional amendment.

"The plan was to write it into our constitution so it couldn't be tweaked," says Edson, the law's co-author. "There is a reason there are no limits to the number of people you can be a caregiver for. There is a reason a caregiver isn't specifically designated as a doctor or a nurse. It is left open to a broad range of individuals."

For one thing, if doctors were responsible for actually providing patients with marijuana, the federal government might retaliate by revoking their Drug Enforcement Administration-issued licenses, which allow them to prescribe narcotics.

Furthermore, Edson had noticed the inklings of a dispensary industry developing in California, whose open-ended 1996 medical marijuana law led to an industry there that now boasts hundreds of such businesses. He decided that an entrepreneurial take on medical marijuana would encourage product diversity, innovative practices and competitive prices, all to the benefit of patients.

"I like to see some of these places where a patient has some options," he says. "Where it's not just one guy in his basement with one type of medicine."

So while other states included impediments to dispensaries in their medical marijuana laws or eventually had lawmakers implement such restrictions, in Colorado the free-market approach was allowed to flourish.

The results were evident at the activist boot camp. In a side room, staffers in vendor booths handed out brochures and business cards for dispensary operations, not to mention marijuana-friendly medical clinics and drug-law-savvy lawyers.

Denver real-estate broker Michael Griffin says he's recently picked up three clients, all looking to open 1,500- to 3,000-square-foot dispensaries in the area: "People are noticing it as a viable business. Once it's legal, I think it's no different than a liquor store."

Michelle LaMay has also found a niche. Last fall, the longtime Denver activist launched "Cannabis University," a day-long, $250 program that gives students a run-down on marijuana laws and growing practices. It's for patients wanting to produce their own medicine, and a mini-MBA for those wishing to break into the business.

"I'm hoping the vast number of caregivers and dispensaries will have to hire some people. And maybe they will hire our students," she says.

While they go by different names, dispensaries or caregiver cooperatives operate under roughly the same model. Patients who wish to buy pot must designate that operation as their primary caregiver on their medical marijuana license by filling out a state health department application. Since the law doesn't say where the pot has to come from, dispensaries can theoretically pick it up anywhere: indoor grow rooms overseen by a dispensary's owner or employees; out-of-sight backyard gardens tended by patients; middlemen hawking stuff from large, clandestine outfits squirreled away in the mountains or in networks of fluorescent-lit basements.

According to Amendment 20, the marijuana is legal as soon as it gets into a patient or caregiver's hands, so no need to ask too much about its provenance.

Many dispensaries operate quietly, relying on word of mouth, while a few advertise openly. If Edson's predictions are correct, local dispensary owners could eventually be servicing a statewide client base of 50,000 registered patients.

"It's a full-on gold rush," says Paul Saurini, producer of Marijuana Radio, a weekly pot-themed radio podcast recorded in a slick studio in the Santa Fe Arts District and broadcast in many a dispensary. "People are rushing here to make a buck. I'm not saying it's good or bad, but I think it's a fascinating moment for the movement."


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To get a Colorado Medical Marijuana ID card, Colorado residents first need a doctor who will recommend them for the confidential state registry. And to get that recommendation, many patients turn to the Hemp and Cannabis Foundation in Wheat Ridge. Of the 5,000 people on the registry, about 2,700 relied on its services.

One of those is Sandra, who's been on the registry since 2005, but who, like all medical marijuana patients, has to go through the state's annual renewal process. That means another visit to the foundation's 1,500-square-foot, third-floor office in a professional building on Wadsworth Boulevard.

Sandra, her pigtails streaked with gray, sits in a solemn, bare-walled waiting room surrounded by people filling out paperwork or watching a marijuana video on TV. It's a scene that's playing out in similar waiting rooms across the country: the nonprofit, known as the THC Foundation, also has clinics in medical marijuana-friendly states like Oregon, Washington, Hawaii, Montana, California, Nevada and Michigan.

Eventually, Sandra is called into the office of Eric Eisenbud, a lanky Colorado ophthalmologist. Before Eisenbud has a chance to review Sandra's history — her multiple sclerosis diagnosis in 1995, her MS-related leg spasms that qualify her for medical marijuana, and the recent discovery that she has degenerative disc disease in her spine — Sandra blurts out, "Thank you for being here for us." She's well aware how hard it is to find a doctor who will recommend patients for the registry. Before she found the THC Foundation in 2006, she asked her primary care physician to recommend her for medical marijuana — and says the doctor nearly threw her out.

Eisenbud's heard hard-luck stories like this before. "My feeling is that a large number of doctors in Colorado are open-minded, but they've been misinformed," he says later. Much of the confusion and apprehension in the medical community stems from the fact that after Amendment 20 passed, then-attorney general Ken Salazar warned doctors that they could face federal charges if they participated in the program. It doesn't help that the Colorado Medical Society hasn't taken a stance and that the American Medical Association has said it won't recognize the medical use of marijuana without further studies. (Other prominent medical groups, such as the American College of Physicians and the British Medical Association, have endorsed the idea of medical marijuana.)

Many doctors play it safe by not dabbling in marijuana at all. At Denver Health Medical Center, physicians are allowed to write letters to help patients get registered, says hospital spokeswoman Dee Martinez. But patient Eric Easter counters that notion, saying his doctors refused to recommend him for the state registry: "They said they don't do this even if you were dying of AIDS."

"That's where we come in," says Paul Stanford, the Portland-based founder of the THC Foundation. "When we first moved into Colorado, in 2006, there were only 700 medical marijuana cards statewide." Now, three years later, the Wheat Ridge clinic sees about seventy new patients a week, says Scott Carr, the foundation's regional manager in Colorado. Carr also believes the foundation has helped the medical community warm up to medical marijuana. According to the state, more than 500 doctors have now signed for patients here, and some insurance carriers cover THC Foundation visits. "I've had HMO nurses call and ask what the best vaporizer is for patients to buy," says Carr. The clinic even has a competitor — an operation called CannaMed that opened in Denver offering similar services. CannaMed representatives did not return repeated phone calls seeking comment.

But the THC Foundation also has at least one critic: its former doctor on duty, Shawn Elke Glazer. "They're all about making as much money as possible until marijuana gets legalized," says Glazer, a former Libertarian candidate for state representative who now runs the Colorado Green Cross medical clinic in Wheat Ridge.

She believes the THC Foundation signs up as many people as possible so they'll fork over the $200 visit fee, whether they warrant medical marijuana or not. The fact that a marijuana dispensary now operates in the same building as the foundation raises red flags as well, since it could put the clinic in violation of a 2003 Supreme Court ruling saying that doctors can't assist patients in obtaining marijuana.

Stanford calls that nonsense, but Glazer isn't the only one who has questioned the foundation's motives. In 2005, the Oregon justice department began looking into the Portland-based nonprofit for potential IRS violations, such as a $100,000 reimbursement it made to Stanford. "It's an ongoing thing. It has caused a little extra scrutiny, but it hasn't caused any problems whatsoever," Stanford says.

Carr notes that the Wheat Ridge clinic only works with patients who have medical records proving they qualify for the state law and turns away those who don't. He also adamantly denies association with any dispensary, including the one that operates in the same building. The owners of that business, who spoke on the condition of anonymity, concur that there's no connection.

Sandra has no complaints about the THC Foundation, and she'll follow it when it relocates to bigger digs near Speer Boulevard and I-25. Yes, the cost of the visit on top of the $90 annual state registration fee isn't easy on her budget, especially since she spends about $300 a month on marijuana. Still, she's grateful for its existence: "Thank goodness the service is here and it's helping me. This place is safe."

In the past, she didn't feel so safe obtaining her medicine. In 2005, before the THC Foundation opened, she went to a Loveland doctor who charged her more than $400 for the service. Then, to get marijuana, she relied on an operation run out of a former Denver church called the Colorado Compassion Club. The club operated at night and had armed guards at the doors, Sandra says. "There were all these people, and I didn't feel safe at all. It was like being in a bread line."

After that, Sandra was referred to Ken Gorman, a well-known Denver pot activist and one-time write-in candidate for governor.

"I don't have my medical certification up to date," she remembers telling Gorman when she reached him by phone. "Are you sick?" he replied. "That's all I need to know."

"Here was someone I'd never met, and he was so kind to me," says Sandra, who decided to make him her caregiver. She never got a chance to follow through. That weekend, on February 17, 2007, Gorman was shot and killed in his home.


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Gorman's death, which is still unsolved, sent shockwaves through the medical marijuana community. It also created a vacuum that permanently changed the industry in Colorado.

Today there are storefront operations like Cannabis Medical, the Healing Center, North Reasonable Access Denver, Denver Patients Caregivers Cooperative and the Kind Room, and delivery services like Confidential Caregivers Unlimited and the Organic Medicine Club. Among them are settings to suit every taste, from dorm-room-like operations with mismatched thrift-store furniture and mega-sized posters of killer kind bud to dentist-office-like venues complete with cushy couches and bubbling aquariums.

Because state law doesn't explicitly sanction dispensaries, the businesses try to protect themselves by making sure that everyone involved is either a patient or a caregiver. "Most of their employees are patients themselves and are listed caregivers for some of these people," Edson says. "And most of the dispensary owners are listed as caregivers for some of the people. But the equivalent of a pharmacy just doesn't exist under the amendment." That's why dispensary owners typically consult with a cadre of lawyers, squirrel away documentation listing their patients and are reluctant to talk to the press.

"We hate to be this evasive," says Daniel Tsirlin, co-owner of Alternative Medicine of Southeast Denver, a newly opened dispensary. "Why not let people know? On the other hand, you don't want to be the first to do anything. Be the second."

That's a good approach, judging by the comments of Jeff Sweetin, special agent in charge of the Rocky Mountain field division of the Drug Enforcement Administration.

"We are investigating some dispensaries throughout this region," Sweetin says, without giving specifics. "The DEA investigates large, well-organized, well-funded organizations. Some of these dispensaries rise to that level." Sweetin is concerned that elements of the medical marijuana scene are tied up with organized crime, in part because Amendment 20 doesn't include rules about where dispensaries can buy their pot.

Early last year, authorities busted a multimillion-dollar marijuana ring involving dozens of indoor grow operations in the north metro region — and Sweetin believes there's a connection to the medical marijuana scene. "It's the largest, most organized indoor grow operation I have ever seen," he says. "I don't believe that's coincidence. I believe they purposely moved that operation to Colorado."

For the most part, however, he says the dispensaries are the problem of local and state agencies — and so far, no one seems to know exactly what to do about them.

Police officers are frustrated by trying to differentiate between illegal drug users and state-certified patients and caregivers, says Captain William Nagle of Denver's Vice and Drug Control Bureau, especially since the only time state health employees can verify certifications is during weekday business hours — not the most conducive time for drug cops. When mistaken raids have occurred, judges have sometimes demanded that law enforcement return the confiscated marijuana and paraphernalia — though police say that by doing so, they could be breaking federal law themselves.

Dispensary owners have grievances, too. While they operate without problem in Denver, other cities haven't been as welcoming. Former Aurora dispensary owner John Chipman says he was hardly up and running before he was run out of town because a city ordinance there didn't allow businesses to operate in violation of federal law. "They said they don't have pit bulls, they don't have massage parlors and they don't want any dispensaries," he says.

Others have problems with crime. Last November, Fort Collins dispensary owner James Masters told reporters that his operation had been burglarized or vandalized nine times in a month. While Masters couldn't be reached for comment, several sources claim these crimes were part of a rash of medical marijuana robberies — including, according to Carr, an attempted break-in at the THC Foundation.

Patients have their own complaints, grumbling that the current business climate is filled with grandstanding and ego clashes, slapdash practices and exorbitant prices. There's no easy way for them to shop around to find better options, however, since they're required to designate only one caregiver.

Officials, law enforcement, caregivers and patients can agree on one thing: The industry should be regulated. They say they'd like to see consistent health standards and better communication between police, government agencies and medical marijuana operations, not to mention dispensary-specific rules and licenses. But since Amendment 20 is written into the Constitution, there's no easy way to tweak the law without a vote of the people, not to mention courting antagonism from either the state's growing medical marijuana community or the federal government.

"The reason you don't have clear and positive regulatory enforcement is that a lot of entities are afraid to piss off the feds by setting up any kind of regulatory environment," says Matthew Kumin, a San Francisco attorney who consults for numerous California dispensaries. "You have something that should be happening more but isn't because of fear."


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Michael Lee runs his soil-dusted hands under the faucet at Cannabis Therapeutics. He's spent the morning planting new strains of marijuana seedlings in a grow room, preparing for his next big endeavor. He just got a call finalizing his purchase of $20,000 worth of dirt that he'll use to fill a 30-foot-by-97-foot plot of land he's obtained at an undisclosed spot along the Front Range. Eventually, he says, he'll ask United States Department of Agriculture officials to inspect the site, since his plan is to grow certified organic marijuana.

That way, even if he does sell Cannabis Therapeutics, he'll still be involved with producing medicine for it and other dispensaries. He'll also continue to operate Genovations Laboratories, the research-and-development company for marijuana-infused products that he runs out of a secure warehouse space near Cannabis Therapeutics. There, thanks to an expensive extraction machine and a full-scale chemistry lab, he's pulling THC out of plants and inserting it into tinctures, foods, maybe someday into self-replicating yeast. "I can medicate your hot dogs," he says. "I can medicate your hamburgers."

And while Lee may shift his business focus away from his dispensary, he and other owners say the proposed new regulations won't go through without a fight.

"We're probably going to rent buses. We are going to try to get 1,000 patients there," says Edson of the March 18 Colorado Board of Health hearing. "I've been dealing with these [medical marijuana] folks for ten-plus years. I don't think the attorney general's office and the health department appreciates what is about to happen."

The health department's Hyman understands that the meeting will be "energetic." The point, he says, is to include as many people as possible in the process, which is what Judge Naves said the department didn't do when he struck down the five-person-per caregiver rule in 2007.

Lee believes it will take another vote to make changes to Amendment 20, and despite his talk of selling Cannabis Therapeutics, he has many more plans. A few doors down from the dispensary, he's opened a patient activity resource center, where, amid a pool table, a massage chair and a cappuccino machine, patients meet with caregivers and receive alternative treatments for their conditions.

"It can't just be about weed," he says. "You're going to see more places like this once the bar is set, because the state will say places like this can stay open while others have to close."

And he has even bigger dreams for the day marijuana becomes legal for everyone: A gentlemen's club, ready from day one, with prices starting at $500 an ounce. After all, he says with a grin as he reaches for his bowl, "Why shouldn't I be a household name?"