Social Use Consumption: Still Waiting Part II

Cannabis Blog Oct 12, 2017 Denver, CO

With official regulations in place, the City of Denver is now accepting applications from businesses for cannabis Designated Consumption Areas (DCAs) within city limits. Thus far, applications have been sparse (very sparse). Adult-use states have seen licensing applications fly in since Day 1, even creating regulations for how city hall will handle long applicant lines for a first come – first served policy. In Denver, many applications are expected, but the numbers aren’t stacking up just yet.

So what’s the hold up?

It’s a business, not a business model

Since businesses cannot sell cannabis in DCAs, they’ll need to find other means of income to sustain their business. Think about it, if your friend asked you, “would you mind hosting a free party at your spot for me and a hundred buddies to come smoke?”…you might balk at the idea without further incentives. There’s certainly a need from the consumer side, with tourists, especially, having little to no access to legal areas to enjoy Denver’s legal cannabis, but businesses will need more than just friendly inspiration to open their doors. Dispensaries are not allowed to create an on-site DCA, which will mean a need to find new locations, sign new leases, and go through new permitting to expand into a “pot café” set up. Still, there are a number of existing businesses who have expressed potential interest—book stores, yoga studios, music venues—there’s a lot of opportunity for new ideas in Denver, but it seems most businesses are still establishing their profit models.

You’ll need to have a public hearing and show community support

The general look of Denver’s Rules Governing Designated Consumption Areas is pretty straightforward, 14-pages with a lot of echoes from the permitting structure and requirements for a retail cannabis license. One difficulty will be navigating stricter buffer zone requirements, dodging not only schools but child care centers, alcohol and drug treatment facilities, and city-owned pools and rec-centers (nothing within 1000 feet). Even after finding that perfect location, there are additional requirements to show evidence of community support, and a need to go through a public hearing process before any licensing application can be approved. There are restrictions to keep DCAs out of sight and out of smell of public places, but finding community support is key. Initiative 300 passed in Denver with just 53.5% of ballot support, meaning there are still quite a few naysayers to dodge as businesses seek approval. That will take some additional time to navigate, even after businesses set there DCA plan for success.

Got booze? No pot.

Many critics of the new Denver initiative are disappointed that alcohol sales (no, not even BYOB) will not be allowed on-site for any business with an open DCA. Restaurants or bars with a DCA will be forced to suspend any beer and liquor sales while the DCA is open, which means they’ll be giving up a large chunk of revenue to host a DCA. That is likely leaving a lot of potential businesses reluctant to jump into the application process, but there is hope yet. There remain opportunities to fit in a DCA without changing liquor sales—potentially pre-happy hour or post-last call—and businesses competing with a dozen other nearby bars can always make the leap and open their doors to cannabis users, potentially opening themselves to a host of new business. That being said, caution will be key when entering uncharted waters of potential liability, and businesses will have to decide whether new opportunity can outweigh the risks.

*The information in this article is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder, P.A., In New York, Greenspoon Marder, P.A. practices under the name Greenspoon Marder, P.A. P.C. In California, Greenspoon Marder LLP practices using the fictitious name and trademark Greenspoon Marder under license from Greenspoon Marder, P.A., or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

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