When the Denver City Council introduces a proposal Monday that would cap the number of locations of pot shops and grow houses, Truman Bradley will be among dozens of investors waiting nervously.
The measure, which is intended to protect neighborhoods already saturated with marijuana cultivations and dispensaries, has found grudging acceptance by much of the marijuana industry. But as the council begins a floor debate over amendments, the biggest dispute is whether to stop pending license applications — like those pursued by Bradley and his business partners — before the city sets the caps.
For Bradley’s team, $3 million is at stake. That’s how much he says they have spent to lease a property in an industrial area of Montbello, hire contractors to turn it into “a state of the art facility,” and apply in the last year for marijuana licenses and all manner of permits.
“I personally would be devastated if the pendings were not allowed to go through,” Bradley said in testimony last week to a special committee considering new regulations. “As would many people, both in this room and out in the community. These are people who have played ball (and) have done what the city asked.”
Councilwoman Robin Kniech’s proposal, as approved by a special committee on April 4, would allow processing of those pending licenses before the city establishes the caps on locations. She and some colleagues have argued forcefully that the city, as it usually does in licensing matters, must show good faith toward businesses that applied under existing rules — uncertain as the regulatory climate was.
But several council members, including some who voted to advance the proposal in last week’s 9-3 committee vote, have major qualms about allowing as many as 47 new grows and stores, by the latest count, under the wire.
Mayor Michael Hancock, while voicing support for Kniech’s proposal, also has worried about the number of pending licenses.
Bradley co-owns two dual medical and recreational dispensaries under the Southwest Alternative Care name. The new business in Montbello, if it’s allowed to open, would combine a grow house, medical dispensary and edible manufacturer under one roof, he said.
Among all applicants for pending licenses, industry sources estimate tens of millions of dollars has been invested as they have worked to meet city and state licensing requirements, including setting up viable locations.
Council members Paul Lopez and Albus Brooks both said late last week they planned to float amendments on the floor Monday. Both aim to reduce the number of pending licenses significantly by barring those for already-saturated neighborhoods to proceed.
“I’d contend that La Alma-Lincoln Park and Sun Valley are maxed out — so are Globeville and Elyria-Swansea,” said Lopez, who represents west Denver and said he still favors marijuana legalization, but within limits. “How do we expect true neighborhood revitalization to occur … when it smells like dog food (from a nearby plant) and marijuana constantly?”
During last week’s committee meeting, president Chris Herndon put a finer point on the risk taken by license applicants.
“I keep hearing about investments that people have made in businesses,” he said. “But the investment that people have made in the communities where they live is a great investment as well — and that is priceless.”
The caps and other new rules, including a lottery system for available recreational store and grow licenses but no licenses for new medical dispensaries and grows, would replace a temporary city moratorium set to expire May 1. It had been set to sunset on Jan. 1, but it was extended so the council could hammer out permanent rules.
The new caps, if approved, wouldn’t affect licenses for edible manufacturing or testing labs.
As of last week, the city had 210 active retail or medical grow houses, 146 dispensaries and 64 facilities that combine both — or 420 total.
A total of 230 pending applications, aside from add-ons to current facilities, include licenses connected with 31 new grows, 10 new stores, and six new facilities that would include both.
Few dispute that changing course on those license-seekers would invite lawsuits.
“If the city changes to not allow pending applications to go through,” said Tom Downey, a licensing attorney who is a recent former director of the Denver Excise and Licenses Department, “then at a minimum, the city would be vulnerable to lawsuits seeking refunds to their application fees.” Those fees can run in the tens of thousands of dollars at the state and local levels for a new business location.
David Broadwell, an assistant city attorney, has told the council that though quashing pending applications would deviate from the city’s common practice when it’s changed other regulations, city attorneys likely would be able to defend such a decision in court successfully.
Downey, who has some clients in the marijuana industry, agreed the city might be able to defeat lawsuits. But it would cost money and attorney time. Even if spurned license applicants would be unlikely to recoup their investments through the courts, he said, they could have more success persuading judges to order the city to issue their licenses.
At Monday’s 5:30 p.m. meeting, the council plans to hold a one-hour public hearing on Kniech’s proposal. It likely will occur late in the evening after two zoning hearings. The council could take a final vote as early as April 18.