DENVER– Approach Denver’s Discreet Dispensary along Brighton Boulevard from either the north or south, and what you see along the way is the same: industrial sprawl with its belt unbuckled. Warehouses that appear to be abandoned are etched with graffiti. Many square buildings have windowless metal or brick facades, nondescript and forgettable. The corridor is home to dozens of industrial strongholds, such as a Pepsi distribution hub stacked with vans bearing the company’s familiar logo and the Nestle Purina Pet Care Co. factory across the railroad to the east near I-70. The air in this part of Denver is thick with whatever smell Purina wafts into the world, smoke and sulfur spewing out of unidentifiable industrial works and, most recently, the herbal, earthy scent of pot plants.

Toni Fox – a self-described soccer mom and small business owner who is a longtime marijuana activist – opened a medical marijuana dispensary and cultivation operation here three years ago when discretion was a must for any pot business. Thus, the name “Denver’s Discreet Dispensary.”

But things are changing fast in the industry. Now that the Obama administration has given what entrepreneurs see as a tacit green light for recreational marijuana sales, the need for furtive caution has waned. Last week, the Colorado Department of Revenue released permanent rules governing retail marijuana, solidifying a number of security and financial regulations. This is good news for Denver’s 285 licensed Optional Premises Cultivation (OPC), registered businesses that cultivate marijuana.

These days, discretion isn’t a selling point. Fox is now referring to her store by its acronym, “3D.” The name change is a sign of her eagerness to come out of the closet, so to speak, about her product.

Colorado House Bill 1284, signed into law June 2010, mandates that dispensaries grow 70% of the marijuana they sell. Fox’s is one of the first pot shops in Colorado that’s readily transparent about its cultivation process. On the hunch that patients might like to see what they’re buying, she has designed a space in which they can step past plastic toy cars in the homey waiting room to a back hallway lined with windows. The windows look into one room of the 6,000 square feet in the building where Fox cultivates 1,500 plants with rows of gold and purple lights shining in the darkness.

Now that Colorado is turning into the Amsterdam of the U.S., Fox anticipates becoming a recreational vendor and tourist attraction. Her recent expansion into an adjacent building coincides with the Aug. 29th announcement that the U.S. Justice Department “deferred to challenge” Colorado’s Amendment 64 (and Washington’s similar law). The amendment, approved by voters in November, effectively legalized recreational marijuana. Fox remembers the moment she heard news of U.S. Attorney General Eric Holder’s announcement not to interfere. “Two employees came up to me holding out their smart phones and I just started crying,” she said. “It’s like taking our gold mine and turning it platinum.”

Brian Vicente, a founding member at the medical marijuana law firm Vicente Sederberg LLC, and co-director of the Amendment 64 campaign, said the transition is just a matter of scale.

“Really if you think about it, switching from a medical operation to recreational one isn’t difficult because they use the exact same infrastructure, just for a different market,” he said.

Vicente noted that, for at least the next year, only businesses currently holding a medical license will be able to apply to sell recreational pot. This means there will not be a bunch of new recreational shops springing up.

“There’s going to be a fair amount of dual operations – some are going to remain medical, some are going to be only recreational, but many will be both.”

With the transition will come a change in the look and feel of many dispensaries. Pharmacy-style logos and clinical waiting rooms are likely to take on more of a comfortable or hip coffee shop vibe.

Fox hopes the expanding recreational market will increase her business from about 30 customers a day to an estimated 200 or 300.

Preparing for an anticipated flux of visitors is a logistical challenge, but Fox said 3D is going to “kick ass.” Expansion will require a major increase in electrical bills to keep hundreds of 600-1000 watt bulbs lit 24-hours a day. Fox is nearly doubling the space used for cultivation with the building next door, upping her grow to 13,000 square feet. That space pales in comparison with some of the gigantic, 40,000-square-foot OPCs in Denver whose owners – when you can figure out who actually owns the places — are reluctant to speak with reporters.

“People who are sketch are not going to apply for a license,” Fox said. “If you’re stopping at medical, not going recreational, you’re probably not licensed. There are a whole bunch of illegal grows.”

Responding to Fox’s claims of illicit operations, Vicente said, “That’s the job of the Denver Police.”

Recent reports have cited an increase of Colorado’s marijuana being sold to neighboring states. The fear among legalization opponents is that licensed operations are skirting the laws, and kicking product out the back door. Meantime, regulated shops have to spend big money to adhere to the law: thousands of dollars in licenses, and sometimes hundreds of thousands on building improvements to meet regulation standards, Vicente pointed out.

Advocates argue that illicit marijuana flow into neighboring states is the result of shortcomings in the Medical Marijuana Enforcement Division (MMED), rather than an inherent fault in the industry. The MMED, which operates under the Department of Revenue, is the state agency responsible for implementing and regulating the strict laws that govern medical marijuana businesses.

Two audits of the MMED this year highlight various failures in an underfunded and understaffed division. These include poorly allocating funds, approving licenses to owners with potentially disqualifying backgrounds and a failure to implement the so-called “seed-to-sale” program, envisioned to allow regulators track each marijuana plant from the planting of the seed to the final product in dispensaries. The average approval time for licenses submitted to the MMED by the two-year moratorium date on August 1st, 2010, was twenty-three months.

On the more local level, Denver is consistently running into regulatory problems. A city audit in July chastised the Department of Excise and Licenses, which licenses and is supposed to track medical marijuana businesses, for not knowing the number of dispensaries in Denver.

Although Colorado’s regulatory system may seem dysfunctional, a source who cultivated pot professionally in Colorado said complaints are minor compared with other states. “Have you been to California?” The Golden State has no rigorous system of regulation for its large medical marijuana trade, and recent attempts introducing legislation to regulate the industry have failed.

The pot industry, like many other businesses, pivots on the economics of scale. The more space you have, the more you can grow and the more money you can make. Given zoning restrictions and higher real estate prices in other parts of Denver – especially those close to downtown – the neighborhood where Fox has planted roots is especially fertile for marijuana growers. 3D is on the edge of RiNo – short for River North Art District – at the northern-most end of Brighton Boulevard before I-70, in the shadow of the Denver Coliseum. The area was incorporated as a neighborhood in 2005, and is a registered non-profit. The RiNo field guide lists 119 galleries, artists and creative locations. The plentiful and cheap warehouse space along and near Brighton Boulevard, much of it zoned for industrial use, appealed to artists. Those same features have also lured OPCs and dispensaries. According to the latest data by the MMED, there are 70 licensed OPCs, and 35 more pending approval in the two zip codes that cover RiNo, plus parts of adjacent neighborhoods. These businesses have the unique advantage of applying for a recreational license in the coming year, bringing more money into the area.

Steve Gordon of Denver’s Community Planning and Development Department drew a comparison between RiNo and LoDo, which was a hub of alcohol distilling and consumption before, during and after Prohibition. RiNo, just like LoDo before its massive gentrification, is largely zoned industrial or mixed-use.

Though the area now known as RiNo had been rural, isolated, and residential in the late nineteenth century, it had become by the 1950’s an industrial hub for its residents and Denver at large. A variety of metalworkers, mining companies and, railroad-related businesses operated there until a downtick in American industry, along with Denver’s boom-and-bust economy in the later twentieth-century, left large swaths of the area vacant and underutilized.

The city identified the River North area as a potential “area of change” as early as 2000. “We continued to see an extension from downtown outward, with a strong interest in development and interest in people to live downtown, or near downtown. We anticipated that would happen up on Brighton Boulevard,” Gordon said.

The latest census data on RiNo, from 2010, shows a divide south and north of the South Platte River. Demographics to the south, in the heart of RiNo’s non-profit zone, are wealthier than counterparts to the north, earning a median annual income of $51,000. There also is a racial divide in the area: to the northwest of the river and past I-25, just past RiNo’s territory, there’s a significantly larger percentage of Latinos.

The Brighton Boulevard Corridor has long been a run-down eye-sore for drivers peeling off I-70 toward downtown, fresh from D.I.A. But development in the last few years has begun to revitalize the area, sending rent prices skyrocketing. Zeppelin Development, Inc. has plunged hundreds of millions of dollars into projects in RiNo, including TAXI 2 in 2008, north along the South Platte River. TAXI houses businesses and residential lofts occupied largely by young professionals and empty nesters yearning for a Brooklyn-type lifestyle in a city notably lacking such a neighborhood.

In June, Zeppelin Development opened The Source, a 25,000-square-foot open-air market, often compared to similar European designs. The look is one of gritty and urban grunge — The Source’s developers decided not to remove graffiti on the brick façade and parts of the interior. But the effect, in the context of gentrification, is somewhat inauthentic – urban decay turned inside out in an area that, for the most part, remains largely decayed.

Far more quietly, RiNo’s real-estate market has benefited from marijuana cultivation.

“RiNo specifically, and a lot of different places in Denver, had massive sections of the neighborhood that were vacant lots, and vacant warehouses that were unused. But now many of those warehouses have been built out, and have medical marijuana businesses run out of them, and these businesses contribute to RiNo,” Vicente said.

A bidding war in 2010 between Dan Emmans, owner of Grass Roots Health & Wellness center, and Zeppelin’s Mickey Zeppelin over a commercial warehouse nearly led Emmans to file a zoning lawsuit against Zeppelin and city councilwoman Judy Montero, who represents much of RiNo. The dispute brought to light disparate visions for putting the industrial area to use.

The apartment complex “Block 32 at Rino” on Brighton Boulevard is another example of RiNo’s increasing concentration of wealth, to the delight of developers who took a bet on the neighborhood. Krishna Doucet, property manager at Block 32, said she doesn’t know enough about nearby cultivation businesses to speak to their influence. She said most of the residents probably don’t know that the OPCs are there.

An artist at Ironton Studios put the contrast more poignantly: “They’re not bad neighbors, but they’re not art” either, she said.

City officials say future development in RiNo will include more art spaces and lofts. They downplay the growth of marijuana cultivation and dispensary businesses in the area.

“We hope that there’s not a lot of that going on there. It’s kind of a headache,” said Gordon, seemingly unaware that there are 70 licensed OPCs, and 35 more pending in the two zip-codes in which RiNo falls.

“There are some discrete growing operations that we seldom hear about. And then there are some that are not good neighbors. They’re not responsible for the upkeep of the property. So it’s a mixed bag,” said Councilwoman Montero. “If people in the marijuana industry want to be credible and a part of the community, they face the same expectation as any other neighbor or industrial user — that they’re a good neighbor, and contributing to the civic fabric of the community. That’s how they’re going to build their credibility.”

Eric, who owns a liquor store in RiNo – and asked that his last name not be used — is pleased to have OPCs as his neighbors He was relaxed and approachable talking about an issue he’d spent time considering. He dismissed perceived community antagonism against the grow houses. In fact, he attributed a decrease in crime to the recent development of OPCss. Dilapidated buildings that used to attract crime and hard drug use have been turned into hundred thousand plus dollar investments, with ramped up security and an increased police presence. “I mean, most of the revitalization of this area isn’t just owed to the artists, but to the growers and dispensaries,” he said.

For many like Eric, the increase in indoor pot farms smells credible. The antagonisms between developers and cultivators, and the snubbing of OPCs by artists seem like lesser concerns to others in the neighborhood. Drive slowly along its streets with your windows down – when it’s not raining – and you’ll pass windowless warehouses that look newly rehabilitated. They might be unmarked businesses for anything, but if you know what you’re looking for, you may get a whiff of RiNo.