When it comes to navigating the maze of restrictions that came with Denver’s voter-passed law allowing marijuana use in licensed businesses, The Coffee Joint cracked the code.

The first — and so far only — licensee under the 2016 ordinance is a combination coffee shop and bring-your-own-cannabis vape bar that’s within spitting distance of Interstate 25, south of West 13th Avenue, in a dingy industrial area.

Next door is a dispensary that has shared ownership. A door that was recently added between the businesses underscores the promotional purpose served by The Coffee Joint, which on its own is a money loser.

While the place is rarely packed, co-owner Rita Tsalyuk says the shop has counted a steady stream of more than 3,200 users of the consumption area, including tourists with no place to try out their purchases.

But its launch about five months ago, in an out-of-the-way spot with little foot traffic and even less cachet, also helps illustrate why more businesses haven’t yet followed suit.

After 54 percent of Denver voters approved Initiative 300 in November 2016, the city last year put in place extensive regulations — and now pro-marijuana activists and frustrated business owners are joined by some city officials, and even neighborhood activists who had opposed I-300, in calling for those rules to be loosened.

“It is concerning that our rules may have thwarted a vote of the people,” City Councilwoman Mary Beth Susman said in June, during a meeting of a task force that’s reviewing the ordinance.

Various location and proximity restrictions for consumption areas have effectively walled off all but 20 square miles of Denver, or about one-fifth of the city’s non-airport land, according to a city estimate.

Most of that is wedged along interstates 25 and 70 and in other industrial corridors — leaving rare pockets in the kinds of walkable neighborhoods that advocates say would offer prime locations, such as on Broadway, Federal Boulevard or East Colfax Avenue.

So far, the Denver Department of Excise and Licenses has denied an application for a combination health spa and lounge because it was 20 feet too close to a licensed child care that’s a few blocks away. Another, for an entertainment lounge called Vape and Play in south Denver, is in the final stages of approval and soon could receive the second consumption area license.

But prospective applicants have dropped a dozen or more ideas in the face of the rules.

As the City Council-led task force nears the end of an evaluation that was required by the initiative itself, its members have spent the most time focusing on why it’s been mostly a bust.

“There is consensus that the extra distance requirements that Excise and Licenses added are overly burdensome and that they don’t address the real problem,” Councilwoman Kendra Black, who chairs the task force, said in an interview. “They’re somewhat arbitrary. … There’s no evidence that they’re protecting anybody.”

From the start, most complaints have focused on 1,000-foot buffers that prohibit businesses from opening the 21-and-older marijuana consumption areas near a raft of protected places, mostly those that cater to children.

The initiative already required such a buffer around schools. The regulations, which were issued after months of discussion by an advisory committee, echoed restrictions for new marijuana stores by adding similar restrictions around licensed child care centers and alcohol and drug treatment centers. They also added new buffers around city-owned pools and recreation centers.

Marijuana industry consultant John Valdez, who also is a commercial real estate agent, said five or so clients have sought his help in finding places to start businesses of varying kinds to take advantage of the initiative.

“None of them have been able to do it,” said Valdez, from Higher Yields Consulting, and nearly all have given up.

The task force likely will recommend changes next month, but specifics of its report have yet to be ironed out. Besides the distance rules, several members have suggested that potential license applicants might gain more financial certainty for their plans if the city lifts the approaching sunset date, at the end of 2020, for what was intended as a four-year pilot program.

Initiative aimed to give tourists places to toke up

A major motivation behind Initiative 300 was to address the prohibition on open and public consumption in Colorado and Denver, which leaves few places for tourists drawn by the city’s copious legal marijuana industry to toke up or vape legally.

The Coffee Joint, even in its hard-to-find spot on Yuma Court near the highway, has drawn plenty of marijuana tourists in addition to curious locals and attendees of its events.

“There are people who are coming from the airport with their suitcases on a layover,” Tsalyuk said, “and then afterward going back to the airport. … We love it — everything about it.”

But initiative backers envisioned a smattering of consumption areas inside established businesses around the city, including bars and yoga studios, rather than in spare upstarts. Because of the state’s indoor smoking ban, any smoking would have to happen on well-hidden outdoor patios; also, a keystone of the initiative is that an applicant must win a nearby neighborhood or business group’s backing.

Such a setup could provide tourists and locals alike with legit places beyond the handful of private cannabis clubs and event spaces that often operate in a legal gray zone, facing the recurring threat of enforcement actions.

The need was highlighted further in June, when Denver police cracked down on two cannabis tour bus operators, issuing citations to customers who were smoking and vaping onboard between stops.

Initiative supporters have lamented the impact of the city’s added regulations, but observers and industry insiders also blame the dearth of consumption areas on myriad other factors, including limits in the profit potential of a model where a consumption area operator can’t sell marijuana.

That’s due in large part to restrictions at the state level that prohibit marijuana stores and liquor licensees, including bars, from allowing marijuana consumption on their premises, forestalling those options. The closest pot shops can come is The Coffee Joint’s side-by-side arrangement.

“Those are the issues that are restricting the rollout of this,” rather than the distance requirements, said Rachel O’Bryan, a longtime critic of Initiative 300 who managed the campaign against it in 2016. “I don’t think the city can fix that.”

O’Bryan served on the regulatory advisory committee last year. For the task force meetings, she and other fierce critics have been on the sidelines. She characterized the task force as “kind of a therapy session for the industry” and said she would argue forcefully against any softening of the city’s requirements.

“It hasn’t been easy,” licensing spokesman says

Denver was among the first to begin dealing with the intricacies surrounding public consumption, but California, Nevada and other states are quickly joining the discussion. California has the precedent of San Francisco’s longstanding marijuana smoking lounges.

In Colorado, state lawmakers have struggled to define the bounds of legal public consumption. This year, the General Assembly approved a bill that would have changed the landscape by allowing tasting rooms inside marijuana stores, but Gov. John Hickenlooper vetoed that legislation over safety and health concerns.

“The fact is we were the first to take on this issue, and so it hasn’t been easy,” said Eric Escudero, the Denver Excise and Licenses spokesman. “We’re trying to take care of the will of the voters and also trying to listen to people’s concerns.”

The distance requirements remain a top concern for some.

When Utopia All Natural Wellness Spa and Lounge was rejected in its bid for the second consumption area license in May, it was doomed by the proximity of its Capitol Hill building to Third Way Center, a day care center for at-risk and disadvantaged youths and their families. They are 980 feet apart, or about 20 feet too close.

Third Way provided written support for a waiver, but licensing director Ashley Kilroy said she lacked discretion to waive the rule. A hearing officer in Utopia founder and CEO Cindy Sovine’s appeal recently recommended that Kilroy uphold the license denial, but a final decision is pending.

Sovine, who says her business plan is solid, still questions the basis for the rules.

“There’s one of the largest bars and patios right next door to this child care center,” Sovine said. “The mom would actually have to drive, one way, almost five city blocks to drive by (my) location. And because of the rules, consumption cannot be visible from anywhere basically on the planet — not the street level, not the rooftops from anywhere above. So even if they drove by, they would not know what the building was — even if there was consumption happening inside.”

Potential changes are still unclear

City licensing officials point out that they have identified about 9,000 existing Denver businesses located in areas that are free and clear, providing ample opportunities.

But further city research provided to the task force shows some limits in that pool. Among 13 categories of businesses seen as most compatible with a consumption area — including art galleries, yoga studios, salons, coffee shops and hotels — the city identified 1,249 total business addresses, but just 325 are in eligible locations.

Reducing the 1,000-foot buffers to 500 feet, the more common buffer for liquor licensees, would increase that number to 624, according to the city research.

Black said most task force members support a reduction of some buffers. But she suspects that idea wouldn’t be palatable to the council as a whole, or to Mayor Michael Hancock’s administration.

So the task force also is considering other ideas for its recommendations. They include giving the city’s licensing director more discretion to waive certain restrictions “for good cause,” though that idea comes with concerns about the potential to play favorites.

Council President Jolon Clark has offered another suggestion. His idea is for a rule that allows the relaxation of a distance requirement when the child care facility or other place that’s meant to be protected indicates that it doesn’t object to having the consumption area nearby.

Sovine has attended meetings, drawing support from task force members. Her outlook is skeptical.

“I’m concerned about City Council,” she said, “because it takes a two-thirds vote to make any changes (to initiatives). While the task force is coming up with these recommendations, is anything going to change?”