Buying local? Where Colorado grows its cannabis

In Colorado it’s now common to see several cannabis medical or recreational retailers within a relatively small radius. What most people don’t see, however, are fields of cannabis plants growing in rows like the commercial production of other crops like corn or wheat.

Some Coloradans choose to cultivate their own cannabis but the booming industry for both recreational and medical cannabis sales demonstrates many do not. In Colorado alone in 2016, sales of legal cannabis topped the $1 billion mark. This translates to a lot of cannabis being grown in the state (it remains illegal to transport cannabis or cannabis products across state lines).

With this massive supply of cannabis being produced, why aren’t there fields of cannabis plants?

For adults in Colorado, it is legal to grow six cannabis plants, with half flowering at any given time. While there are special licenses for certain medical growers – called caregivers – these limits apply to anyone not licensed as a commercial cultivator within the industry. Any homegrown cannabis is for personal use, and it is illegal for private citizens to sell the cannabis they produce.

For commercial growers, the answer is a little more complex.

The plants are valuable, so treating their cultivation like any other crop is not practical from a security standpoint. Additionally, the plants are notoriously complex to grow and care for, making mass outdoor cultivation possible but difficult. There are large-scale outdoor cultivation operations in locales like Pueblo, but these crops are subject to natural forces like drought or flood as well as the normal demands of cultivation.

In addition, most local law makes commercial outdoor growing nearly impossible, and state law says homegrown cannabis must be grown in an enclosed space and secured with a lock. While some municipalities – like Pueblo -- have allowances for cultivation outdoors, most municipalities that have licenses available have extensive zoning requirements. This means that even though technically commercial cultivation licenses will be issued, finding zoning available to establish operations is exceedingly difficult.

Within Fort Collins, any cultivation license cannot be standalone. In other words, cultivation operations in Fort Collins must be directly associated with a dispensary or production facility (making commercial edible products, for example). However, dispensaries and production facilities can also purchase cannabis from other cultivators. Fort Collins enforces vertical integration of production within the city, keeping supply and pricing relatively consistent and ultimately benefiting both sellers and consumers.

The close association between cultivation and dispensaries or production is not the case for most other municipalities. This has allowed large-scale cultivation to take hold in certain places, creating more consistent cannabis supply for the wholesale market. And while this has allowed many cultivators to thrive, the abundance of supply is driving down wholesale prices for retail cannabis on the state-wide market.

The ability for recreational dispensaries to cultivate their own crop as well as sell and purchase wholesale cannabis has allowed the industry to thrive. It allows a dispensary to focus on growing particular strains that their clientele favors, while buying more “mainstream” strains to round out their inventory.

The retail cannabis on shelves in Fort Collins comes from several different sources. First, it likely comes from a cultivation operation associated directly with the dispensary, particularly for more unusual or specialty strains. For Choice Organics, some cultivation is proudly on display for clientele in the waiting room, giving people a behind-the-scenes look at their upcoming crop.

Second, it may come from a large-scale cannabis wholesale cultivator from another part of the state. This becomes more likely as wholesale prices drop and the quality consistently available to dispensaries from wholesalers improves. For smaller shops, wholesale makes up the bulk of the product because the demand is simply too big for small productions to meet.

The majority of infused products and concentrates are derived from third-party manufacturers because licensing for extraction facilities is limited across municipalities. However, some concentrate production is allowed under the umbrella of a grow license. For example, Choice Organics is permitted to use ice water extraction to make bubble hash. However, without a manufacturer of infused product license (MIP) CO2 and BHO are restricted.

On the medical side, there is more vertical integration, restricting medical dispensaries to purchasing or selling 30 percent of total on-hand inventory to or from a third-party. The dispensary is responsible for maintaining a 70/30 ratio of in-house production to wholesale purchasing. Additionally, the total on-hand inventory is directly tied to the number of patients it serves.

As the recreational and medical cannabis industries continue to grow and change, the laws on the state and municipal levels will continue to evolve.

The next installment of this series on where Fort Collins cannabis comes from will focus on the growing process, and how the high quality cannabis end product is achieved.