It turns out the song “Legalize It” by Peter Tosh, which hints at the financial benefits of legalized marijuana, got it pretty much spot on.
City councilors, economic leaders and industry representatives agree: Recreational marijuana has brought a lot of smiles – both as a successful business venture and a boon to sales tax collections.
Recreational marijuana in Durango has meant more than $1.7 million in added sales tax collection since the first sale on Sept. 25, 2014.
Tim Walsworth, executive director of the Durango Business Improvement District, estimates about 200 jobs have been created in La Plata County.
The legalized recreational marijuana industry has grown to be an important part of the retail scene, he said – noting that out of 18 different sales tax categories tracked in Durango, recreational marijuana now ranks sixth.
The industry, he said, is making an effort to ensure city regulations are followed. He added, “They care about the community as well. They are donating to help out community causes. They are an important segment of Durango’s business community. They just happen to sell a product that is illegal in 41 states.”
The first cash register to ring a recreational marijuana sale came in September 2014, but public data for sales tax revenue begins in March 2015, when the city recorded $23,855 in sales tax collections from recreational pot sales. The number constituted 2 percent of all sales tax collections for the month.
By June 2016, recreational marijuana brought in $53,358 to city coffers, just over 3 percent of all sales tax collections for the city.
The biggest haul for the city, so far, came in August 2017, when retail pot brought in $75,749, or 3.4 percent of all sales tax collected. By comparison, medical marijuana brought in $8,629 in sales taxes. The top generator of sales tax revenue for the month was department stores, which brought in $339,026 in sales tax collection, or 15.4 percent of all sales taxes collected by the city.
In December 2017, recreational pot sales tax revenue came in at $41,802, a 24 percent decline from the same month in 2016. The trend continued for the first month of 2018, with January sales tax collections of $50,783, down 15.6 percent from January 2017.
But even the recent drop in month-to-month sales tax collections of recreational marijuana has few people worrying.
Pat Dalton, owner of the Durango Rec Room, 145 East College Drive, No. 3, has a simple and seemingly plausible explanation for the drop in monthly sales tax collections coming at the end of 2017: “There wasn’t any snow. We didn’t have any skiers in town.”
However, the numbers have more generally been positive.
In February 2016, recreational marijuana shops for the first time provided more sales tax revenue to the city than liquor stores, with $39,990 collected from retail marijuana sales compared with $33,743 from liquor stores.
In July 2017, sales tax collection for recreational marijuana was $69,338 compared with $54,929 for liquor sales tax collections.
Beyond the numbers and the boost provided to city’s coffers, some city councilors and economic development officials concur: Predictions of how the industry might change Durango, and not necessarily for the better, have not materialized.
Durango Mayor Dick White said: “The operators, as citizens, are beginning to engage in civic matters. They’re getting to know people. It’s providing good jobs, well-paying jobs. And that’s kind of what you’d expect a good entrepreneur would provide to your community.”
As for the costs associated with sales of mind-altering substances, Councilor Dean Brookie said police reports indicate far fewer issues with retail pot shops than bars for incidents such as fights, loitering and public intoxication.
Walsworth said, “There was a fear that it would change the character of downtown Durango. We would be inundated with flashing neon signs, and that’s just not the case.”
Durango’s recreational pot shops must complete a lengthy approval process, including a criminal background check of employees. The businesses also need city business and sales tax licenses. The Local Licensing Authority, a municipal panel, must review and approve the recreational license after a public hearing. The premises must pass an inspection before opening. And still more regulations apply before a shop can make its first sale.
But owners and executives making a living running Durango’s marijuana shops seemed pleased with the regulatory structure established by the city.
“We haven’t had a single problem,” said Paul Edwards, store manager at Rocky Mountain High, 120 E. 36th St.
Beyond the lengthy city application process, Edwards touts the traditional benefits many pro-cannabis supporters cite.
“People don’t have to get it from another person, someone who they are not familiar with. It helps people avoid getting ripped off,” he said.
He added, legalization has provided more confidence to users that the product will be safe and will be grown without harmful pesticides or herbicides.
Dalton, the owner of the Durango Rec Room, is nothing but pleased with city rules.
“I appeared before the City Council. I absolutely think the regulations worked. I’m a big believer in what they did,” he said.
Protecting the character of Durango was as important to Dalton and the other owners of recreational marijuana shops as it was to city councilors and others who weighed in on the original ordinance, he said.
“Durango’s a great place to raise a family,” he said. “Everyone is friendly, and the icing on the cake is we can sell legal marijuana. It’s a nice, friendly place.”
One regulation of retail pot shops – distance requirements preventing shops from being closer than 1,000 feet to any school, addiction recovery clinic or child care facility, or 250 feet of a public park with playground equipment – has set off a race for limited openings for downtown retail pot shops.
Dalton’s Durango Rec Room, located near College Drive and Main Avenue, is a benefit of being an early bird in the application process.
“I know I got lucky. I got a great location. It was pure luck,” he said.
Edwards said while finding a location downtown is difficult, locations are available in Durango in less-trafficked areas such as Florida Road.
One prediction about retail marijuana sales, the advent of pot tourism, has not really unfolded in Durango, both Dalton and Edwards said.
“I don’t think people are coming here for marijuana,” Dalton said. “Tourists say: ‘Well, we’re here. We might as well try it.’ Maybe I’m wrong, but I haven’t heard people are coming here for the weed.”
Edwards said his business follows traditional tourism patterns for Durango – busy in the summer, but dropping off in the winter.
“When we’re not in the tourist season, we have to compete on price in Durango. About five or six months out of the year we can count on the tourist market,” he said.
Monique DiGiorgio, managing director of Local First, an economic advocacy group supporting local purchases, said her organization is expected to release a report in two to four weeks looking at the economic impact of legalized marijuana sales in La Plata County.
The study will examine the number of direct and indirect jobs associated with the industry as well as examining the revenue generated for governments by taxing, licensing and permitting.
“When you look at the cannabis industry, it’s a growth area in retail, and the industry is virtually all local because it’s only legal here (in Southwest Colorado),” she said.
Looking to the future, Durango’s mayor sees some challenges that could arise, such as large national corporations gobbling up local operations as the industry matures and undergoes mergers and consolidations. However, questions surrounding the industry regarding banking and federal legality might actually protect small operations such as those in Durango.
“Change may well happen,” White said, “but first, they have to solve the banking issue and get out of the cloud of federal law.”
As for acceptance of what might have been seen a decade ago as a radical proposition, recreational marijuana sales now seem commonplace by many.
“Colorado voted twice to support the industry. So did the city of Durango, overwhelmingly,” said City Councilor Sweetie Marbury. “I voted for it. I see it as a sustaining industry.”
parmijo@durangoherald.com
Poll: Has the marijuana industry become an important element of Durango’s economy?
Yes - 773 - 65.01%
No - 416 - 34.99%
