Earlier this month, regulators, lawmakers, public health officials, law enforcement, and industry members from across the globe descended upon Denver for the annual Marijuana Management Symposium. This regulation and policy-focused conference, the biggest gathering of cannabis regulators in the US, takes place, naturally, in Denver, where the first legal cannabis sales in the world took place in 2014.
Ashley Kilroy, director of Denver’s Department of Excise and Licenses, has been the top cannabis regulator in the state’s industry epicenter since those very first sales. The cannabis landscape has changed dramatically in the past five years, especially after the launch of legal sales in Canada last October. Now, the industry is truly global. And here in the US, cannabis is for the first time being taken seriously in Congress, with issues like banking access and social equity in the spotlight.
So, Cannabis Wire spoke with Kilroy to learn more about how Denver is evolving with the fast-paced changes in the industry, and what was top of mind at the multi-day symposium. (You can now watch video from the event here.)
(This conversation has been edited for length and clarity.)
Nushin Rashidian, Cannabis Wire: What was the major theme or takeaway this year?
Ashley Kilroy, Denver: Social equity. We’ve been doing this symposium for five years, we’ve had legalized marijuana for six years. And after our very first six months, because we were first in the world, we started getting all these calls: ‘How are you doing this? Can we come by and see you?’ Whether it’s California or Portland or Washington. After that first year of getting so many inquiries, we said, ‘let’s go ahead and try to answer all the questions at once at a regulator-to-regulator symposium.’ Last year, we thought: ‘why don’t we do a lunch conference on race and social justice and social equity?’ And that was a conversation that was just sort of starting last year. I think people were interested and kind of listening and paying attention. Well, this year we did the same lunch panel again, but as we got started that morning, almost every panel wound up discussing social equity. Even the international panel was talking about social equity.
Rashidian: Can you characterize the discussion around social equity a bit for me? What was the top concern or a major point about social equity that emerged from the day?
Kilroy: The best thing about it was that on breaks, or at cocktail hour, or at dinner, different people came up to me and said, ‘Wow, I had never thought about that. I think I’m going to look into that on behalf of our city.’ So, I think that was the big takeaway, that it resonated with a lot of people.
The war on drugs has disproportionately impacted communities of color for 50 years. And now, fast forward to where we are today, and we have legalized marijuana, both recreational and medicinal. And the national data appears to show that most of the people who are now making money off of legalized weed are, for the most part, white. Another way to look at it is along the lines of: is that industry lining up with the demographics in your community? Pretty much everybody agrees, yes, let’s figure out how to build a more diverse and inclusive industry. And then the hard question is: how do you do it? And that’s really where the rub is. We did have Representative Sonya Harper from Illinois who just drafted Illinois’ legislation that builds in social equity from the ground up, but other jurisdictions haven’t built that into their programs from the ground up.
Rashidian: Colorado was first. And social equity was not really at the core of legalization conversations back then in the way that it is now. And so what is top of mind for you as far as trying to retroactively work that in to the program?
Kilroy: When we first legalized, our Governor [John] Hickenlooper said, ‘oh, well the voters voted in favor of that, but don’t break out the goldfish just yet, we don’t know if the federal government is going to allow us to go forward with this.’ In 2012, we also had the federal government come in to Denver and shut down like 40 medical marijuana dispensaries. So, when we first legalized it was about: how do we make sure we do this right, how do we make sure we can keep moving forward? The Cole Memorandum said if you have strict rules and robust enforcement, the federal government would make enforcement in those jurisdictions that legalize marijuana one of the lowest priorities. And my team and I weren’t even here yet. This was 2012, when our voters first voted in favor of it. So a [state task force] put in things like requiring vertical integration, so that you couldn’t just own a store, you had to own that distribution chain, which then made it significantly more expensive to get into the industry. So, then you have some economic barriers. The state also put in the qualifications to be a licensee that you couldn’t have a certain criminal convictions, putting in more barriers to entrance. And the stricter rules and regulations became, the more costly it became to be in a regulated industry. So that’s how we got started. And I think everybody acknowledges that’s how we got here. And it was inadvertent, but it did put in real barriers to people to get into the market.
So the question about: what are we going to do about it? In Denver, our mayor has always made sure that we look at everything we do through our Race and Social Justice Initiative. So, from the very beginning, as we’ve had marijuana tax money come in, the mayor has been able to use that to support his priorities. And we’ve used that for such things as affordable housing. We’ve used it for youth education in low and moderate income neighborhoods. We’ve used it for one of the city’s first truly urban rec centers. So, we’ve always been utilizing those tax dollars to support equity, really, and racial and social justice initiatives that the mayor cares about to begin with in our city. We’ve been doing that since day one.
And then last year we started the Turn Over A New Leaf program. We work on expungement under that program. And then there’s the workforce development and licensure and ownership piece; We have a monthly phone call with Los Angeles and Oakland and Massachusetts and some other cities, including Portland. It’s something we’re all working on, and I think we’re all working towards some ideas, but we don’t have anything totally firm yet. But it’s an issue that cities all across the country are working on.
Rashidian: Equity aside, what would you say are the most common inquiries you get from other regulators?
Kilroy: There’s a couple of things. How did we do it in Denver, how have we managed it? What we always say is, number one, our mayor backed it right away. And he said, as soon as it passed, that no matter how anybody felt about marijuana, the voters have spoken and we’re going to do it and we’re going to do it right, and we’re going to get it right. And he made sure we had the funding for it. We imposed an additional 3.5% retail sales tax on marijuana to pay for the management of marijuana, to make sure we were complying with those Cole Memorandum directives. And it’s one of the reasons why people come to Denver to learn how we’ve done it. That’s basically why we started this symposium.
After equity, the next thing was what the mayor called Marijuana 2.0 as more mature markets like Colorado and Washington and California are seeing things like delivery, social consumption clubs or hospitality, and sustainability efforts. One of the things we say is that if you’re one of our licensees, a marijuana business owner, by definition you are an innovator, you’re an entrepreneur, and you’re a risk taker. And your products are developing quickly and processes are changing quickly. And we, as regulators, owe it to them and to our citizens to ensure that we’re as nimble and quick as they are, and we’re able to react quickly so that we can get regulations in place that help keep them safe and keep the community safe. So we talk about how we’ve had to be nimble and how we’ve had to react and how we’ve had to learn and learn quickly.
Rashidian: If you could go back in time and bake something into what Denver and Colorado more broadly did out the gate what would that thing be?
Kilroy: That we had known more about edibles, that we had known more about serving size and THC content, because right after we legalized at least two people consumed way too much marijuana and wound up dying as a result of marijuana psychosis. [Read about these incidents here and here.] At first, when we didn’t know what the right serving size should be, or how much THC should be in something, we’d have a cookie that had 100 milligrams in it, and it would say ‘Oh, break your cookie into 10 pieces and then share it.’ And that’s not how somebody eats a cookie.
That is the one thing that really bothers me, that we didn’t know what we didn’t know at that time. And still today, we do not have the public health data, the federally-funded or university lab studies to know: what are the medicinal benefits of marijuana? What are the risks? What are the long term public health impacts? And so we started without knowing that. And unfortunately Colorado had two deaths.
Rashidian: There’s unprecedented momentum in Congress for a cannabis bill, the SAFE Banking Act. What difference would the passage of the Act make in your work and the work of other people who are regulating cannabis in the city and state?
Kilroy: There would be a lot of impact for us right now. I mean, first of all, that our legalized marijuana businesses who are contributing to our economy will be treated the same as other legitimate businesses, and have access to banking. Cannabis businesses not having access to banking puts them at risk, in addition to our communities, from issues like having large amounts of cash lying around. We have had an issue with marijuana grows being the most frequently burglarized businesses in Denver. They were the number one most frequently burglarized business for maybe one or two years. So there are legitimate, legal businesses who should be treated like all other legal businesses that are at risk for crime, whether from burglaries or robberies, but also just not being able to track their own money, and being worried about employee theft.
From the government standpoint, we know that all-cash businesses are hard to audit, they’re hard for us to ensure that they’re paying taxes. We know that when people can access online banking, and pay their taxes online, they get their taxes in more timely.
And we know that one of the barriers to entry into the marijuana market is access to capital, and not having banking really seems to mean that you probably do need a rich old aunt to borrow money from to even get into this business. So we feel like, in Denver and in Colorado, our voters voted in favor of legal marijuana. We’ve taken a good government approach toward implementing it, like I said, under the Cole Memo, with strict rules and robust enforcement and making sure we’re doing it the right way. And it really is time for Congress to join us in that good government approach to something that is now legalized in some form or another in almost every single state.