The Crested Butte News Serving the Gunnison Valley since 1999
Part I: The ins and outs of running a shop
By Alissa Johnson
In this series, the Crested Butte News takes a look at the marijuana industry in the Gunnison Valley. We start by examining what it takes to run a retail business in a brand new industry.
It’s a Thursday afternoon at URBA, a recreational marijuana store on the 300 block of Belleview in Crested Butte, and a bell alerts a 20-something budtender to the arrival of customers in the waiting room. After he checks their IDs, a middle-aged couple enters the salesroom. The woman explains their presence in a sing-song voice.
“You know, we’re from out of town, and we had to come see what it was all about,” she says, laughing. The budtenders begin to outline the couple’s options, explaining the selection of marijuana and marijuana-infused products in the glass display case. In no time, the woman pulls out her camera, and URBA manager Caroline Murphy is taking a picture of the couple with the budtenders, making sure to capture the URBA sign in the background.
“This is just so trippy, you guys,” her customer says, waving her hand at the budtenders and the salesroom. She and her husband were hippies once, she explains, and it’s clear that she can’t get over the scene—that marijuana is legal in Colorado.
The interaction seems to be a familiar one in Gunnison Valley pot shops. Chuck Reynolds is owner and retail manager at Soma, which has stores in Crested Butte and Gunnison. He, too, recently served a middle-aged couple at the Crested Butte store, and he says the female customer was beside herself. She couldn’t get over how cool it was to see retail marijuana.
“It was really fun. She was so psyched,” Reynolds said. “One of the things I love about this business is the customer base. They’re happy customers right off the bat, a lot of people walking in—especially the older folks—going, ‘I never thought I’d see this in my lifetime.’”
Murphy shared a similar sentiment. Helping customers is one of her favorite parts of the job, whether she’s helping tourists or locals who want to ease their back pain, sleep better or just feel good. “It’s nice to help the whole community have access to cannabis for both recreational and medicinal purposes,” Murphy said.
The concept of a marijuana store as a community resource isn’t a common part of the legalization discussion, but it’s becoming a reality. Mikey Costello is the manager of the family-run Cannabis Cabin in Gunnison, located across from the airport. The “discrete location,” as he calls it, has been a boon for business in ways he didn’t expect.
“A lot of our local clients like that it’s on the quiet side of town. The parking lot is fenced in and it’s very discrete,” Costello explained. “A lot of people, because of work or because of their kids, like to keep it under wraps even though it is legal.”
Costello serves everyone from young 20-somethings to people in their 70s and 80s, and even helped someone who brought in their 93-year-old mom to help her get some pain relief. Marijuana customers, it turns out, defy stereotypes and even expectations.
Reynolds explained that before Soma opened in Crested Butte, it was a medical marijuana dispensary in Boulder. There, many of the customers were 20-year-olds with “bad backs.”
“When we opened in Crested Butte as recreational, the demographic flipped 180 degrees. Far more baby boomers, people in their 50s, 60s and on up. They comprise close to 50 percent of our clients,” Reynolds said.
Often times, these customers haven’t smoked for 20 to 30 years and want to check out the store or try edibles. Many of them are looking for medicinals, hoping to get off of pain medications or sleeping pills.
Whatever they’re looking for, one thing is quickly clear: the recreational marijuana industry may be new—the first recreational stores in Colorado opened in 2014—but there is no shortage of products, from locally grown strains of marijuana to chocolate bars and drinks to THC-infused balms. At URBA, Murphy recently accepted a shipment of beef jerky, a product she was particularly excited about. She prides herself on building the relationships that enable her to bring in the latest products.
When rapper Snoop Dogg launched his own line of marijuana flowers and cannabis products in 2015, Murphy immediately reached out to her supplier and became the first dispensary on the Western Slope to sell products from Leafs by Snoop.
While that makes cannabis an exciting industry to be part of, local shop managers admit that being part of a cutting-edge industry comes with its own host of challenges. The rules and regulations for day-to-day operations are extensive and they regularly evolve.
“The rules change every single day,” Murphy said. “I have to check two different websites before we even open every day to make sure nothing was put on hold, that there was no new statement of position or bulletin.”
In recent months, for example, one big question surrounded the regulation of out-of-state consumers. The state already limited them to 7 grams per transaction, compared to the 28 grams allowed for in-state residents. A proposed rule would have allowed even less and created different restrictions for different types of products.
For Murphy, figuring out the limits for customers who bought more than one type of product felt like a headache in the making. Eventually, the state reversed course and expanded the out-of-state limit to match that for in-state consumers, resulting in higher volume sales at URBA.
But during the debate Murphy and every other manager had to stay on top of the latest expectations.
That kind of change is common.
“Colorado has an excellent regulatory structure,” Reynolds acknowledged. “But sometimes that bureaucracy can be onerous, and the regulations change on a regular basis. [The state] adds new rules, regulations and updates, and it’s a moving target. Staying compliant is a big part of our time and energy.”
For example, a state-mandated tracking system, METRC, tracks every batch of marijuana and every marijuana-infused product, and stores are expected to report sales at the end of each business day.
Tracking inventory is also a big part of the job; the products in the store need to match the records in METRC. Staff at SOMA take inventory three times a week. At URBA, staff weigh weed two times a week and inventory one concentrate or edible each day.
“In Denver, they do it daily,” Murphy said. She goes so far as to take the course on how to use METRC every three to four months to make sure she’s familiar with anything that’s changed.
“The main concern is that product isn’t going out the back door and being sold illegally or being stolen. In addition, every batch of marijuana must be tested for potency and microbial molds and mildews,” Reynolds said. “It gets very expensive. These things add costs, be it in actual fees like testing fees or manpower.”
There are other costs of conducting business as well. Costello says taxes on the marijuana industry are higher than those for most other industries. “The tax burden companies in this industry face, that’s the most difficult when it comes to having affordable prices,” he said.
According to Costello, taxes can range from 18 to 25 percent for marijuana once you factor in the state and local entities. There’s also an excise tax on any marijuana that gets moved, a rate per pound that is the same for one-mile trips between the grow house and the store and for trips from Denver. And banks often require higher fees to have an account.
“It’s a tough business to be competitive in, especially when you’re small,” Costello said.
And there is no shortage of competition. Initially, Crested Butte was the only municipality in the county to allow marijuana stores. According to town clerk Lynelle Stanford, there are four active permits out of the five that are allowed: three are retail and one is dual-licensed for retail and medical marijuana.
The city of Gunnison, however, began licensing marijuana shops in 2015 and did not limit the number of permits. The first shops opened in November of last year, and since then seven marijuana shops have opened their doors.
Reynolds and his business partner responded by opening a second store in Gunnison, knowing that a lot of their customers who came from Gunnison, Ohio City, Lake City and even Montrose would stop making the trip to Crested Butte. It proved to be a smart move, with combined sales greater than last year’s sales during certain times of the year.
And both URBA and the Cannabis Cabin have seen steady increases in sales despite the competition. That, perhaps, is the reason so many people have opened shops: There is a demand for the product, it can be profitable, and the challenges are simply part of the experience.
“This is new. It’s leading edge and it’s never been done before, which is what makes it fun, exciting and challenging. But the challenge is part of the positive experience. It has been a tremendous learning experience with a lot of personal growth. There is so much to do in this business. It’s great,” Reynolds said.
Next week, we’ll take a look at another aspect of running a retail marijuana business: grow operations, which can be a way for companies to expand their niche in the market, supply marijuana for their own stores and control the quality of their products.
