The City of Boulder’s pot power grab


Some voters oppose Amendment 64 because it gives local governments too much power. The city of Boulder opposes it because it doesn’t give them enough.

Last week, City Council took a stand against Amendment 64, the ballot initiative that would allow retail marijuana stores in Colorado. The disapproval troubles some advocates, because Amendment 64 would also allow City Council to ban the retail marijuana — without a public vote.

But the council isn’t necessarily against legal marijuana.

“It’s the way it’s written,” explained Assistant City Attorney Kathy Haddock. If new marijuana policies enter the state constitution, the city can’t change them. The city is burdened, Haddock said, “if the fees don’t cover the cost of regulation.”

But Amendment 64 actually doesn’t limit the city’s fees (or the state license fee) — just the state application fee. According to the Campaign to Regulate Marijuana Like Alcohol, “localities will have the opportunity to enact license fees as they deem appropriate.”

“That’s not what the amendment says,” Kathy Haddock countered. “It says we only get half of the fee the state gets.”

The amendment directs the Department of Revenue (DOR) to start accepting business applications in October 2013, and to send half of each application fee (which can’t exceed $5,000) to the applicant’s business locality. But if the Department of Revenue fails to issue any licenses by 2014, the amendment redirects decisions about licensing — including fees — to localities. And some sources say to expect incompetency from the DOR, whose Medical Marijuana Enforcement Division (MMED) was recently considered defunct by much of the industry. Its online system (which must approve travel routes for all marijuana before it approaches a dispensary) had crashed; the department’s staff couldn’t respond for several days.

The MMED had spent more on regulating marijuana than it could collect in fees. So has the City of Boulder, officials say. So they’re raising the fees paid by local medical marijuana (MMJ) businesses. The new fees are included in the latest revised draft of Boulder’s MMJ ordinance, which City Council gave initial approval to last week.

In a memo addressing the need for higher fees, city officials calculated that they’ve collected $496,350 from the industry — and spent $665,000 regulating it.

Some say the money was mostly spent on payroll. Haddock says her fees “take up half of the fees paid by the businesses.”

Others blame costly court cases.

“We’ve been to court a lot,” said Haddock. “We’ve denied applications and revoked licenses. A lot of these people have challenged the city. In all these cases, the city has prevailed.”

Except one, says MMJ attorney Jeff Gard. His client, a dispensary denied for low “moral character,” defeated the city. So the city changed the ordinance, found a new violation, and promptly appealed its appeal. The case continues to cost massive amounts of money.

It’s not the only battle the city continues waging against a dispensary owner. Michelle Tucker wasn’t informed of her alleged shady moral character until after she’d passed the first background check, “received a Tier 1 letter from the city to proceed,” and spent $250,000 making her dispensary compliant with city regulations. Then she was told to close. But a hearing officer decided that the city couldn’t use Tucker’s past legal trouble: It was a civil case; she’d never actually been convicted. So the city found a new violation in her paperwork. The case drags on.

Last week, her appeal was nearly cut short by city officials who arrived at her business bent on destroying all its marijuana. Then the court decision wouldn’t matter, Tucker and her attorney explained, because the business would be crushed anyway. If they do win in court, the city can also continue the battle by appealing the victory.

“No one can win against the city,” said one dispensary owner.

During one case, Haddock told a judge that if an appealing dispensary wins, the city’s rules will be viewed as “suggestions.” These dispensaries must be defeated — at any cost.

The increased license fees will help cover the cost. Other changes in the latest version of the city’s ordinance will make shutting down dispensaries more cost-effective. The new draft includes the city’s “zerotolerance” policy: If your business violates any MMJ rule — if your manager leaves the dispensary for a minute, or you forget to lock up your edibles one night, or you file paperwork a couple days late, or your employees put unopened beers in the fridge — it’s all over. Several Boulder businesses have been shuttered by the zero-tolerance policy — although the ordinance doesn’t officially include it yet.

How did the policy become Boulder law, before City Council ever voted on it? Sources say it was simply Haddock’s decision. In a phone interview, Haddock explained that a judge had asked “how many bites at the apple” each dispensary gets, and the decision was ultimately made by “the licensing authority. It was their discretion. That’s a bad word, but they had to establish standards.”

In a later email, Haddock clarified that the judge was told that “the city had not set a number of violations that were ‘free’ before a license would be revoked.” This led to the zero-tolerance policy. “Frankly,” says Haddock, “I do not remember if that first came from a witness or from a judge.”

On the phone, she’d been reluctant to credit anyone “because there was so much discussion.” It had been a group decision, “for lack of a better term.” So a decision by unelected officials, without any vote, became a law — a law that shattered the lives of several small-business owners.

Once denied, dispensary owners have little hope. “Boulder has eliminated any right to present evidence to a neutral hearing officer,” says Gard. “This is the only area where government can take away licenses without the opportunity to present your evidence or make your case. So now with zero tolerance, the city becomes arresting officer, judge and jury.”

When I asked Haddock about the lack of due process, she forwarded me the decision from Boulder Kind Care v. City of Boulder. She had represented the city; Gard represented the dispensary. The judge ruled that “the standards of due process are flexible” — dispensary owners should have “the opportunity to be heard” but not to testify. They don’t deserve “traditional due process protections” because their business license is “not a constitutionally protected right or property interest.”

Marijuana business licenses will enter the constitution if Amendment 64 passes. (That’s why the City of Boulder officially opposes the amendment.) But medical marijuana business licenses won’t. “A medical marijuana business license is a revocable privilege,” the judge repeatedly said about Boulder’s MMJ ordinance. The new version of the ordinance strengthens that sentence, clarifying that your privilege can be revoked not just by the feds or the state — but by the city, too.

Changes to the ordinance are based on MMJ court cases the city has struggled to win, Gard suggested. The latest draft allows the city to use civil cases (like Tucker’s) to deny licenses. Even if it’s not approved in time to apply to Tucker’s case, it still helps the city defeat dispensaries. It raises fees paid by the industry, funding the court battles. And it cements the zero-tolerance policy in local law.

Would the zero-tolerance policy apply to retail marijuana stores, too? Amendment 64 proposes regulating marijuana “like alcohol.” Businesses that sell alcohol don’t permanently lose their liquor license after their first violation. And they’re allowed to make their case at hearings.

But marijuana isn’t treated like any other business. And Boulder treats MMJ businesses differently than any other city does, several attorneys agreed.

Regardless of how the city reacts, Amendment 64 will immediately allow adults in Colorado to possess and grow marijuana.

This November, you have a voice. In marijuana policy, it turns out, you usually don’t.

Cecelia Gilboy owns Colorado Quality Collective, which provides wholesale information to the MMJ industry.


This opinion column does not necessarily reflect the views of Boulder Weekly.


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