Pot shops required to source half of products from Steamboat following City Council vote

Steamboat Springs City Council passed two marijuana ordinances at their meeting Tuesday — one that requires existing dispensaries to source half of their products from within city limits, and another that establishes a merit-based application system to vet any future pot shops that want to open in town.
John F. Russell

STEAMBOAT SPRINGS — Steamboat Springs City Council members postponed a vote to increase the number of pot shops in town at their meeting Tuesday, but they passed an ordinance establishing a merit-based application for marijuana licenses that anticipates more dispensaries in the coming years. 

Another ordinance the council passed will require existing dispensaries, as well as any future ones, to source half of their products from within city limits. 

These votes come after almost a year of intense debate on how, if at all, the city should expand its marijuana industry. 

Current city regulations limit the number of pot shops to three, restricting them to a commercial district on the west end of town. 

An ordinance passed at the last City Council meeting in May will allow shops to open in more commercial areas around town, including parts of downtown and near Steamboat Resort. 

That ordinance, along with the two ordinances passed Tuesday, will take effect Jan. 1, 2020. 

Also at the council’s last meeting, members narrowly approved, on a 4-3 vote, the first reading of an ordinance that would allow more dispensaries in town but to limit the number of licenses to six.

The council was set to finalize that limit on Tuesday but faced difficulty garnering the necessary number of votes to do so. Part of the reason was the absence of council member Lisel Petis, who supported the increase to six licenses at the last meeting.

Council member Heather Sloop opposed allowing more pot shops, echoing an argument she has made at previous meetings.

9 new factors for marijuana license evaluation
  1. Experience operating a licensed marijuana business in Colorado
  2. Impact on the neighborhood, the community and the environment
  3. Convenience of the proposed location to the residents of the city
  4. Compatibility with the surrounding properties
  5. Diversity of retail choices
  6. Business plan evaluation
  7. Ability to operate an effective and lawful analogous business in the city
  8. Quality and detail of the proposed security plan, business plan, community outreach plan and other application materials
  9. Potential for crime in the proposed location

“I don’t feel as if there has been this incredible public call for more (dispensaries),” she said. 

After several motions failed to pass — including one to deny any increase in licenses — the council tabled the ordinance until its June 17 meeting. 

The tabling motion passed on a 4-2 vote, with Sonja Macys and Scott Ford opposed. 

Any new pot shops that may come to Steamboat will first have to gain city approval through the new merit-based application. It requires applicants to submit a business plan, as well as plans for security, community outreach and odor management. 

It also gives the city power to vet applicants, establishing nine factors for evaluation. Among them are an applicant’s experience operating a dispensary in Colorado and the impact any proposed store would have on the neighborhood and greater community. 

That ordinance passed without significant pushback on a 4-2 vote, with council members Kathi Meyer and Sloop opposed. 

The biggest impact to existing dispensaries from Tuesday’s meeting is a new ordinance requiring pot shops to source at least 50% of all of their marijuana and marijuana-derived products from within Steamboat city limits. 

This is a change from the current requirement, in which each dispensary must produce or manufacture 70% of its own products, otherwise known as vertical integration.

As the council pointed out, the new requirement should not have much of an effect on existing stores, which already have the infrastructure in place to meet current standards.

One dispensary, Golden Leaf, submitted a letter to the council that advocated maintaining the 70% proportion, but measuring it only on the amount of flower a business sells.

“Not only is this trackable, but it also forces jobs to be kept local,” the letter said.

Council member Robin Crossan opposed the idea of requiring all of a dispensary’s marijuana products to be sourced from within the city. She worried it could prevent stores from filling their shelves with innovative products — like edibles and concentrates — from across the state. 

Other council members voiced similar concerns, adding that other municipalities do not require their pot shops to source products locally.

“The vertical integration requirement would make us truly a special snowflake,” Ford said.

The council eventually settled on a compromise, passing the local sourcing requirement but scheduling it to sunset in 2027. Macys, in supporting the motion, reminded the opposition that the timing of the sunset can always change with a future vote. 

“If the next council decides that is too long, they can revisit it at that time,” Macys said. 

The ordinance passed on a 5-1 vote, with Meyer opposed.

Dispensaries have until Jan. 1, 2020, to make any necessary changes before the ordinance takes effect.

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