Despite a newly proposed retail marijuana store appearing to have checked all the boxes for approval, City of Gunnison leaders seem lukewarm to the idea of another pot shop in the public eye. It may be a sign that cannabis establishments in the city are reaching a saturation point — if not within the market, then in the realm of public acceptance.
On Tuesday, Aug. 27, City Council ultimately tabled discussions to permit the cannabis establishment, citing concerns over compatibility with the surrounding neighborhood and impacts to traffic, among other things.
Located at 1003 West Tomichi Ave., on the city’s west end, an empty lot is eyed for the location of NuVue Pharma, a marijuana retail chain with locations in Pueblo, Trinidad and Colorado Springs.
If approved, NuVue would be the eighth retail marijuana shop operating in Gunnison. After residents approved sales in the city in 2014, municipal leaders adopted rules for where the shops could be located — but not a cap on their number.
According to Gunnison City Clerk Erica Boucher, there are currently seven retail marijuana shops in operation as well as two cultivation centers and two product manufacturing establishments.
In 2015 — the first year that allowed for the sale of recreational marijuana in the city — a total of seven retail shops opened their doors. In 2016, another three retail marijuana shops began business. However, four shops have closed in the last two years.
Although cultivation centers and product manufacturing establishments have started since 2016, no other retail marijuana shops have cropped up since then.
While there is a considerable amount of cannabis available county-wide, there are caveats that come with the industry.
The Town of Crested Butte, for example, allowed the sale of recreational marijuana as soon as a law allowing it in Colorado passed in 2014. However, the town swiftly moved to limit the number of marijuana establishments, capping their number at five.
Concern over location
While the city has not limited the number of permits, Gunnison voters instituted an additional 5 percent tax for cannabis on top of existing state and local taxes. The special sales tax was initially intended to mitigate the impacts of legalization, but ballot language says that in addition to social, recreational and educational programs the money can be used “to promote the general purposes of the City of Gunnison.”
The funds from the special tax go into the city’s Marijuana Mitigation Fund. The fund currently contains $227,501 in unspent money.
The burden brought by the special tax remains a source of contention for some shop owners, but that hasn't stopped a cannabis business boom in the city.
Paul Julian, attorney for NuVue Pharma, told councilors last Tuesday that the business would stand out among competitors by offering a greater collection of product. A wider variety of available stock, ranging from bottom of the barrel to top shelf, would be key in attracting customers.
“Looking around, a lot of the stores around here, they only offer two shelves,” said Julian of the quality and price point of cannabis flower found in Gunnison.
While there are numerous stores already within city limits, Julian said the impacts to the surrounding neighborhood would be minimal in terms of both traffic and influence.
Yet, councilors also noted nearby nonprofit Gunnison Valley Mentors — a program that offers one-to-one mentoring for children. While the group is not a school or church — both of which require setbacks of 1,000 feet from cannabis establishments — the nonprofit still sees children regularly.
“Lots of students go through there,” said Councilor Bob Drexel, who expressed concern over the proposed location.
Councilor Leia Morrison also expressed concern over the proposed location, noting potential for traffic conflict especially following the construction of Lazy K — an affordable housing and park project in the works on the city’s west side.
“I struggle with the location for a couple different reasons,” said Morrison. “For one, yes, there’s a ton of kids in that park across the way — but my other concern is traffic and flow.”
Reaching saturation point?
For wholesale cannabis provider Source Co — a company with offices in both Denver and Crested Butte — there are a variety of factors impacting the industry.
“It’s definitely a tight market right now,” said Source Co founder Connor Thompson.
Seaport Global, an investment bank, recently released reports that shows wholesale marijuana prices have been on the rise since mid-April in the first three states to legalize recreational cannabis — Colorado, Washington and Oregon.
According to the report, wholesale prices have increased 17 percent in Colorado from April to July of this year.
However, given the sheer amount of competition when in the cannabis industry in Gunnison, the price point for product is imperative to staying afloat. The blend of the rural community coupled with the university lends itself to a market that values lower prices more so than the types of available product, said Thompson.
‘I don’t think it’s wise’
However, Julian of NuVue Pharma contended last Tuesday that a variety of product is just what the community is calling for, and noted 29 signatures of support from local residents for the store.
Gunnison resident Steve Cox was in attendance at the public hearing to oppose the store, citing the number of children in the area.
“I’m against this — actually any kind of marijuana, period,” said Cox. “There’s residential areas all along Tomichi and I just don't see the point in another store being here in Gunnison.”
Yet, Julian spoke to market demand that is still untapped here in the Gunnison Valley.
“I think there’s a need there that NuVue could satisfy,” said Julian. “The other big thing we bring to the table is that we’re vertically integrated.”
That is, unlike the smaller mom and pop pot shops in the City of Gunnison that often purchase wholesale, NuVue Pharma has state licenses which allow for the capability to cultivate as well as manufacture product for both medical and recreational cannabis.
“So we’re not subject the vagaries of the wholesale market price, which fluctuates a lot in terms of smaller stores,” said Julian. “Around here I noticed a lot of stand-alone stores that outsource all their product.”
Hashish Hut gets their supply wholesale. The retail cannabis shop located on North Main is owned and operated by a mother-daughter duo who opened their doors in 2016.
Hashish Hut co-owner Kimber Arsenault said the sheer number of pot shops in operation does add challenges to meeting the bottom line.
“It’s really hard,” said Arsenault. “We’re essentially just making a living.”
While Arsenault isn’t necessarily supportive of adding yet another retail shop in city limits, setting a cap on the number of licenses doesn’t seem like a solution for Gunnison either, she said.
“I don’t think it’s wise to open a shop here,” Arsenault said.
City Council will revisit the discussion for NuVue Pharma on Sept. 10.
(Kate Gienapp can be reached at 970.641.1414 or email@example.com.)