Legal pot sales ply uncharted waters

Recreational use to begin in Colo.

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DENVER -- A gleaming white Apple store of weed is how Andy Williams sees his new Denver marijuana dispensary.

Two floors of pot-growing rooms will have windows showing the shopping public how the mind-altering plant is grown. Shoppers will be able to peruse drying marijuana buds and see pot trimmers at work separating the valuable flowers from the less-prized stems and leaves.

"It's going to be all white and beautiful," the 45-year-old ex-industrial engineer explains, excitedly gesturing around what just a few weeks ago was an empty warehouse space that will eventually house 40,000 square feet of cannabis strains.

As Colorado prepares to be the first in the nation to allow recreational pot sales, opening Wednesday, hopeful retailers like Mr. Williams are investing their fortunes into the legal recreational pot world -- all for a chance to build even bigger ones in a fledgling industry that faces an uncertain future.

Officials in Colorado and Washington, the other state where recreational pot goes on sale in mid-2014, as well as activists, policymakers and governments from around the U.S. and across the world will not be the only ones watching the experiment unfold.

So, too, will the U.S. Justice Department, which for now is not fighting to shut down the industries.

"We are building an impressive showcase for the world, to show them this is an industry," Mr. Williams says, as the scent of marijuana competes with the smell of sawdust and wet paint in the cavernous store where he hopes to sell pot just like a bottle of wine.

Will it be a showcase for a safe, regulated pot industry that generates hundreds of millions of dollars each year and saves money on locking up drug criminals, or one that will prove, once and for all, that the federal government has been right to ban pot since 1937?

Cannabis was grown legally in the U.S. for centuries, even by George Washington. After Prohibition's end in the 1930s, federal authorities turned their sights on pot. The 1936 propaganda film "Reefer Madness" warned the public about a plant capable of turning people into mindless criminals.

Over the years, pot activists and state governments managed to chip away at the ban, their first big victory coming in 1996 when California allowed medical marijuana. Today, 19 other states, including Colorado and Washington, and the District of Columbia have similar laws.

Those in the business were nervous, fearing that federal agents would raid their shops.

"It was scary," recalls Mr. Williams, who along with his brother borrowed some $630,000 from parents and relatives to open Medicine Man in 2009. "I literally had dreams multiple times a week where I was in prison and couldn't see my wife or my child. Lot of sleepless nights."

That same year, the Justice Department told federal prosecutors they should not focus investigative resources on patients and caregivers complying with state medical marijuana laws -- but the department reserved the right to step in if there was abuse.

In Colorado, the industry took off. Shops advertised on billboards and radio. Pot-growing warehouses along Interstate 70 in Denver grew so big that motorists started calling one stretch the "Green Zone" for its frequent skunk-like odor of pot.

But the marijuana movement didn't stop. Voters in Colorado and Washington approved recreational pot in 2012, sold in part on spending less to lock up drug criminals and the potential for new tax dollars to fund state programs.

The votes raised new questions about whether the federal government would sue to block laws flouting federal drug law.

That didn't happen. In August, the Justice Department said it wouldn't sue as long as the states met an eight-point standard that includes keeping pot out of other states and away from children, criminal cartels and federal property.

Colorado law allows adults 21 and older to buy pot at state-sanctioned pot retail stories, and state regulations forbid businesses from advertising in places where children are likely see their pitches.

Only existing medical dispensaries were allowed to apply for licenses, an effort to prevent another proliferation of pot shops. Only a few dozen shops statewide are expected to be open for recreational sales on New Year's Day.

Legal pot's potential has spawned businesses beyond retail shops. Marijuana-testing companies have popped up, checking regulated weed for potency and screening for harmful molds. Gardening courses charge hundreds to show people how to grow weed at home.

Tourism companies take curious tourists to glass-blowing shops where elaborate smoking pipes are made.

Dixie Elixirs & Edibles, maker of pot-infused foods and drinks, is making new labels for the recreational market and expanding production on everything from crispy rice treats to fruit lozenges.

It's easy to see why the industry is attracting so many people. A Colorado State University study estimates the state will ring up $606 million in sales next year, and the market will grow from 105,000 medical pot users to 643,000 adult users overnight -- and that's not counting tourists.

The challenges, activists and regulators say, are daunting in Colorado and Washington.

One of the biggest questions is whether they have built an industry that will not only draw in tens of millions of dollars in revenue but also make a significant dent in the illegal market. Another is whether the regulatory system is up to the task of controlling a drug that has never been regulated.

There are public health and law enforcement concerns, including whether wide availability of a drug with a generations-old stigma of ruining lives will lead to more underage drug use, more cases of driving while high and more crime.


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