A Growing Industry

Increasing number of marijuana dispensaries vying for canna-biz

Posted 3/26/10

From a distance, or even up close, The Hemp Center looks like the many other quaint gift shops and galleries that line historic Littleton’s Main …

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A Growing Industry

Increasing number of marijuana dispensaries vying for canna-biz


From a distance, or even up close, The Hemp Center looks like the many other quaint gift shops and galleries that line historic Littleton’s Main Street.

A quick peer in the storefront windows — a frequent occurrence at this medical-marijuana boutique — reveals a 19th-century charm of interior brick walls, hardwood floors and a functioning gas stove.

“We don’t have too many people who don’t like our atmosphere,” said Bob Van Diest, co-owner of The Hemp Center, a legal dispensary for medicinal cannabis.

There is no pot leaf in The Hemp Center’s window, nor a brazen slogan about marijuana use — though The Hemp Center does share its initials with THC, the plant’s psychoactive substance.

Unlike some nearby dispensaries, The Hemp Center forbids on-site consumption of marijuana and does not have an in-house doctor.

The 1890s ambience of the historic Abbot Building is more than pleasant nostalgia to Van Diest, who co-owns the family-run business with his brother, sister and niece.

Although the former satellite-television contractor and real estate agent is a new player in the burgeoning medical-marijuana industry, he is a walking encyclopedia on the social, political and medicinal history of his store’s leading commodity.

“This medicine has been used for centuries,” Van Diest said, noting that marijuana was legal for four decades after the Abbot Building was constructed. “George Washington and Thomas Jefferson required farms to grow hemp and cannabis. Henry Ford in 1941 made a car that ran on hemp-based ethanol.”

The Hemp Center was designed as an all-purpose source for hemp history and hemp products. Bags, powders, foods and lotions — all without THC — adorn the shelves for anyone to buy.

The full-fledged marijuana is kept under lock and key in the back room. It is available only to licensed patients in smoked, vaporized, eaten, lotion and oil-based forms and guarded by a 24-hour surveillance and security system.

Van Diest is not just a dispensary owner. He is also a patient who says he uses marijuana to relieve his arthritis and hepatitis C.

“I don’t really want to take drugs that would damage my liver and kidney,” he said.

Weeding competition

It is not hard to find a dispensary in the south suburbs — or anywhere in the state. A drive down South Broadway yields a range of dispensaries that have sprung up since Colorado voters approved a constitutional amendment allowing medicinal use of marijuana.

Despite the 2000 vote, the industry has a problem not faced by any other storefront business in Colorado. Any use of marijuana — medical or otherwise — remains illegal under the federal Controlled Substances Act, which does not recognize pot’s medicinal benefits.

Even so, after U.S. Attorney General Eric Holder announced that the Justice Department would not enforce drug laws against compliant patients and dispensaries in 14 states that have OK’d medical use, hundreds of “ganga-preneurs” have opened shop in Colorado.

Denver famously has more pot shops that Starbucks, libraries and public schools.

The business models exercised by the growing proliferation are as varied as the tens of thousands of Coloradans who have received a doctor’s recommendation for a medical-marijuana card.

Many retailers, including the Hatch Wellness Center in Highlands Ranch, emphasize marijuana as alternative healing and offer it in the context of other services, such as chiropractic, acupuncture and massage.

Such clinic-like dispensaries have been user-friendly to Littleton resident Donovan O’Dell, 61, who uses a marijuana-based ointment to relieve a shingle-like condition under his left ribcage.

“There are certainly dispensaries that present themselves and act in a more professional manner than others,” he said. “I’m not looking to alternate psychologically or emotionally. I’m looking for relief of pain.”

Because O’Dell serves on the city commission that approves dispensaries in Littleton, he buys his medicine outside the city to avoid a conflict of interest.

Some dispensaries serve a younger demographic and provide on-site medication lounges with couches, music and televisions. Others maintain a gritty, industrial feel, with bars on the windows, and require a marijuana card to even enter the building.

The industry has become so crowded that some cities have imposed moratoriums. Nature’s Kiss in Englewood has dubbed South Broadway “Broadsterdam,” a reference to Amsterdam, Holland, a city well known for its decriminalized hash bars.

Westword has gone so far as to hire a marijuana critic to sort through it all and created an advertising section touting everything from free pot samples to marijuana lollipops. An ad for Mr. Stinky’s boasts, “If you’ve got the pain, we’ve got the strain.”

“With 500 people a day getting their recommendation, there are different business models that fit different patients,” Van Diest said.

Uncertain futures

Although a plausible legal defense for using marijuana is now enshrined in the Colorado Constitution, dispensaries, themselves, remain on shakier ground.

Controversial marketing, federal law, suspicions about the large number of patient cards, and marijuana’s recreational history have all played into a public-relations problem for the industry. Dispensaries have been compared unfavorably to another land-use pariah — sexually-oriented businesses.

Many cities have tried to keep dispensaries away from schools, daycare centers and other such uses. Centennial was sued when it forcibly closed CannaMart, the only dispensary to operate in the city of 103,000 people.

Against this social and political backdrop, no dispensary has applied to join the South Metro Denver Chamber of Commerce — a fact that surprises chamber president John Brackney. The chamber’s board of directors must approve members.

As dispensaries become ubiquitous, Brackney thinks the day is ahead when — under the right set of circumstances — a professionally run dispensary joins the networking organization.

“We want to really understand our clients. We partner with our clients,” he said. “So if a medical-marijuana business is operating as a legitimate business and providing pain relief to people in need and wants to be a member of the business community, my instinct is, welcome.”

The dispensary’s place in law is more tenuous than its social position. Neither dispensaries, nor distribution in general, were mentioned in Amendment 20, the ballot question that effectively decriminalized medical marijuana. The absence of such language has led the Colorado General Assembly to try to clear the air.

Lawmakers have mulled a variety of options, including a controversial provision, endorsed by the Arapahoe County Sheriff’s Office and other law enforcement groups, that would put dispensaries out of business by limiting them to five clients.

If that were to happen, so be it, says Sheriff Grayson Robinson. He emphasizes the constitution’s silence on dispensaries, which he considers magnets for crime.

“Anything that’s self-regulated is ripe for corruption,” he said. “I support medical marijuana for people who have a legitimate debilitating condition. But I don’t believe 39,000 card holders in Colorado have that. There are a few dispensaries that are truly focused on care. The larger portion is focused on profit.”

Pot o’ gold?

In comparison to some dispensaries along South Broadway, ADG Herbal Medicine does not have the most eye-catching name or marketing platform.

The business is tucked away in a basement on old Hampden Avenue in Englewood. Discreetly located below a bakery and next to a Vietnamese restaurant, the dispensary is easy to miss — and that’s the way co-owner Dmitry Rotenberg likes it.

“Our patients also like it,” said the 30-year-old Russian immigrant who smokes marijuana to relieve pain from a bus accident. “There’s no pot leaf on the door. I don’t want that type of audience here. I consider this a pharmacy.”

In lieu of overt marketing, Rotenberg — a businessman with a background in home-theater set-up — emphasizes security. ADG’s modest 2,000-square-foot space has surveillance cameras, but decidedly, no windows.

“We’re a bunker,” Rotenberg said. “We’re surrounded by 12-inch concrete bulletproof walls. I see 360 degrees at all times.”

ADG has also strived to stay ahead of the curve on legislation. Although the store provides space to a physician rent-free, the two operations have no other financial relationship, according to Rotenberg. No smoking is allowed on site.

“People get rejected here. You cannot just walk in and get pot,” Rotenberg said.

In light of the start-up investment, a crowded market and a low-key sales approach, the grass could be greener for ADG’s joint venture. Rotenberg and his partners have yet to take a salary. He predicts the competition to ease up soon, however.

“Ninety-nine percent of those people are going to fail because all they are after is money,” he said.

Marjorie Silva, owner of the Azucar Sweet Shop and bakery upstairs, says she has been impressed by ADG’s professional business style.

“They’re normal people with families and kids,” she said. “Their customers are regular people — old ladies and gentlemen — that come in and get cookies.”

Other businesses agree that well run dispensaries can make good neighbors. Littleton City Councilmember Jose Trujillo, owner of Jose’s restaurant in Littleton, operates next door to The Hemp Center.

“I haven’t heard a derogatory word about it,” he said. “They seem to be doing a pretty good job there — whatever they’re doing.”

The fact that a marijuana dispensary can operate alongside a bakery or restaurant has not ceased to amaze nervous patients or entrepreneurs who have strived to supply the new demand for cannabis as medicine.

Rotenberg and Van Diest are also concerned about what form the inevitable laws regulating dispensaries will take in coming months.

“It’s a day-to-day issue for us,” Rotenberg said. “Every day, we come in expecting to be shut down.”

The owner says he finds solace in the immigrant-entrepreneurial spirit that led he and two Russian-American friends to start ADG — and name it for the first initials of the three founders.

“It can also stand for another day is good,” he said with a slight smile.


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