AURORA | Seeding these businesses could get sticky. Budding shops could get pinched.
Lame puns aside, Aurora’s fledgling retail marijuana shops are hitting their first impasse.
Aurora’s Amendment 64 Ad Hoc committee is debating a request for a proposal process that could evaluate retail marijuana shops the same way the city chooses contractors. Tim Joyce, an assistant city attorney for Aurora, says though legal, an RFP process for retail pot would be unusual.
“I suppose you could use it, but I wouldn’t recommend it,” he said. “The RFP is a process the city uses when seeking to purchase a service or a product. It’s not the right mechanism to use in this particular case for determining anything about a marijuana establishment.”
Brian Vicente, a lawyer specializing in marijuana law, said a merit-based system with scoring wouldn’t be so odd. Nor would it be open for interpretation.
“There are ways to create criteria, to ensure that the person is an upstanding operator,” he said.
Vicente has been working on laws related to marijuana for about a decade and helped draft and pass Colorado’s Amendment 64 in 2012. His law firm, Vicente Sederberg, has offices in Colorado and Massachusetts, and he said a scoring method there could help city lawmakers here screen for the best pot shops for Aurora.
For instance, if one applicant had deeper pockets than another — minimum criteria met already — that well-heeled business owner might get a better score. Same goes for security standards and business plans.
“We see this sort of thing in other places, and not necessarily marijuana-only,” he said. Massachusetts currently not only scores medical marijuana shop applicants, but it awards licenses partially based on those scores, rather than using a lottery or waiting list. He insists that the differences between government sanctioned vendors and contracts for governments are that stark.
Financial backing and industry experience were two recommendations Councilman Bob Roth, chairman of the Amendment 64 Ad Hoc committee, suggested as part of a pot RFP, according to city documents.
“I’m in the construction industry, and I’m familiar with RFPs based purely on pricing or qualifications,” he said. “It just made sense to me that if we had an RFP system where we could evaluate the finances and business experience of a potential retail marijuana shop, that would be a good way to pre-select who those 20 or whatever the cap ends up being, might be.”
During the city’s first official update from the committee in early December, the Aurora City Council received its first glimpse on where retail shops could go, and the idea to limit the number of initial retail permits to 20 licenses.
But there are gray areas when it comes to the quality of one marijuana retailer versus another, says Jason Batchelor, the city’s finance director.
“For an RFP process, as staff, our recommendation is that our criteria remain objective,” he said. “Meaning it’s pass or fail. We set a bar, and somebody clears it.”
Batchelor says if Aurora tries to create an RFP where retail marijuana applications are graded on the basis of their financial strength and industry experience, the city could face litigation.
“If somebody has $800,000 in capital, do they get more points versus somebody who has $400,000 in capital? Our point is that it’s subjective criteria,” he said.
Joyce wrote in a memo responding to Roth’s RFP suggestion, “Prioritizing applicants based on financial wherewithal is loaded with legal pitfalls. The City needs to have a rational basis if the City elects to prioritize applications based on their financial strength. That rational basis must be the result of a survey or some empirical data that would explain how an applicant with more financial backing would be a more suitable applicant than another … ”
Vicente said those standards could be developed, and withstand challenges.
“I believe it would (hold up in court) … They’d have to show that the city was being arbitrary and capricious in their findings, and doing favors for individuals, and I think that’s unlikely. I think (Aurora) knows it’s under a microscope, and they need to take a hard look at those applications.”
Right now, city officials don’t have that survey or much else to help them navigate this new frontier.
Joyce says the state is “inventing the wheel” with the requirements it created for retail marijuana licenses under Amendment 64. Those include an applicant being a Colorado resident for more than two years, being age 21 or older, not having any felony convictions, and not having any delinquent government debt.
“The only thing you can compare it to is when alcohol became legal again. How do we regulate that? It is all brand new. There’s nobody we can look to for guidance,” he said.
But once city council is ready to make decisions, Aurora can in fact, do a lot.
“The city is permitted by Amendment 64 to limit time, place, manner and number,” Joyce said, when it comes to how Aurora ultimately wants to regulate the pot industry within city limits. “Every municipality has that authority. Boulder has ordinances that mimic the state regulations. So far, Aurora hasn’t chosen to follow that methodology.”
Denver and Boulder are accepting applications for dispensaries that want to convert to the retail side of marijuana with requirements that go beyond those of Colorado’s Marijuana Enforcement Division. Boulder, for example, has stricter sustainability laws with caveats like one that requires businesses to recycle lamps used for marijuana, while Denver requires that its applicants pass five city inspections.
The high bar set in Denver has resulted in a dearth of viable candidates. As of this week, the City of Denver approved none of the 312 retail marijuana applications it received, and fewer than a dozen stores are expected to open come January 2014, according to the city’s licensing department.
Aurora meanwhile, will further develop its licensing procedure, says Roth.
“I think there’s still value to having some sort of process through an RFP or similar type of mechanism,” he said.
“One thing that came up from our last meeting is the possibility of a pre-application period, where people can get information, ask questions, and work with the city on the process. Depending on how we go about this, if it’s first-come, first-served or whatever, there are going to be some challenges.”