DIARY OF A CASH COW: Legal pot biz is growing to Aurora

159

AURORA | When Tim Cullen looked at his email inbox Aug. 29, it felt like graduate school all over again.

He tentatively opened the first of three emails that came from Aurora city staffers. 

“I swallowed my heart,” he remembered of the first one. “There were a lot of qualified applications. Your location on Havana was not chosen, it said.” 

Cullen learned that day he did not win a license for Aurora’s Ward III. Luckily, the other emails bore better news. He is now the proud holder of licenses for recreational marijuana stores in the southern and southeastern areas of Aurora. 

Cullen was one of the 13 businesses owners awarded a license to operate in Aurora. He was chosen from a competitive group of 58 applicants who vied for 24 highly regulated and coveted spots in the city. So far, Aurora has awarded all but three of its available licenses. When they open, these stores will be pioneers in a municipality that placed a year-long moratorium on recreational marijuana and still prohibits medical marijuana businesses from operating within city limits. 

Aurora was the first government in Colorado to implement a points system as part of its application process that gave licenses to applicants who received the highest scores.  Almost half of the application’s 41 points were awarded based on the operating and business plans submitted. Aurora was also the first city in the state to require applicants to have $400,000 in liquid assets. 

“I think getting a master’s (degree) was easier,” said Cullen, who before entering the marijuana industry worked for a decade as a high school biology teacher. “It felt like you were jumping through a lot of hoops. Some are flaming and 20 feet off the ground, and some are straightforward as far as submitting a history of the sales tax paid for your existing businesses.” 

Cullen is no stranger to the industry as a co-owner of two retail cannabis shops, Evergreen Apothecary and Colorado Harvest Company in Denver. He is also a partner in an organic hash oil production company called OrganaLabs. 

“We hold 11 different licenses with the City and County of Denver. I’m comfortable with the application process, but have never gone through a process where my application is competing with others,” he said. 

He said finding properties for his Aurora stores proved to be the hardest part, given the limit to four marijuana stores per ward and regulations that require stores to be 1,000 feet from schools and 500 feet from hospitals.

“Some of the craziest real estate deals I’ve ever worked on were involved with this Aurora process. You’re essentially asking an owner to tie that property up with no guarantee you’re going to be awarded a license,” he said. 

Cullen said that two months before Aurora finalized its retail marijuana laws in July, he had found a property owner who was willing to lease him a building in Ward IV with a contract to purchase if he was awarded a license. His store in Ward V is being constructed. 

“Between both of them, it will be $2.5 million to $2.7 million,” he said of how much the stores will have cost by the time they’re open. “That’s everything from the application process, to the lease and purchase of the buildings, to the capital required to get them across the finish line.”

For his store at East Yale Avenue near Parker Road, Cullen is purchasing and renovating an entire building made up of four units. Right now, only one business occupies the space and the rest are vacant. 

“We would like it to be the anchor of the strip center,” he said. “There might be a coffee shop, a pizza restaurant, anything under the sun,” he said of other establishments he intends to lease to. He added the store would look nothing like a college dorm room with the dye-tied tapestries hanging off the walls. The aesthetic he wants to create is more steampunk, with custom wood cabinetry and polished concrete floors. He expects his Ward IV store to open by December 1. 

Aurora Finance Director Jason Batchelor said Cullen is unique so far in actually purchasing a building. 

“The majority are leasing existing space. There are a few that are going to purchase, and a smaller percentage that are building new space,” he said of the other applicants. 

Cullen also has one of only two stores in the city that are being built new. His store in south Aurora sits near Arapahoe Road close to the Cherry Creek Trail. 

“That is new territory for us as well,” he said. “I’ve never built one from the ground up. I’m excited to watch that process happen.” Cullen right now anticipates having that store up and running by next spring.

One thing that surprised Cullen about the award email was it didn’t tell him how many points his applications received. Batchelor said applicants are free to follow up about any part of their application, but they weren’t part of the initial award email. 

“We’ve handled this like we handle any request for proposal contract,” Batchelor said. 

Meg Collins, executive director of Colorado’s Cannabis Business Alliance has been following Aurora’s unique process closely and said it went well for the city. “When you’re embarking on something new with a new industry, and you have the luxury of having to craft how that industry is going to be and behave in your community, I think that’s nothing but good.”

She said she would be curious to better-understand why some applicants got more points than others. “In looking at a list of people who applied, I was surprised that a couple of top operators did not get licensed,” she said.