Lessons Learned from Colorado’s Cannabis Market
Allay Consulting founder and CEO Kim Stuck Photo courtesy of Allay Consulting

Lessons Learned from Colorado’s Cannabis Market

Four takeaways on the state of Minnesota's nascent cannabis industry from a regulator turned consultant.

Kim Stuck knows what launching a new cannabis market in a state looks like. In 2014, when the retail sales of recreational marijuana began in Colorado, Stuck went from being a wholesale food and restaurant health inspector to taking on a cannabis regulator position for the public health authority in Denver. These days, she runs her own cannabis consulting business called Allay Consulting, now based in Portland, Oregon.

Colorado and Washington were the first states in the U.S. to legalize recreational marijuana. A decade later, several states have continued to legalize adult-use recreational cannabis. Now Minnesota has been added to the list, though most retail dispensaries likely won’t open until 2025.

As the state begins its rule-making process before most recreational businesses can open, lots can be learned from what’s happened in legal states.

“It’s going to be a challenge,” said Stuck, founder and CEO of Allay Consulting. “It is a challenge for every state. But eventually, everything will come out in the wash. Eventually, everybody will get their feet underneath themselves.”

Here are some observations from Stuck about what’s to come for Minnesota cannabis:

The most successful cannabis businesses are thinking five years ahead of themselves.

Companies that Stuck works with are often focused on larger goals toward compliance that aren’t actually required yet–things like compliance with Occupational Safety and Health Administration (OSHA) regulations or manufacturing certifications that comply with FDA quality standards.

Be cautious about investing in property.

That’s because, until the rule-making process is complete, there’s still ambiguity on how many cannabis retailers will be legally allowed throughout the state. Municipalities cannot ban marijuana businesses outright, but they will be allowed to limit the number of cannabis retailers to one for every 12,500 residents. Some cities have passed moratoriums while the state makes rules around the new market. However, business owners still aren’t allowed to open up retail shops until rules have been set in place, and the law only allows these moratoriums to last until 2025. Still, Stuck says, “Don’t buy a property yet until we see the regulations and where you can and can’t have companies. I’ve seen that happen many times and then [businesses] waste a lot of money on properties that they can’t use.”

Preservation of the medical marijuana program may be challenging.

Stuck noted that products for medical patients are often very different from products that are sold recreationally. “There are a lot of patients that need 100-milligram bars, things like that. But at the same time those are few and far between compared to people who want to buy cannabis because they’re daily smokers and not because they have an actual medical issue.”

Plus, given Minnesota’s market restrictions, it’s an open question whether it will even be profitable for companies to serve the medical market. “I would say that in most of the states that have medical and recreational, companies make so much more money on the recreational side, medical falls to the wayside,” Stuck noted. “And I feel like that might happen in Minnesota.”

Most states that have legalized recreational saw a reduction in medical cannabis patients by about 30% to 40%, Chris Tholkes, director of Minnesota’s medical cannabis program, told TCB in March. This reduction depends on a number of things, including geography, as well as incentives or disincentives for participation in the program.

Many states have not addressed hemp-derived cannabis to the same extent as Minnesota. 

Not every cannabis law passed in states addresses hemp-derived THC products, which include the edibles and cannabeverage products that have boomed in Minnesota over the last year. Stuck noted that Minnesota’s law actually addresses these products more thoroughly than many state laws that legalize recreational marijuana.

This is largely because of timing. Hemp-derived products found in head shops and other stores weren’t really a result of the state law change at all.  Rather, these products started to rise in prominence after the passage of the federal 2018 Farm Bill, which removed hemp from the Controlled Substances Act and defined hemp as a plant containing no more than 0.3 percent of Delta-9 THC. Because this started when this federal law went into effect in 2019, states that legalized recreational cannabis prior to 2019 didn’t address hemp-derived products in their own laws. Minnesota, however, wrapped this market into this year’s law, which includes labeling and testing regulations, along with age restrictions on who can buy products.