A mad scramble continues in Broomfield to acquire a trio of coveted licenses to sell recreational marijuana, with 26 applicants battling for a spot in a city that has so far banned all weed sales.
An established cannabis company is crying foul, alleging that the lottery system Broomfield will use to award licenses this month is essentially rigged to increase the odds for some claimants — and the city is doing something about it. not doing.
“They are allowing different individuals to submit multiple applications to the lottery through different shell companies,” Jordan Factor, attorney for Terrapin Care Station, told The Denver Post. “we are confused.”
Terrapin Care Station filed suit against Broomfield and several applicants last week, and is seeking a preliminary injunction preventing the city from running the October 21 lottery until the dispute is resolved.
Terrapin points to Broomfield’s own rules, which state that “no person or entity shall apply for more than one license at any place in the City” and that no applicant should “apply for any other business entity”. Can’t, or can’t own it.” Another license within the city. “
Still, many of the more than two dozen applicants are using multiple versions of the same corporate name while at least three claimants are directly related to each other. Terrapin’s lawsuit claims that multiple competitors share the same business address and are submitting “same walk-up/drive-thru documents, same control plan for prevention of premises use, same disposal plan” across multiple applications. Huh.
The document states, “The formal legal names of the entities through which they applied differed, but the applications themselves clearly demonstrated that businesses and individuals formed multiple entities and applied through each of them.” deposited.”
“If you’re going for a fair lottery, every entrant should have an entry,” Factor said. “We don’t know why they are operating their lotteries improperly.”
Broomfield spokeswoman Carolyn Romero said the city could not comment on the ongoing lawsuit, but said the 26 applications “technically meet the language of the ordinance.”
“Based on the applications received, certain related groups or individuals have set up separate legal entities and submitted applications which are operationally similar for the same location but under different owners,” it said.
Romero said the city’s marijuana selection committee would rigorously review each application before entering a lottery for a $4,000 license.
Broomfield is an untapped market for marijuana entrepreneurs in Colorado, where sales hit an annual record — $2.2 billion — in 2020. In January, statewide sales reached $10 billion as the legal market got off the ground in 2014.
Combine those high numbers with the fact that Broomfield was Colorado’s fastest-growing county over the past decade—now with nearly 75,000 residents—and it’s no surprise that cannabis companies want to.
“You’re talking about a huge Metro Denver population,” said Peter Marcus, a spokesman for Terrapin Care Station.
And two large cities near Broomfield — Arvada and Westminster — are marijuana dry towns, giving three prospective Broomfield licensees a relatively unsaturated submarket in which to operate. And that, Marcus said, makes it important that the process of determining license winners is as fair as possible.
“Merit-based licensing is very important,” he said.
Terrapin currently has a half-dozen stores in the communities north and south of Broomfield, including Longmont, Boulder, Denver, and Aurora.
One target of Terrapin’s lawsuit is Yuma Way LLC, which has six pot dispensaries in Colorado and one in Michigan. CEO Rita Tsalyuk said she, her husband and their son filed an application for a Broomfield license – sometimes using shared or consolidated information – but each submission would have been a “separate individual business with different owners”. Is.
“We know each other, but we are different individuals,” she said.
Broomfield’s applicant list shows filings under four Yuma names, including YUMA BRIT, YUMA BRKM and YUMA BRAT. Tsalyuk said officials in Broomfield told her weeks ago that she was complying with city regulations taking this approach.
“We cleared it about 10 times,” she said.
Communities across Colorado have taken different approaches to legalizing the sale of pot, some with running lotteries, others setting up maximum numbers of stores and still others using distance buffers to limit locations. are doing. Many cities and towns in Colorado do not allow sales at all.
Broomfield’s elected leaders approved the sale of medical and recreational marijuana in March. While the cap will start on three licenses, the city is leaving open the possibility of granting another two licenses a year after sales begin, either later this year or early 2022.
David Mitchell, an attorney who represents five of the Broomfield applicants who applied under the trade name Igadi, said Terrapin was misinterpreting city rules.
The situation, Mitchell said, is similar to the franchise model used by businesses like McDonald’s. In Igadi’s case, the applicants he represents will use the company’s “intellectual property, branding, business practices, and will have the same executive team, but not the same owners.”
Each of the Igadi applicants proposes a store location on Taylor Street at the same address.
“Not only is this in line with Broomfield’s ordinance, but city employees were aware of this structure and agreed it was in line with their laws – individual owners capitalizing on the experience of existing marijuana companies,” he said.