Where's the Pot?

What to expect when Colorado's marijuana shops open on Wednesday

The world's first government-licensed recreational marijuana stores will open in Colorado on Wednesday. About 20 pot shops, half of them in Denver, are expected be open for business on New Year's Day, with more following during the next few weeks as they get local approval. But January 1 is also the first day these businesses, which are legally required to produce at least 70 percent of their inventory, will be allowed to grow marijuana.

Which raises an obvious question: Where will the pot come from? The answer suggests that cannabis consumers should be prepared for shortages and price increases, at least until the first harvest of newly legal recreational marijuana this spring.

On Monday the Colorado Department of Revenue issued licenses to 136 marijuana retailers. All of them already operate medical marijuana centers, which are the only businesses eligible to apply for licenses at this point. They are also the only businesses that have legal inventories of marijuana.

A dispensary is allowed to grow up to six plants for each patient who names it as his designated provider. But that does not mean every patient consumes that much marijuana. Wiggle room is built into this system, since patients do not have to buy exclusively from their designated providers and dispensaries may sell as much as 30 percent of their marijuana to other outlets.

Any dispensary interested in the recreational market has had more than a year since voters approved Amendment 64, Colorado's marijuana legalization initiative, to maximize production under the existing quotas. Each dispensary will be allowed a one-time transfer of medical marijuana (plants and buds) to its new recreational outlet; otherwise the two sides of the business are supposed to be strictly segregated. "A lot of the businesses are going to be making a big transfer," says Michael Elliott, executive director of the Medical Marijuana Industry Group. "That's how they'll have product on the shelf on January 1."

Figuring out how much pot to transfer will be a challenge. Right now, Elliott observes, "110,000 patients can legally purchase from medical marijuana businesses in Colorado, and we're opening up the market to about 4 billion people in this world who could come and purchase from one of these businesses." Visitors who are 21 or older will be allowed to buy up to a quarter of an ounce at a time, compared to an ounce for Colorado residents. "It's really tough to know what tourism is going to be like," says Elliott, "and it's tough to know even in the state of Colorado what demand is going to be like."

Meanwhile, supply is fixed until about five months from now, when marijuana from the first plants grown for recreational sale will be ready. "We are anticipating shortages," says Elliott. "Everything that's brought over to the recreational side will be sold, so there's not going to be much of a wholesale recreational market."

Then again, "Colorado has had cheaper marijuana than just about any place you can think of, and it's been that way for years. We've gone from eighths [of an ounce] being $50 to eighths being $20. I do anticipate it's going to go up, and how much it goes up is tough to know right now."

Denver Relief, one of Colorado's best-known dispensaries, plans to focus on serving current customers, allocating only about a fifth of its plants, producing 10 pounds or so a month, to the recreational side. Co-owner Kayvan Khalatbari says new customers probably will be limited to "family and friends, referrals from people who already come in." Khalatbari predicts that outlets open to the general public will have a hard time meeting demand. "People who come here on January 1 are going to be sorely disappointed by the lack of marijuana," he says. "I think there's going to be a huge drought. People are going to be able to sell eighths for 60, 70, 80 bucks for the first few months."

If the price gets too steep, there is another option for those who planned ahead or have friends who did. Since last December, Coloradans have been allowed to grow up to six plants at home and share the produce, up to an ounce at a time, "without remuneration." Those provisions could give rise to an alternative distribution system, although how far cannabis cooperatives can go without breaking the law is a matter of dispute. At what point does compensation for expenses become remuneration? "This is a difficult area of law that I anticipate will receive a lot more attention from state and local elected officials," Elliott says.

Another practical question, especially for tourists: Assuming you can buy pot at a reasonable price, where can you smoke it? The state legislature has added marijuana to the Colorado Clean Indoor Air Act, meaning you can't light up a joint inside a bar or restaurant. Probably not on the patio either (not that outdoor seating is a very appealing option this time of year in Colorado), since consuming marijuana "openly and publicly" is forbidden.

On its face, the anti-smoking law does not apply to vaporizers, and marijuana-infused edibles also should be OK, as long as you do not eat them "openly and publicly," however that phrase ends up being interpreted. If no one knows your brownie contains marijuana, you can hardly be accused of conspicuous cannabis consumption.

This article originally appeared in Forbes.