Urban, rural and tribal: how three Wests diverge on cannabis

By Felicity Barringer

The West is the heartland of legal sales and recreational use of marijuana. It’s where legalization began (for medicinal use in California in 1996, and for recreational use in Colorado and Washington in 2012 and California in 2016). Western states make up nine of the 19 states  where recreational sale and use of cannabis are legal.

Up Close

We explore the issues, personalities, and trends that people are talking about around the West.

But, looking more closely, it’s clear there is more than one West when it comes to retailing recreational marijuana. Outside of Idaho, Wyoming and Texas, where possessing cannabis is still a criminal offense, and Utah, which only allows medical use, much of the urban West has embraced the lucrative business.

It is the best of times for the marijuana economy in the urban West, as dispensaries proliferate. Realestatewitch.com, a real-estate site owned by a Missouri company, recently put out a list of the top 15 cities for marijuana buyers; Denver led the list and all of the top 10 were in the West, many in California.

Planet 13, a dispensary in Las Vegas (#4 on the list of “weed cities”), which styles itself “the Disneyland of cannabis,” has opened another outlet in Santa Ana, a city in Orange County, California near the actual Disneyland. 

Since California law empowers local jurisdictions to make their own decisions on permitting growing or selling cannabis, the city of Santa Ana chose to allow the sale of recreational marijuana. 

These are economic pluses and minuses associated with the western urban embrace of marijuana dispensaries. Like Las Vegas, Denver, Portland, Seattle, Phoenix, and Flagstaff, California’s big cities have sprouted large crops of cannabis dispensaries — five are on realestatewitch.com’s top 10 list.

Tax requirements make the California dispensaries good business for the state: cannabis tax revenues in the first quarter of 2022 were over $293 million. That’s the plus. The minus? This figure was down six percent from the same quarter last year.  Total taxable sales in 2021 were almost $5.27 billion, according to California’s department of tax and fee administration.

And that recent falloff in tax revenue may reflect legal businesses’ loss of some customers to scofflaw competitors selling their product cheaper since they pay no taxes. Legalization or no, much of the marijuana market remains underground.

Which means that, while there is plenty of good news for those in the urban West who want to see the legal cannabis culture expanded, it is not universal. Despite Santa Ana’s choice to embrace dispensaries, most of the rest of conservative Orange County won’t have them. MJBiz Daily, a cannabis business publication, styles the county as a “marijuana industry desert.”   

Another very liberal urban California county, Santa Clara, in the southern reaches of the San Francisco Bay area, also prohibits retail sales in unincorporated areas. Its city of Palo Alto does likewise. But San Jose is more like Santa Ana; it has at least 10 dispensaries.

The bad news for cannabis culture in the West is rural standoffishness, prompted both by philosophical opposition and by the growing presence of drug cartels in their midst. The cartels have created hundreds of illegal marijuana cultivation sites and greenhouses to serve the illegal market and soak up increasingly scarce water supplies. Last year Humboldt, Mendocino and Trinity Counties –  known as the “Emerald Triangle” — got state grants totaling $1.5 million to go after the cartels’ illegal grows.

In nearby Siskiyou County, the sheriff just called for California’s government to declare a state of emergency. He estimated his county is home to 2,000 illegal grow sites and 5,000 greenhouses.  Law enforcement in Jackson County, Oregon, late last year asked the state for $7.2 million to fight the “emergency” of illegal growing operations. 

In Montana, one of the newest states to allow recreational cannabis and in Colorado, the first to do so, marijuana retailing is still illegal in more than half of the counties; most of those are rural. In local elections in April, four Colorado towns – Hooper, Burlington, Ignacio, and La Veta – rejected legalization of retail sales. But a recent article in the Denver Post argued that, while it is tempting to assume an urban-rural divide on marijuana acceptance, “the situation is not so black and white.”

Colorado also boasts dispensaries close to the borders of three states criminalizing recreational use. Towns with such outlets include  Rifle and Silt, along Interstate 70 not far from the Utah border, Dinosaur, also near Utah, and Sedgwick, near the Nebraska border. Dispensaries remain in the San Luis Valley towns of Trinidad and Antonio, although cross-border traffic  from New Mexico — where recreational marijuana was legalized last June — may have diminished.

Montana’s legal dispensaries opened this year, but as KTVH news reported, the county-by-county  votes on legalization in 2021 tended to divide rural and urban areas, though it is not a neat division. “Half of Montana’s 56 counties voted to legalize” recreational cannabis “and the other half voted against it – though the 28 “green” counties included more than  80 percent of the state’s population,” the radio station reported. 

As this year began, a total of $1.5 million in sales of both medicinal and recreational cannabis were reported in the first two days of legalization; the state had 380 dispensaries in 29 counties. 

One largely rural population, members of Native American tribes, are growing more interested in the cannabis business. But while the federal government doesn’t block states, cities, and counties from legalization, it has challenged tribal marijuana cultivation. After the Trump administration undid Obama-era policies shielding tribal projects from federal prosecutors, Federal agents stopped the organized marijuana growing of the Picuris Pueblo in New Mexico. It’s not clear if new state efforts to protect tribal projects will make federal agents back off.

In South Dakota, another state with very recent legalization, the Flandreau Santee Sioux tribe opened the Native Nations dispensary just under a year ago. All its products are of its own making, and the tribe regulates it and benefits from the taxes on sales. The managers are interested in showing other tribes how to create their own business.

Since Obama’s relaxation of cannabis enforcement in Indian country was reversed in 2018, a 2014 Justice Department guidance has held sway. It reaffirms that marijuana is illegal under federal law and suggests prosecutors prioritize cases to prevent distribution to minors and to prevent the use of sales revenue by criminal gangs. 

In March, New Mexico’s Sen. Martin Heinrich led a group of eight senators — six from the West — that asked the Justice Department to respect tribal sovereignty. “Tribal governments that have chosen to legalize cannabis have determined what is best for their members and residents on their land,” it said. “Investigating and prosecuting cannabis offenses with no other corresponding criminal activity is not a wise allocation of resources.”

Top photo: Oregon Department of Agriculture via Flickr