When Colorado became one of the first states to legalize recreational marijuana, a community called Pueblo stepped forward hoping to become the 'Napa Valley of Cannabis'. WSJ’s Julie Wernau visited the town to explore the cannabis boom that promised new jobs and tax revenue, and found an industry that had gone bust, with local residents struggling to find a way forward. Jessica Mendoza hosts. Further Listening: -The Highs and Lows of Diversifying the Cannabis Industry Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What was Pueblo’s vision for becoming the 'Napa Valley of Cannabis'?
Karen Randall lives in Pueblo, Colorado, one of the first cities in the country to develop a legal marijuana industry.
We're in cannabis country here. I'll show you the greenhouses over there you can see.
Karen took our colleague Julie Wernow on a tour of Pueblo late last year. As they drove around, they spotted signs of the cannabis industry everywhere.
I mean, that looks like a giant sort of like industrial warehouse-sized building. Yeah, exactly.
I guess I'm just surprised how packed together it all is. And you can smell it. Can you smell the pot? Oh, yeah. Yeah, right.
That signature smell was hard to miss. And yet, many of the marijuana greenhouses and dispensaries that Julie saw seemed to be shuttered.
Well, it looks like a lot of abandoned businesses. You see anything in there? It looks empty, right? Yeah. So this is a big pot place. Wow. Yeah. A lot of these are closed. Right here is a dispensary. So this is the second one you've seen. It's not like, I'm not seeing like big full parking lots. No, I never see cars there.
Pueblo was a city that dreamed of being a marijuana hotspot. And it went all in on Colorado's growing legalized pot industry. Julie went there to see how it was faring a decade later.
Pueblo was a place that was on track to be what they said was the Napa Valley of cannabis. And then everything went wrong. When I showed up there, it was definitely not that. This was a place full of failed businesses. So what would you say happened to Pueblo?
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Chapter 2: How did the cannabis boom initially impact Pueblo?
The idea was that embracing the legal cannabis industry could bring new jobs, tourism, and tax revenue to Pueblo. And at first, it seemed like that's exactly what was going to happen.
Leading up to the first day of marijuana sales, people literally, like, packed up everything they owned, got in their vehicles, and just drove to Colorado with no plans. This is people from all over the country? People from all over the country.
One local newspaper reported that the day after legalization, 50 people were camped out in front of one of the first weed shops in Pueblo, waiting for the doors to open. And in the first month of legalization, the two licensed shops in Pueblo County rang up a combined $1 million in sales. That amounted to $56,000 in taxes for the county. Pueblo couldn't get more shops licensed fast enough.
People are comparing it to, they're saying it's the new Amsterdam. One group that does have a cannabis business there told me, you know, that there was so much demand to get one of these licenses that people would like rush to the steps of the county building and try to get there first so that they would get the best spot, you know.
One of the places had like Girl Scouts selling cookies in the parking lot. There were food trucks. I mean, it really was like a huge, exciting moment for the city and the county.
One local joint that sprung up during that exciting moment was called Sticky Icky's. In 2016, the owners set up shop on a popular route from the city to a local lake, which brought a lot of business in the summertime.
There's like a doorbell that goes off when you walk in. Daniel Swick was the manager there and he, you know, welcomed us in.
This is the first point of entry. Once we know that their IDs are verified and not expired or underage, then they're able to go to the fun part.
And then you sort of are let into this beautiful back room.
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Chapter 3: What was the experience like inside a Pueblo cannabis dispensary?
I mean, I can see why businesses didn't love that.
There was definitely, you know, some lobbying on behalf of some of the local businesses saying, you know, these taxes are too high and that's why all these businesses are failing. And if you, you know, were to remove this tax, then we would actually be able to thrive and we would be able to compete.
And some sellers were skipping the license process and going through the black market instead.
One of the unexpected things for Pueblo was that everybody sort of thought, well, if we legalize this stuff, the illegal stuff will go away, right? I mean, why would they bother? Not only did that not happen, but the law enforcement there said that it actually got worse.
And one of the reasons was that when there's all this legal marijuana around, it's a little bit easier for the illegal marijuana to hide. Why was there so much illegal dealing? Well, what people didn't anticipate is that if you are in the illegal marijuana market, you can charge less. I mean, it's a really simple economic argument, right?
If you're not paying for sales tax, excise tax, marijuana sales tax, county tax, city tax, state tax, you can charge way less than the legal competition. And so they continued to thrive under the legal regime.
At the same time, this was around 2020, other states started legalizing marijuana, creating even more competition. What did that mean for businesses like Sticky Icky's?
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Chapter 4: Why did the cannabis industry in Pueblo start to decline?
They told me that for a long time, they were pulling in something like $20,000 a day in sales. And since then, it's plummeted to about $2,500 a day in sales. They've also shed some employees. And so one of the things that happened is Sticky Icky's owner, in the time that I was talking to him, decided to pull out his stake
in that enterprise because he had another business he'd started in New Mexico. And in New Mexico, he said the taxes were about half what they were in Colorado.
As the marijuana industry in Pueblo has struggled, the county's tax revenue has plunged. Dispensaries have closed down, going from more than 200 businesses in 2017 to just 45.
The profitability has dropped dramatically for the businesses. So only like a quarter of these businesses are even profitable. So the trends are not going in the right direction.
And as Julie spent more time in Pueblo, she heard from residents who felt strongly that the failure of the marijuana industry was hurting their town. That's next.
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Pueblo's marijuana business boomed and quickly went bust. Now, local law enforcement, along with some city officials and residents, say the experiment wasn't worth it. One of the lingering problems has to do with the people who came to Pueblo from out of town, drawn by the industry's promise. While some did start their own shops, that wasn't the case for everyone.
Generally, what was happening is there were a lot of people who had some kind of, you know, criminal record, something that was making it difficult for them to find a job. And they also loved cannabis.
And so when they heard about how there was going to be all these jobs, you know, they sort of imagined themselves working in the marijuana fields or at a dispensary and that this would be this kind of golden age where they'd be able to find something to support their families.
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Chapter 5: How did competition and taxes affect Pueblo’s cannabis businesses?
Chapter 6: What is the current state of Pueblo’s cannabis industry?
Well, it looks like a lot of abandoned businesses. You see anything in there? It looks empty, right? Yeah. So this is a big pot place. Wow. Yeah. A lot of these are closed. Right here is a dispensary. So this is the second one you've seen. It's not like, I'm not seeing like big full parking lots. No, I never see cars there.
Pueblo was a city that dreamed of being a marijuana hotspot. And it went all in on Colorado's growing legalized pot industry. Julie went there to see how it was faring a decade later.
Pueblo was a place that was on track to be what they said was the Napa Valley of cannabis. And then everything went wrong. When I showed up there, it was definitely not that. This was a place full of failed businesses. So what would you say happened to Pueblo?
The message I got from people in the town, and this is on both sides, is there are people who are in the marijuana business and people who are against the marijuana business, is this is not what we signed up for. This is not working out the way that I was promised.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, April 18th. Coming up on the show, how one Colorado town's cannabis dreams went up in smoke. Pueblo is a city two hours south of Denver, with a population of just over 100,000 people.
When recreational weed became legal in Colorado in 2014, Pueblo saw an opportunity to establish itself at the center of the cannabis boom.
Pueblo did a really good job of convincing the rest of the country that they were the destination for weed.
The county commissioner at the time called it the Napa Valley of Cannabis. Advocates like him imagined Pueblo would draw marijuana lovers from around the country. Why was this so important to Pueblo?
Pueblo was a place full of hardworking blue collar workers who just couldn't catch a break. They had been this huge steel town. They were shedding those jobs for years. There was a local slaughterhouse that also closed up shop. And so they just kept trying to get back on their feet and were struggling. And this new industry sort of showed up
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