A backlash is growing in a state where marijuana has quickly become a $1 billion legal business.
For months, Paula McPheeters and a handful of like-minded volunteers have spent their weekends in grocery-store parking lots, even in 95° F heat. Sitting around a folding table draped with an American flag, they asked passing shoppers to sign a petition. Inevitably a few sign-wielding young protesters would show up to argue that McPheeters’s group was dead wrong. With the two sides often just yards away from each other, shouting matches erupted. “We’re peaceful people,” one woman yelled. “You’re drugged out,” countered an angry man. Threats and phone calls to police became the norm.
The wedge dividing the people of this small blue-collar city of Pueblo, Colo.? Legal marijuana.
Colorado gave the green light to recreational marijuana back in 2012, when it passed a law to make nonmedical pot sales legal starting Jan. 1, 2014. But now opposition is rising in communities across the state. Colorado has become a great social experiment, the results of which are still not clear. “The jury is still out as to whether this was a good idea,” says Colorado attorney general Cynthia Coffman.
What’s undeniable is this: Legal marijuana is in high demand in Colorado. Only three other states—Alaska, Washington, and Oregon—plus the District of Columbia currently permit recreational adult use of cannabis. (It’s legal for medical use in another 19 states.) Of that group, Colorado led the way in 2015 with $996.5 million in licensed pot sales—a 41.7% jump over 2014 and nearly three times the figure in Washington State. Recreational sales made up nearly two-thirds of the total.
Now, as citizen groups attempt to put the brakes on the growing industry, a heated debate has emerged about the drug’s societal impact. Doctors report a spike in pot-related emergency room visits—mostly due to people accidentally consuming too much of potent edible pot products. Police face new cartel-related drug operations. Parents worry about marijuana being sold near their homes and schools. And less affluent communities like Pueblo struggle with the unintended consequences of becoming home to this emerging and controversial industry.
Amendment 64 decriminalized marijuana statewide, but Colorado’s cities and counties still decide if the drug can be grown and sold locally. At least 70% of the municipalities in the state have banned commercial operations, either by popular vote or board decisions.
Many other communities have begun pushing back. Last fall, controversy arose in the small western Colorado town of Parachute when an antipot group attempted to recall members of the town council who had welcomed pot shops. (Voters defeated the recall 3 to 1.) Debate has since emerged in Aspen, Carbondale, Glenwood Springs, Grand Junction, Littleton, and Rifle over the number, location, smell, and mere existence of retail and cultivation facilities. Citizens in the San Luis Valley, in the southern part of the state, say their schools and social services have been overwhelmed by a flood of newcomers coming to grow cannabis on cheap land, despite limited water. And just this spring officials in Colorado Springs and Englewood opted to ban pot social clubs, which are akin to lounges in which people can legally smoke weed in public.
“I’m getting calls now from people who voted for legalization thinking it wouldn’t affect them,” says Kevin Sabet, co-founder of national antimarijuana legalization group Smart Approaches to Marijuana. “They’re surprised to see these are sophisticated businesses opening up next to their schools selling things like marijuana gummy bears. And they’re angry.”
Officials in Denver, which is home to one-third of the state’s cannabis market, moved this spring to rein in pot capitalism. The city passed an ordinance capping the number of dispensaries and grow facilities at the present level. But discontent continues to fester in poorer communities, where many of these operations inevitably land. “We were told that legalization would take drugs out of our community,” says Candi CdeBaca, a community activist who grew up in the mostly Latino and poor Denver neighborhood of Elyria-Swansea. “The drugs stayed—and the drug dealers changed.”
CdeBaca points to, for example, an increase in school suspensions related to marijuana. And unlike the meatpacking plants and refineries that once dotted the area, CdeBaca says, this new industry hasn’t brought her neighbors jobs. Instead, the money is flowing to outsiders.
“It’s the Wild West, and the well-funded marijuana industry has dominated the regulatory process, and people are finally speaking up,” says Frank McNulty, a lawyer for Healthy Colorado, which plans to put a measure on the November state ballot—an easier task in Colorado than in many other states—that would limit the active drug ingredient THC in cannabis candy and concentrates and require health warnings on packaging. The marijuana industry has objected to the proposal, and the issue is now before the Colorado Supreme Court.
Cannabis backers bristle at the pushback, calling it a back-door effort by prohibitionists who simply disagree with the legalization of the drug. Mason Tvert, director of the Marijuana Policy Project, which leads legalization efforts nationwide, cites studies showing minimal impact on society and no harm to Colorado’s growing economy. Says Tvert: “Anyone who says it’s caused an increase in this or that [problem] is full of shit.”
What plays out in Colorado may influence what happens across the nation. Pot remains illegal under federal law. But legalization of recreational marijuana for adult use will be on the November ballot in California, Massachusetts, and Nevada, and likely in Arizona and Maine too. Voters in Arkansas, Florida, and Missouri will be voting on whether to approve it for medical use. The growth of the cannabis industry has begun to attract the interest of big companies. Microsoft announced in mid-June that it has developed a software product to help states track marijuana growth and sales.
In a recent appearance on CNBC, Colorado Gov. John Hickenlooper offered this advice to other states considering legalization: “I would suggest wait a year or two and see how it goes.”
Nowhere has the impact of legalization in Colorado been felt more powerfully than in the small community of Pueblo, located 114 miles south of Denver. At least 20 dispensaries and 100 growing facilities with 4 million square feet of cultivation now dot the highways near this town of 160,000, which has aggressively embraced the budding industry, making it the top cultivation spot in the state. “We’re sort of like the Napa Valley of cannabis,” says Pueblo County commissioner Sal Pace.
Pueblo has struggled for decades, ever since the 1983 recession, when most of the jobs at the local CF&I steel mill disappeared. Today the community is dealing with failing schools, rising gang activity, and increased crime. With a total of 26 homicides in 2014 and 2015, Pueblo earned the highest per capita murder rate in the state.
When the county’s three commissioners approved licenses for marijuana operations in 2014, Pueblo’s problems got worse, argues McPheeters, a Pueblo mom and community-college budget manager who is the driving force behind a group called Citizens for a Healthy Pueblo. “The promises of marijuana have not come true,” she argues. After weeks of contentious petition drives, McPheeters’s group believes it has gathered enough signatures to put a measure on the November ballot to revoke all the recreational marijuana licenses in the county. Marijuana industry groups, however, have sued, arguing that the number of signatures falls short under a new state law. A judge is set to decide in July.
Groups serving the poor in Pueblo report a flood of homeless people arriving from other states. Local homeless shelter Posada, for instance, has witnessed a 47% jump in demand since 2014, including 1,200 people who reported to shelter workers that they came to smoke pot or get jobs in the industry, says Posada’s director, Anne Stattelman. She says her funding is tapped out. “It’s changed the culture of our community,” she says.
The city’s three hospitals officially threw their support behind the antipot ballot measure after reporting a 50% spike in marijuana-related ER visits among youth under age 18 and more newborns with marijuana in their system. A number of local businesses are also backing the ban after struggling to find sober employees.
Commissioner Pace, in particular, has emerged as a target of criticism for citizens hoping to rid Pueblo of legal marijuana.
As a state legislator he drafted early pot regulations and then as commissioner led local efforts to launch the industry in Pueblo County after 56% of voters in the city approved Amendment 64. “It will take time to change some people’s opinions that pot is bad,” he says.
The pro-marijuana contingent in Pueblo say critics are misplacing blame for the area’s problems. They argue that the pot business has generated jobs and taxes as well as a college scholarship and a local playground. Revoking the licenses of cannabis shops, they say, will only fuel the black market. Says Chris Jones, an employee at a local dispensary clad in a Bob Marley T-shirt: “We already voted on this one time. Let it stand.”
Both antipot groups and marijuana advocates tend to cherry-pick data to support their claims. However, Larry Wolk, chief medical officer for the state department of health, says it’s too early to draw conclusions about the true social and health impacts on Colorado.
Marijuana-related hospitalizations have tripled in Colorado since legalization, and emergency room visits have climbed 30%, according to a state report released this spring. And pot-related calls to poison control have jumped from 20 to 100 a year, says Wolk. Drug-related school suspensions have also climbed. Yet teen usage hasn’t shot up dramatically, and crime has remained fairly stable. Marijuana-related DUIs increased 3%, and traffic fatalities involving THC increased 44%—but the absolute numbers were small in comparison to those that involved alcohol, according to the report.
The data is tricky, Wolk says, because Colorado didn’t track these numbers the same way prior to legalization. Are there more suspensions, he asks, because teachers are more aware? Are doctors now asking about marijuana at hospitals when they didn’t previously? “It may be a year or two before we’ll really have good answers,” says Wolk.
Marijuana legalization has delivered some surprises statewide to regulators, police, and citizens alike. For instance, many people thought legalization would quash the black market for the drug. “That’s been a fallacy,” says Coffman, Colorado’s attorney general. Legalization of cannabis stores and grow operations has drawn more drug-related crime, she says, including cartels that grow the plant in Colorado and then illegally move it and sell it out of state. “They use the law,” she says, “to break the law.”
Since 2013, law officials say, they have busted 88 drug cartel operations across the state, and just last year law-enforcement made a bust that recovered $12 million in illegal marijuana. Adds Coffman: “That’s crime we hadn’t previously had in Colorado.”
The state legislature is trying to play catch-up. Last year it passed 81 bills enacting changes to drug laws, prompting state law-enforcement groups to request a two-year moratorium on new laws so that they could have time to adjust. Lawsuits are also flying—including one from Colorado’s neighbors. Nebraska and Oklahoma have sued Colorado, claiming that it is violating federal drug statutes and contributing to the illegal drug trade in their states.
Another surprise to many Coloradans is that a promised huge tax windfall to benefit schools hasn’t materialized. Of the $135 million generated in 2015, for example, $20 million goes to regulatory and public-safety efforts related to cannabis, $40 million funds small rural school construction projects, and the rest goes to youth drug prevention and abuse programs. That’s a drop in the bucket for a $6.2 billion education budget.
A third revelation to parents in particular is the potency of today’s pot, says Diane Carlson, a mother of five who started Smart Colorado to protect teens from the drug. The weed, edibles, and concentrates sold in stores have THC levels that average 62% and sometimes as high as 95%, according to a 2015 state report. That compares with levels of 2% to 8% in the 1990s. “We passed this thinking it was benign, that it was the stuff from college,” says Carlson. “The industry is just moving too fast, and we’re playing catch-up while the industry is innovating.”
Sitting in a Denver café, Carlson compares marketing by the marijuana industry to that of Big Tobacco in the 1950s, portraying the product as a harmless cure-all for everything from ADHD to anxiety. Yet research shows that marijuana is harmful to the developing brain. She supports Healthy Colorado’s ballot initiative to limit the active drug ingredient in THC in marijuana edibles, candy, and concentrates to 17%.
The backlash worries Mike Stettler, the founder of Marisol, one of Pueblo County’s largest dispensaries, which has been endorsed by comedian and weed smokers’ icon Tommy Chong. The onetime construction worker fears that Pueblo’s pushback against pot will shut down his entire recreational dispensary and its 10-acre grow operation, which generated $4.5 million in revenue last year. “I’m hoping and praying this thing doesn’t go through, but you don’t know,” he says.
He says he has invested millions in his business and has more plans for growth. In May he flew to Las Vegas to discuss a partnership with famed guitarist Carlos Santana to create a Santana brand of weed called Smooth, named after the artist’s hit song.
Inside, Marisol is a veritable wonderland for cannabis enthusiasts. Customers can consult a “budtender” for advice on the right weed for energy, sleep, or relaxation. They can also choose from a seemingly boundless variety of marijuana merchandise—from vegan “dabbing” concentrates for water pipes to pot-infused bottled beverages to peanut-butter-and-jelly-flavored THC candies. There are even liquid products designed to alleviate marijuana overdoses.
Giving a tour of the store, employee Santana O’Dell, clad in green tights with tiny marijuana leaves on them, sighs as a beatific smile appears on her face. “This is freedom,” she says.
For a growing number of her neighbors, however, legalized marijuana is starting to feel like a really bad high.
A version of this article appears in the July 1, 2016 issue of Fortune.