Inside Denver’s Struggles to Diversify Its $700M Marijuana Market

Ari Cohen was set up for success in Denver’s trailblazing weed market.

The New Jersey native had a successful career in the food and hospitality industry in New York City. He parlayed that experience into running operations for a multi-state marijuana edibles brand after moving to Colorado more than five years ago. And Denver is home to one of the most mature marijuana markets in the world, with $689 million in sales last year.

But less than a year after Cohen’s business — Doobba — made the city’s first legal cannabis delivery, he shut it down.

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As weed legalization spreads across the country, white-owned cannabis companies are overwhelmingly the ones raking in billions of dollars a year selling a drug that disproportionately landed people of color behind bars. To counter the trend, cities like Oakland, Calif., and Cambridge, Mass. have launched initiatives to diversify their marijuana industries and offer business opportunities for those stung by the war on drugs — only to find themselves struggling to get those programs off the ground.

When Denver launched its social equity program last year, setting aside licenses for delivery operators and cannabis lounges where people could consume, it sought to reimagine its marijuana industry. Cohen, who is white, but qualified thanks to a decades-old marijuana conviction, jumped at the opportunity to start his own business.

Yet, nearly a year in, Doobba was doing fewer deliveries than his worst-case projections. And the company’s demise despite Cohen’s know-how and connections made its failure unnerving to other social equity applicants.

“[Cohen] had the business chops. … He had more dispensary partners than me,” said Michael Diaz-Rivera, a social equity applicant who operates Denver-based firm Better Days Delivery. “Am I just throwing money into a bottomless pit because I’ve been sold this dream of generational wealth that might already be gone?”

The earliest states to legalize weed — including Colorado — typically did so with ballot measures that lacked provisions designed to help people with cannabis charges into the industry. After seeing large, white-owned corporations crowd out small operators already struggling to compete with thriving illicit markets, many governments and civil rights activists are trying to repair the harms of marijuana enforcement.

Oakland pioneered the idea of building diversity into the marijuana industry when the city launched the nation’s first social equity licensing program for cannabis in 2017. Since then, states like Massachusetts, Illinois and New York have moved to put the concept at the forefront of their legalization efforts. And on Capitol Hill, Senate Majority Leader Chuck Schumer has introduced a weed legalization measure coupled with several equity measures, including funding for states to develop social equity programs.

Still, despite its lengthy experience regulating marijuana, Denver’s social equity program is faltering: weed deliveries account for less than one half of 1 percent of all marijuana sales in Denver. The overwhelming majority of the city’s more than 200 cannabis shops have also shunned the opportunity to partner with social equity businesses to do weed deliveries.

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Regulators in Denver are also hoping to help social equity applicants with technical assistance and grants.

The city is partnering with the Color of Cannabis, a Denver-based education company, to run the program for social equity licensees. The organization is led by Sarah Woodson, who runs her own social equity delivery business in nearby Aurora.

Color of Cannabis is running a 10-week program that includes sessions on the regulatory structure of the industry, how to use the seed-to-sale tracking software METRC and advice on navigating legal and funding issues unique to marijuana.

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The state also recently gave out half a million dollars in grants to help fund social equity applicants. But even the most well-intentioned assistance from regulators can’t help overcome structural challenges beyond the city’s control, entrepreneurs said.

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Denver’s marijuana regulator will soon introduce legislation to the city council designed to address some of the issues hampering the program. The measure would bar dispensaries from ferrying cannabis themselves entirely and slash licensing fees for setting up delivery businesses.

And while existing businesses have proved reluctant to work with social equity delivery services, some of those applicants have gotten off the ground thanks to interest from existing operators and the Color of Cannabis program.

Desiree Duran, a social equity applicant who received a license to do deliveries, was demoralized when she kept getting rejected by dispensaries she sought partnerships with.

Duran decided to pivot, inspired by her cousin who was already making infused cannabis products at home for her husband’s medical condition. She was inspired by the sweets of her childhood — Mexican pastries called pan dulce.

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