We're a legal business, we're paying expenses - yet we can't claim them," he explains.īecause traditional banks refuse to work with cannabis companies out of fear of federal drug charges, companies such as Colorado Harvest have a much harder time securing funding, both for expansion and cash flow, according to Ruden: "Starbuds has been self-funded, but if we didn't have the constraints of not being able to borrow money or the IRS's 280E, we'd be growing faster." "It's being weaponized against the legal marijuana industry. He calls 280E "very difficult" for anyone with a licensed pot business. "The City of Aurora had fully vetted me and Tim when issuing our original licenses to us, and I had a very good track record," Ruden says.Īlthough looking forward to the new store, Ruden says it's unfortunate that it became available the way it did. But for the sale to happen, he and Cullen had to gain approval from the Marijuana Enforcement Division and Aurora officials. The new Starbuds should be open in March, according to Ruden there are plans to make it the brand's flagship location. Ruden says his past dealings with Organa Brands, which Cullen co-owns, and its subsidiary company, O.PenVape, had already created a relationship of respect between the two. We wanted to do something together and make it a Starbuds." "We noticed it hadn't been moving forward, so I contacted Tim, and he told me what was going on. "I always thought that was a spectacular location," he says. Co-owner Brian Ruden was excited at the opportunity to expand the company's footprint in Aurora, but sympathizes with Cullen's situation. The Arapahoe dispensary will be the second Starbuds in Aurora and the company's third new store since June 2017, with other locations recently opening in Commerce City and Niwot. I think everyone's kind of stuck holding the cards they were dealt, and that's where we are right now," Cullen says. "The Denver market is as saturated as it's ever been. "There are no more Aurora licenses, so I felt like we had to sell a golden goose. I feel like people in general and the legislature don't have a good understanding of how bad this is."Īurora capped its dispensary licenses at 24, and Denver currently has a moratorium on any new pot shops, so Colorado Harvest is maintaining its three stores as it looks for opportunities in the metro area and beyond. "We were going to have to part with something, and it was easier to sell a piece of dirt than stores that were up and running," he explains. Cullen says a 280E audit of Colorado Harvest's earnings in the taxable year of 2013 to 2014 cost the company nearly $1 million, forcing him to decide which assets to part with. Selling the spot was a bitter pill to swallow for Colorado Harvest CEO Tim Cullen, who says the company only parted ways with the license and property because of an audit from the IRS under a tax code that forces some pot business owners to pay tax rates of up to 70 and 80 percent on earnings.įederal tax code 280E, a term that cannabis business owners can't wait to stop hearing, was written in 1982 to stop drug dealers from buying expensive possessions with cash and writing them off, but now it's wreaking havoc on the coffers of legal pot businesses. The location would've been Colorado Harvest's fourth in the metro area and its second in Aurora, but now it will be the eleventh store under the Starbuds umbrella. Colorado Harvest Company received a retail dispensary license from the City of Aurora in 2015, one of only 24 available citywide, but had to sell it in 2017 to another familiar dispensary chain: Starbuds. There will be a new dispensary at 14655 East Arapahoe Road in Aurora this spring, but it won't be opened by the company that held the license for over two years.
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