Oak Creek eyes annual-fee reduction for marijuana businesses

Oak Creek officials are considering a change to the town’s annual licensing fees for marijuana producers and retail businesses amid shifts in the state’s cannabis industry.

Since 2016, the town has charged an annual $5,910 licensing fee for all types of medical and retail marijuana businesses, in addition to a fee assessed per square foot of operational space on marijuana cultivators and manufacturers.

“A year ago, the board heard from some of the marijuana shop owners, in particular the cultivators of medical and recreational marijuana, questioning if the license fee could now be reduced because we have gotten through a lot of the headaches from when the marijuana licensing first came about,” Town Administrator David Torgler said.

Additionally, Torgler explained how a 2021 state law allowing outdoor marijuana cultivation has created competition for indoor cultivation facilities that require significantly more investment.

“It has created enormous competition in the sale of cultivated marijuana.”

Mayor Nilkki Knoebel noted that when the town first enacted its licensing-fee schedule in 2016, the cost for the town to review applications for marijuana licenses, “brought a lot of attorney fees, and what it cost for (Police Chief) Ralph Maher to go there, and the fire department to go there, and all of these costs that just aren’t there anymore.”

A survey of marijuana license fees in other Routt County municipalities shows Hayden assessing $3,500 for medical and retail marijuana businesses. Steamboat Springs assesses a $400 fee for medical licenses and $9,165 for retail licenses.

Craig assesses a $5,000 initial fee for medical retail licenses and a $4,500 fee for renewals but does not have medical cultivation license fees. On the retail side, Craig assesses a $5,000 initial fee and $4,500 for renewals for all types of marijuana businesses.

Town Board members and Mayor Knoebel earlier this month agreed to discuss the marijuana licensing fee topic in the New Year with a request for Torgler and his staff to provide information on how a fee reduction would affect the town’s general fund in 2024 and provide updated estimates on what it costs to issue a license.

Oak Creek is projected to earn roughly $48,000 in revenue in 2023 under the current licensing fee schedule, providing roughly 5.5% of the year’s general-fund revenues. Torgler said the town currently licenses six or seven marijuana businesses.

“If the Board wants to reduce (the fee) amount, it will obviously impact our general fund, but we can compensate for that by using our general funds balance,” Torgler said. “We are confident that we can hit the revenue projects unless something unexpected happens.”

The town administrator added that making a decision on reducing the licensing fees would be an urgent matter for the town to ensure those businesses whose licenses are up for renewal at the start of the year do not end up paying a different amount than those who are scheduled for later renewals.

“It is a high priority because the license renewals come up periodically throughout the year, and so we don’t want to miss anyone because we complete this update late,” Torgler said.