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Council hears business and staff case to extend Steamboat Springs' local-sourcing requirement for retail marijuana
Summary
City staff outlined the history and legal context of Steamboat Springs' 50% local sourcing rule for retail marijuana and presented options including extension, phased reduction, or geographic expansion; local growers and counsel urged keeping the requirement to preserve jobs and local investments.
Steamboat Springs City Council on July 14 heard a staff review and public comment on whether to extend the city's local sourcing requirement for retail marijuana, which currently requires that 50% of product sold by local retailers be produced in Steamboat Springs.
City attorney staff member Dan summarized the ordinance's history and rationale, saying this is "a work session on the city's local sourcing requirement, which applies to, the city's retail marijuana licensees," and reminding council that the rule dates to 2013 and was tied to earlier state licensing limits.
The requirement was created as part of a local regulatory package that included a cap on licenses (three) and an early vertical-integration approach. Dan told council the 50% rule was adopted in 2019 to help protect local businesses and to preserve the economic and accountability benefits of local cultivation. He said the market has changed: more states now allow recreational sales and wholesale prices have fallen, and state regulators have expressed concerns about diversion and noncompliance at the cultivation level.
Local business owners and licensee representatives told council the requirement supports jobs and community ties. "Currently, we have 21 full time employees at our cultivation facility and . . . The aggregate payroll for that is about $1,100,000 a year," said Charlie Petty, who identified himself as a principal owner of Bilo. John Petty of Gatsby Holdings and Emily Kelly, an attorney for Golden Leaf, said their operations provide local employment, employee benefits and community support and argued that removing the requirement would put local cultivation and related jobs at risk.
Other comments raised practical and safety questions. An online participant asked whether the city's local rule adds consumer-protection testing beyond state oversight; staff answered that the city does not maintain additional contaminant testing beyond state requirements but that local sourcing does create more local accountability and notification obligations if a recall or health advisory occurs.
Council members focused on feasibility and timing. A number of councilors said the program appears to be "working" for Steamboat Springs and endorsed giving staff direction to draft an ordinance that could extend the requirement, potentially indefinitely, or phase it out gradually to protect existing licensees. Staff said the council could also choose to expand the geographic sourcing boundary to Routt County (subject to county permitting) and that an ordinance would need a date or timeframe included if council wants a sunset or phased reduction.
Dan said city attorneys could draft options for phased reductions, percentage-based phase-outs or a geographic expansion, and recommended the council act before the end of the year to allow for ordinance reading and scheduling. Council gave staff direction to prepare an ordinance for council consideration and to coordinate with county partners if geographic expansion is desired.
Next steps: staff will draft ordinance language reflecting the council's direction and return with options and legal analysis for first reading at a future regular meeting; no final vote was taken at the work session.
