Waiver will give the dispensary time to come into compliance with Steamboat's unigue ordinance, which was put in place in 2013 to encourage vertical integration and create more jobs.
Tumbleweed Dispensary will have one year to start sourcing half of its marijuana from within the city limits of Steamboat Springs, which would bring them into compliance with the city’s decade-old local sourcing rule — a rule they appear to have flouted for years.
The rule has been in place since 2013, but initially required that 70% of a dispensary’s marijuana sold in Steamboat be grown within the city limits, including cannabis used to make edibles, oils and other products. In 2019, council reduced that to 50%.
But the city had not been checking if dispensaries were following this ordinance until 2023, when Tumbleweed indicated that it was closing the last of its grow operations in town. A staff report included in Council’s packet for Tuesday says the city did not receive complete reports from Tumbleweed until October of last year, after the city issued a notice of violation.
Those reports indicated that Tumbleweed had not met the city’s sourcing requirements, which put the dispensary’s license for 2025 in jeopardy. City Council does not have the authority to renew the license itself, but opted to grant a one-year waiver to the sourcing rule to allow Tumbleweed to get into compliance and for city staff to renew their license for this year. Council voted 7-0 to grant the one-year waiver.
“As an employer who operates in a highly regulated environment, it is your responsibility to comply with it. It is akin to blaming the IRS for not filing your own taxes,” said Council member Bryan Swintek. “We should give them a hard, one year deadline. That’s a year for you to come into compliance and if not, personally, I would not support any more waivers.”
Steamboat’s ordinance was put in place when Colorado voters legalized marijuana for recreational use in 2013 with the idea that it would promote vertical integration locally. The idea of the ordinance was to require dispensaries to contribute to the local economy in a broader way by providing more local jobs.
Tumbleweed owners say they have tried to understand and comply with the ordinance since they purchased the business in 2021, but that city staff failed to inform them or conduct due diligence to understand if they were following the ordinance. While Tumbleweed didn’t own operations until 2021, they had been managing operations since at least 2019.
“I appreciate that there’s lack of our own city not doing compliance, and there’s a lot of fingers to point, right, but the rules are black and white,” said Council member Michael Buccino. “What they have in essence been doing for the last couple of years is bringing product from out of town. … They have been out of compliance whether someone asked for it or not for quite a long time.”
Waivers to this rule are allowed if an operation has experienced hardship in meeting it. Tumbleweed cited the loss of leases to grow cannabis in town as that hardship. Since 2019, Tumbleweed or their previous owners, Rocky Mountain Remedies, has closed more than a dozen grow operations.
“It was only upon the shutting down of our last grow for us that, remarkably, one of the competitors probably made the city aware of the ordinance,” said Tumbleweed co-owner Mark Smith, referring to the two other dispensaries in town, Billo Premium Cannabis and Golden Leaf Dispensary. “Maybe they met them, maybe they didn’t, but they were never asked to give their reporting requirements.”
Without the waiver, Tumbleweed’s license to sell marijuana in Steamboat would likely be revoked, resulting in the loss of 18 local jobs that provide health insurance benefits. Tumbleweed has seven dispensary locations across Colorado.
“These employees along with their families rely on the stable jobs we provide,” said Sherri Marzario, who co-owns Tumbleweed and teared up as she spoke of her employees. “Non-renewal of our license would leave these employees without jobs or healthcare, placing them and their families in an extremely difficult position.”
Tumbleweed says their payroll provides more than $780,000 in local wages each year, which would equate to roughly $44,000 a year per employee. That means Tumbleweed employees on average are making under 55% of Routt County’s Area Median Income of $83,400 — an income level that could qualify them for subsidized, low-income housing.
Two employees of Tumbleweed spoke during public comment urging council to grant the waiver and protect their jobs. Both employees said they lived on the Front Range. Owners Smith and Mazario said they live in Edwards.
Tumbleweed owners pushed City Council to consider removing the sourcing requirements altogether, which are scheduled to sunset in 2027. It appears only Steamboat Springs has such an ordinance in Colorado. Council will have the opportunity to extend the ordinance prior to the sunset.
The rational given to end the ordinance was that there is no location for Tumbleweed to grow in Steamboat anymore, saying they hired a broker to look for space already. Owners of competitor Billo say they believe they could.
“Seems like a little bit a of a stretch to me. Just with brief research, we have been able to find some other opportunities, so to me it feels like there has not been a lot of effort put into it,” said Charlie Peddie, Billo’s chief operating officer. “I do just find this vertical integration law very, very important to the community because it allows us to provide jobs, health insurance to a number of different individuals throughout the city and we pride ourselves on that.”
While city staff did not recommend council grant the waiver, Peddie said he did support giving Tumbleweed time to come into compliance. Another option for Tumbleweed to get into compliance would be to purchase cannabis grown locally from their competitors.
One potential middle ground change to the ordinance would be to extend the ordinance to allow dispensaries to source marijuana from all of Routt County, rather than just within city limits. Tumbleweed’s lawyer, Nadav Aschner, said if the ordinance was changed in this way, the dispensary would be able to comply.
Council considered reviewing the ordinance this year, while also noting that they just set their priorities for 2025 last month and that amending this ordinance was not one of them.
“I personally think vertical integration should be extended beyond the 2027 deadline because I think it is great for the community,” said John Peddie, a majority owner of Billo. “We pay our people very well.”