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Trending: Could Denver do the Federal Government's bidding in war on marijuana?

Last updated: 04:34 13 Apr 2016 AEST, First published: 23:34 12 Apr 2016 AEST

Will Denver remain a green field for Marijuana?
Will Denver remain a green field for Marijuana?

We could be just a week away from discovering whether the City of Denver in Colorado - one of the pioneers of legalising marijuana in the United States - is about to vote to cap the drug's availability.

Denver City Council will debate a proposal aimed at capping the number of marijuana shops and grow houses allowed within the city and a vote could come as soon as April 18.

But the effects of such a vote, the first serious retardation in the progress of the legal manufacture of marijuana for medicinal and recreational use in the United States, could be wide-ranging.

There are plenty of federal-level law enforcers looking anxiously at curbing the drug, and a new US president after the November elections could be keen on enforcing federal drug laws and upend the industry.

For now, the Drug Enforcement Administration classifies marijuana as a Schedule 1 illegal drug, a category that also includes narcotics like heroin. Yet the US Justice Department under President Obama has largely refrained from enforcing current federal laws, allowing states to proceed with legalisation measures.

If the marijuana industry's expansion has been put on hold by the US presidential elections, it is about to be tested in the second quarter of this year.

The ordinance would call for new rules for issuing retail marijuana cultivation and sales licences. It would prohibit the issue of new medical marijuana cultivation and sales licenses.

Pro-cappers say it would allow some new businesses to get into the industry without increasing the number of locations. It would offer more protection to low-income neighborhoods where the smell of marijuana is an issue. The environmental factor is one which is known to weigh heavily on lawmakers and could persuade them to act.

A group called Smart Colorado believes children are at risk and that 22.5% of youths are taking marijuana.

Those who are against the cap, or simply not in favour of heavier regulation per se, reckon the measures won't stop existing businesses from coming up with ways to expand.

At present, Denver approves seven different kinds of licences for various retail and medical activities involving marijuana and has been doing so since January 2014.

To obtain a retail marijuana licence "In Denver, only existing medical marijuana centers, manufacturers and cultivators that were operating in good standing as of Oct. 1, 2013 can apply for a retail license before Jan. 1, 2016. These facilities can convert to a retail license or add a retail license to their existing medical marijuana license," is how the official Colorado website explains the process.

And transforming a medical licence into a retail licence, which has been a popular route, must be licensed both by the city of Denver and the state of Colorado.

But events in Denver will be closely watched across the USA. A total of 22 US states prohibit marijuana in any form.

But among states that do permit some form of it, Coloradio is one of the top states by consumption. According to LiveScience.com, in 2014 some 61.5% of18-60 year olds had ever smoked "pot". Another legal pioneer, Washington state, was higher at 63.2%, and perhaps surprisingly, Alaska topped the bill with 64.2%.

Bloomberg Intelligence identified 55 public companies whose business is based largely or completely on legal marijuana. So the effects could be huge. In mid-2014 the market capitalisation of the marijuana industry in the USA peaked at $7bn. With the looming elections in November that has stabilised at a more conservative $3bn.

The largest pharma and research group in this field in the US, is Arena Pharmaceuticals (NASDAQ:ARNA) whose market cap is north of $1bn. The largest producer by market cap is FV Pharma International (NASDAQ:FVPI), followed by Canadian Cannabis (OTCMKTS:CCAN). The biggest consumer by marketcap is CannaVest (OTCMKTS:CANV).  Among real estate groups who provide physical locations Indie Growers Association (OTCMKTS:UPOT) is the largest.

But for Colorado, and Denver in particular, any capping of the grass-based drug will be seen as a reversal of hard-won victories. Only four states - Alaska, Oregan, Washington and Colorado - have fully-legalised marijuana. But another 25 have some level of approval for marijuana.

Colorado is among the most popular destinations for companies seeking to provide services related to marijuana, so the vote, if it comes, will be a game-changer.

RISERS but no FALLERS

Arena Pharmaceuticals (NASDAQ:ARNA) shares up 4.62% at $1.92

FV Pharma International (NASDAQ:FVPI) unchanged at $0.05

CannaVest Corp (OTCMKTS:CANV) shares up 12.4% at $0.54

Indie Growers Association (OTCMKTS:UPOT) unchanged at $0.41

Canadian Cannabis Corp (OTCMKTS:CCAN) unchanged at $0.78.

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