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Battle for Broomfield’s three marijuana retail licenses spurs accusations, lawsuit

A mad scramble is on in Broomfield to score a trio of coveted licenses to sell recreational marijuana, with 26 applicants jostling for a spot in a city that until now has banned all weed sales.

One established cannabis company is crying foul, charging that the lottery system Broomfield will use this month to award the licenses is essentially rigged to raise the odds for some contenders — and the city is doing nothing about it.

“They’re allowing various individuals to submit multiple applications into the lottery through various shell companies,” Jordan Factor, attorney for Terrapin Care Station, told The Denver Post. “We’re baffled.”

Terrapin Care Station filed suit against Broomfield and a number of the applicants last week, and is seeking a preliminary injunction to stop the city from running the Oct. 21 lottery until the dispute is resolved.

Terrapin points to Broomfield’s own rules, which state that “no person or entity shall apply for more than one license in any location in the city” and that no applicant “may apply for, or be an owner of, any other business entity applying for another license within the city.”

Yet, among the more than two dozen applicants are several using multiple versions of the same corporate name while at least three contenders are directly related to one another. Terrapin’s suit claims that a number of competitors share the same business address and are submitting the “same walk-up/drive-through documents, the same control plan for premises use prevention, the same disposal plan” across multiple applications.

“While the formal legal names of the entities through which they applied differ, the applications themselves clearly demonstrated that businesses and individuals created multiple entities and submitted applications through each of them,” the document reads.

“If you’re going to have a fair lottery, each entrant has to have one entry,” Factor said. “We have no idea why they are choosing to conduct their lottery in an unfair way.”

Broomfield spokeswoman Carolyn Romero said the city can’t comment on ongoing litigation, but she said the 26 applications “technically meet the language of the ordinance.”

“Based on the applications received, some related groups or individuals established separate legal entities and submitted applications that are operationally similar for the same location but under different owners,” she said.

The city’s marijuana selection committee will rigorously review each application before entering them into the lottery for a $4,000 license, Romero said.

Broomfield is an untapped market for marijuana entrepreneurs in Colorado, where sales set an annual record — $2.2 billion — in 2020. In January, statewide sales reached a staggering $10 billion since the legal market got off the ground in 2014.

Combine those lofty numbers with the fact that Broomfield was Colorado’s fastest-growing county in the last decade — now with approximately 75,000 residents — and it’s no wonder cannabis companies want in.

“You are talking about a huge metro Denver population,” Terrapin Care Station spokesman Peter Marcus said.

And two big cities near Broomfield — Arvada and Westminster — are marijuana dry towns, giving the three future Broomfield licensees a relatively unsaturated submarket in which to operate. And that, Marcus said, makes it critical that the process to determine the license winners be as fair as possible.

“Merit-based licensing is so important,” he said.

Terrapin currently has half a dozen stores in communities north and south of Broomfield, including Longmont, Boulder, Denver and Aurora.

One of the targets of Terrapin’s lawsuit is Yuma Way LLC, which has six pot dispensaries in Colorado and one in Michigan. CEO Rita Tsalyuk said she, her husband and her son each filed an application for a Broomfield license — at times using shared or consolidated information — but that each submission is a “separate individual business with separate owners.”

“We know each other, but we’re different individuals,” she said.

Broomfield’s applicant list shows filings under four Yuma names, including Yuma BRIT, Yuma BRKM and Yuma BRAT. Tsalyuk said Broomfield officials told her weeks ago that she was in compliance with city rules taking this approach.

“We cleared it about 10 times,” she said.

Communities across Colorado have taken different approaches to legalizing pot sales, with some running lotteries, others establishing a maximum number of stores and still others using distance buffers to limit locations. Many cities and towns in Colorado don’t allow sales at all.

Terrapin Care Station, a recreation cannabis ...

Eli Imadali, Special to The Denver Post

Terrapin Care Station, a recreation cannabis dispensary, has several locations in the Denver metro, including this store on Broadway in Denver on Friday, Oct. 1, 2021.