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'Bud & Breakfasts' try to keep high profits from going to pot

Still looking for plans for the 4th of July weekend? Never mind a bed and breakfast -- How about a “Bud and Breakfast?”

Marijuana-themed inns are sprouting all over Colorado like...well, weeds. Offering "wake and bake breakfast", "4:20 Happy Hour", and cannabis-infused massages, these lodges are just one of the many creative ways entrepreneurs in the Centennial State are capitalizing on the legal recreational marijuana market.

Other places like marijuana adult camps are more like resorts and “have everything down to even a wine and food pairing with a particular strain,” said Nick Colas, chief market strategist at Convergex, a brokerage services provider in New York.

Colorado is a popular July 4th destination with cooler weather, outdoor activities, and, of course, legal recreational marijuana. But profits from the state’s marijuana market are not as high as they used to be because of falling prices.

“Last year was the first year of the industry," said Colas. "It really came out of the starting blocks at full speed,”

His research found the average price of an eighth of an ounce of recreational cannabis dropped from a range between $50 and $70 to between $30 and $45 since last June.

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Nonetheless, it's still a huge money making market.

Based on the states' tax receipts, "the industry is going to do roughly $500 million in revenue this year,” Colas estimated, adding that pricing is in a “wait and see” mode.

"This is a wildly profitable business," he said. "So even if prices come down modestly as growers continue to grow more plants, there’s still going to be a lot of money left over for the store owners and growers at the end of the year.”

The big problem for the industry continues to be its inability to bank and make deposits like any other business. Many financial institutions are hesitant to deal with enterprises in the business, even if they are legal in Colorado. Using marijuana remains a federal offense.

“The cash stays as cash and is a big drain for store owners to hire the security and all the storage facilities to hold the physical cash until it can be reinvested in the business,” said Colas.

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