‘An emotionally-challenging decision’: Tabernash IgadI closes its doors

In 2015, 20 people came together with a shared vision to start a vertically integrated cannabis business in Tabernash. It would feature one of the nation’s largest observable cannabis grows, which remained so until recently.

Nearly 10 years later, the groundbreaking store has closed its doors. IgadI has nine other Colorado locations (including Granby), but Tabernash served as its flagship location. David Michel, one of the 20 founders, is the company’s general counsel.

IgadI’s says it was an emotional decision to close, but the correct one

Since 2015, IgadI has leased the land on which it sits from a landowner. It encompasses 11 acres along U.S. Highway 40. IgadI’s building included both retail and grow operations. A perfect storm combined to cause the closure.

“It just didn’t make a lot of sense to continue to operate up there,” said Michel. “Which is really sad, because I think that facility was the best thing I’ve done as a businessman.”

As a vertically integrated business, the Tabernash IgadI had lots of moving parts — those parts cost money. In a booming economy, the company could thrive by owning all aspects of the supply chain, including growing, cultivation, extraction, manufacturing and retail. But the cannabis industry is facing a downturn.

“Looking at the costs, looking at labor supply, what’s happening with the overall marijuana market, and the high rent we were paying for that that space, it just didn’t add up as an economically viable location to continue,” Michel said.

Michel added that it was hard to staff two locations in Grand County because of lack of affordable workforce housing. Employees of the Tabernash store had the option to transfer to other locations after the lease ended.

How the Granby IgadI fares

The Granby IgadI opened in April 2022, and the company “was excited for that opportunity,” Michel explained. Many Tabernash customers have gone to the Granby location, which is more convenient for people living in Grand Lake or the west end of the county.

“Our Granby store’s done very well; it was outperforming our Tabernash store,” he said. “We’re thrilled that it’s there and we’re still serving the community.”

In addition to Granby, IgadI’s dispensary locations include: Central City, Lafayette, Golden, Lyons, Northglenn, Idaho Springs, Louisville and Nederland.

Michel stated that the company does still have a grow operation in Aurora. Having multiple grow locations was a struggle, and now that Tabernash is closed, IgadI can concentrate on its Aurora location. It also operates a manufacturing facility in Nederland. Its other small grow operations — in Boulder and Idaho Springs — have also been closed. Michel explained that they couldn’t grow efficiently at that smaller scale to justify them.

Tabernash IgadI’s grow facility made national news when it opened

IgadI has certainly grown a lot over it’s near-decade in existence, but the heart of the company will always be Tabernash. In 2015, Michel and IgadI’s other founders excitedly opened their grow operation to the public.

“We really wanted people to pull back the veil, to be able to see that this is where your products are made; these are the people doing it,” he said. “To have trust and faith in us as a brand and a company. And it was incredibly successful.”

Michel recounted that residents and lots of visitors watched the cultivation process through wide open windows, where the flowers of the plant grew under lights mimicking the brightness and cycle of the sun.

As the plant became legalized in more states, industry representatives from around the country would tour the facility.

“It was the first of its kind to be doing it at that scale,” he said. “People would fly into little Grand County to look at what we did.”

The staff showed customers how each flower is expressed differently, depending on its strain, as well as how edibles are made. Inside the dispensary, customers could look through the kitchen window at budtenders creating cannabis-infused snacks.

For such a large operation, Tabernash needed a very robust, expensive HVAC system to control temperature, humidity, odor and carbon dioxide level.

Data Aire designed the system, giving it the 2014 HVAC Project of the Year award, beating out the World Trade Center in New York.

But that system was beginning to fail.

“The HVAC system needed a lot of upgrades at the facility after 10 years of operation, and it just didn’t make sense to put the capital into it with the economic conditions in Grand County,” Michel explained.

Thus, the HVAC system, once the centerpiece of IgadI’s success at its corporate headquarters, also spelled that location’s end.

What’s next for the Tabernash property?

The owner is currently trying to sell the entire property, which extends from the Highway 40 frontage to behind Neils Lunceford. It also has water rights.

Michel doesn’t know what is planned for the property once it sells. He said that from the owner’s economic perspective, it would be easier to sell the property without a cannabis facility on it.

“The problem is, when you have marijuana activities on a property, it’s very, very challenging to get financing to do development or to build something out,” he explained.

Since IgadI staff couldn’t continue to pay the high rents and replace their HVAC system, they and the owner mutually decided to part ways.

“The owner was very gracious and did the cost of the build out for us. He’s been very supportive of us and we don’t have any ill will towards him,” Michel said.

The slowing marijuana industry in Colorado

For Michel, “there was no joy” in closing the Tabernash IgadI. While it was an “emotionally-challenging decision,” it was the right decision economically, he explained.

“People have said, well on to new beginnings after this but it just feels sad,” he said. “It was a big part of Grand County.”

He’s experienced a downturn on a personal level, but this reflects a statewide trend. Colorado was the first place in the world to legally sell recreational marijuana in 2014; now sales are slumping.

Data from the Colorado Department of Revenue shows that in 2023, the state’s marijuana sales were $1.5 billion, trending down from to $1.77 billion in 2022. In 2021, the industry saw $2.2 billion in sales. According to Michel, 2024 is expected to end with around $1.5 billion in sales.

“In 2021 it was a bit of a bubble. People were at home getting checks from the government,” he said. “Then we experienced inflation; the cost of living went up in Grand County.”

According to the September 2024 Economic and Revenue Forecast report, the falling demand is due to two main factors: decreased consumption following a pandemic-fueled surge, and the legalization of marijuana across other states.

“As demand dropped, there’s been price wars, so the pricing has gotten very competitive. It’s a very challenging market to be successful in right now,” Michel said.

He added that it’s difficult to tell if the newly-opened Winter Park dispensary, Great Divide Lettuce Colony, posed significant competition for sales at their Tabernash location. Sales stayed fair considering the statewide slump; Tabernash’s high rent was really the tipping point.

When Colorado first legalized the plant, vertical integration was legally required for businesses. Now, owners don’t have to grow marijuana themselves to sell it on the retail side.

Beginning in 2022, lower demand collided with lots of marijuana products being produced by many cultivators. This equals oversupply and lower wholesale costs.

With grow and cultivation costs, it was more cost effective for IgadI to purchase on the wholesale market.

“We, in turn, sold products to our customers for less because we weren’t paying as much to stock stores,” Michel explained. “So I’m selling the same product for less, so less revenue.”

Historically, IgadI produced about 30% of product stocked in its dispensaries; the rest it bought wholesale.

Jobs in the cannabis industry are also being lost in the downturn; Colorado has seen the the biggest job losses in country — down 16% from numbers in 2023. This is according to the marijuana staffing company Vangst.

Despite this dreary economic outlook, Michel intends to continue having a business in Granby. They’ve also expanded their Aurora grow.

“We’re still going strong. It’s been challenging,” he said. “But we’re still going to be a fixture in the community.”

He added that the Tabernash IgadI has been frequently recognized in Best of Grand over nearly a decade; they won Best Locally Made product in 2023.

“Not only were we recognized nationally and internationally for that facility, the community recognized us,” he expressed. “We couldn’t be more grateful for their support.”

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