Federal water, cannabis and some lingering uncertainty in Colorado
by Allen Best
GLENWOOD SPRINGS, Colo. — If cannabis remains illegal under U.S. law, can water in Colorado be used to grow it?
Banks that are federally chartered—nearly all of them—have pointedly kept their distance from money involved in the cannabis industry. This has resulted in many businesses adopting cash-only models or using stratagems to side-step the banking ban. In other words, banks don’t know they have cannabis cash.
In the case of water, it hasn’t been an issue—despite the fact that much of Colorado’s water gets stored in federally financed and administered reservoirs, such as Ruedi, Pueblo, Granby, and the trio of dams/reservoirs in the Aspinall unit near Gunnison.
The U.S. Bureau of Reclamation has ruled that it won’t make a fuss—as long as the water is not taken directly from a federal facility. The key provision in the temporary federal policy, which expires in May, is that the Bureau of Reclamation will not be hard-nosed about the prohibition on use of water from federal dams as long as it is “comingled” with water from other sources.
Is that always the case in Colorado? Nobody seems to know for sure. Todd Hartman, spokesman for the Colorado Department of Natural Resources, reports that state water authorities, after ransacking their memories, think that water from Bureau of Reclamation projects is “generally used as supplemental to the water” used by towns and cities.” Ditto for farms. But nobody knew for absolute sure.
For its part, the Bureau of Reclamation in 2014 indicated it wouldn’t look hard for people using water from federal projects. “We’re not an investigative agency. We’re an agency that provides water to irrigation districts,” Dan DuBray, a spokesman for the Bureau of Reclamation in Washington, D.C., told The Associated Press. “The limit of our proactive stance is that if asked, we’re not approving it, and if we become aware of it, we report it.”
Northern Colorado Water Conservancy District, which administers water from the Colorado-Big Thompson Project, similarly adopted a don’t-look, don’t-tell policy. “We don’t envision getting into the police and enforcement business,” the district’s Brian Werner told BizWest.
Still, there are nagging doubts in some minds—specifically in that of a water referee at the water court in Glenwood Springs.
Aspen Journalism’s Brent Gardner-Smith reports that the issue was provoked by the application of High Valley Farms, a marijuana growing facility at Basalt, for a water right. The company wants to grow 2,000 to 3,000 cannabis plants in a 25,000-square-foot facility. It supplies Silverpeak, a cannabis store in Aspen.
Colorado has plenty of grow operations, of course, but the water, he says, has been transferred from previous uses, the distinction here is that it would be the first water right applied for specifically for cannabis production, Gardner-Smith reports.
In response to the High Valley Farms application, a water court referee asked the company to answer the question of whether a water right to grow marijuana in Colorado can be “lawfully” granted when the plant is illegal under federal law.
That answer would seem to be patently obvious. Colorado claims that it runs water rights in Colorado, and not the federal government. And specifically in the case of legalized use of cannabis, the state has thumbed its nose at federal laws for more than a decade.
Still, the water referee wants to know. Aspen Journalism reports that Rhonda J. Bazil, the attorney representing the cannabis company offers three arguments why this appropriation would put the water to “beneficial use,” as required by the Colorado constitution: 1) the state water engineer has said it’s OK to use water to grow cannabis; 2) the previously described U.S. Bureau of Reclamation policy; and 3) the federal government has ceded general management of water rights to the states under the McCarran amendment in 1952.
This is from the Feb. 16 issue of Mountain Town News, a subscriber-based publication. Please write for subscription details.