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The state of Colorado has seen a surge in the number of stores that sell marijuana. The state has allowed marijuana use for medical reasons since the year 2000. There's also been a confusing mix of regulations and court rulings over the years. And this year, it became clear to many that the risk of being put in jail had declined significantly. Now, pot stores are showing up in many neighborhoods, as NPR's Jeff Brady reports.

JEFF BRADY: There's a section just outside downtown Denver that's become known as Little Amsterdam. In this neighborhood, there's a cluster of three marijuana dispensaries. Pierre Werner moved here from Las Vegas to open one of them.

Mr. PIERRE WERNER (Owner, DrReefer.com): The laws here in Colorado are a lot more liberal than conservative Nevada. I mean, the state of Colorado gave me a business license and told me to pay my taxes. The state of Nevada put me in prison.

BRADY: Werner says he has three felony convictions for selling marijuana. But in Colorado, there's no regulation against felons opening a dispensary. For Werner, there was one problem, though: His store in Little Amsterdam was near a church and a school. There are no rules against that, either, but he didn't want to upset the neighbors. So Werner moved his business to a spot that could be even more lucrative: right across the street from the University of Colorado in Boulder.

Werner says the lack of regulations encouraged him to open shop. And he says the White House helped move things along, too.

Mr. WERNER: Thanks to President Obama and the U.S. Attorney General Eric Holder for getting the feds off of our back and allowing the states to implement their laws.

BRADY: The Obama administration has said busting medical marijuana operations will be low on its priority list.

Nobody knows how many dispensaries there are in Colorado. The best guess is 150. Over the past nine years, there have been efforts to regulate Colorado's medical marijuana industry. The health department wanted to limit the number of patients a caregiver could have, and it planned to adopt a rule saying a caregiver must do more than just sell pot. But nearly all those efforts have been unsuccessful.

Attorney General JOHN SUTHERS (Republican, Colorado): So it's not surprising at all that the so-called dispensaries are popping up everywhere.

BRADY: John Suthers is Colorado's Republican attorney general. To say the least, he was never fond of the medical marijuana concept. When folks complain to him about the number of dispensaries, he tells them there is isn't much prosecutors can do. But that may be about to change, because, Suthers says, there appears to be more appetite among state lawmakers to regulate this fast-growing industry.

Atty. Gen. SUTHERS: So I think the combination of what's going on right now in this kind of - if you'll excuse the expression - legal haze that we're in, I think it's going to cause things to be somewhat status quo until the legislature convenes. And then I think you're going to have some very heated debate. Then we'll see what happens.

BRADY: Already, law enforcement and district attorneys are lobbying for stricter limits on dispensaries. And the marijuana businesses have formed their own lobbying group, which is growing larger all the time as more dispensaries open.

Back in Little Amsterdam, Nicholas Paul runs a marijuana business called Walking Raven. He says the new competition doesn't worry him much.

Mr. NICHOLAS PAUL (Owner, Walking Raven): I believe there's enough people out there that need the medicine that we're almost full. We're only going to have 500 people - patients that we take care of. We're almost full and ready to close our doors, which will leave room for another dispensary.

BRADY: And Paul says his business expects to pay about $80,000 in sales taxes each year. He hopes lawmakers will consider that as they debate tighter regulations on marijuana businesses.

Jeff Brady, NPR News, Denver.

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