2018 Retail and Medical Marijuana Rule Changes

The Colorado Marijuana Enforcement Division (MED) recently finalized the 2018 amendments to the medical and retail marijuana rules. Several of the new rules include changes to product contamination testing, product packaging and labeling requirements, and the 70/30 Percent Rule, etc. Below you will find a summary of some of the key amendments that became effective this week. Note, however, this summary is not all-inclusive and each business owner should carefully review the amendments to ensure compliance.

Definitions

  • The definition of “Associated Key License” has been expanded to require and Associated Key license for “any Person who controls or is positioned so as to enable the exercise of control over a Retail Marijuana Establishment.”
  • The definition of “Commercially Reasonable Royalty “ has been altered to apply specifically to intellectual property “with a direct nexus to the cultivation, manufacture, Transfer or testing of Retail Marijuana, Retail Marijuana Concentrate or Retail Marijuana Product.” Additionally, a Commercially Reasonable Royalty now “will not be approved where it could cause reasonable consumer confusion or violate any federal copyright, trademark or patent law or regulation.”
  • An “Exit Package” now must be opaque, but need not comply with other labeling rules.
  • For a plant to qualify as “flowering,” there must now be physical signs of flower budding out of the nodes in the stem, not just its status in a light cycle.
  • “Heat/Pressure Based Retail Marijuana Concentrate” is now defined in the Code.
  • “Marijuana Research and Development Cultivation” has been added and means “a Person that is licensed pursuant to the Medical Code to grow, cultivate, possess, and Transfer Medical Marijuana to a Marijuana Research and Development Facility for limited research purposes authorized pursuant to section 12-43.3-407, C.R.S. A Marijuana Research and Development Cultivation is a Licensed Research Business.”
  • “Support License” has been added to the Code and means “a license for an individual who performs duties that support the Retail Marijuana Establishment’s operations. A Support Licensee is a person with less decision making authority than a Key Licensee and who is reasonably supervised by a Key Licensee or an Associated Key Licensee. Examples of individuals who need this type of license include, but are not limited to, sales clerks or cooks.”

R 200 Series – Licensing and Interests Rule Changes

  • R204G has been added and states a Licensee shall not instruct a third-party to perform any act or conduct on the Licensee’s behalf or for the Licensee’s benefit if the Licensee is prohibited by law or these rules from engaging in such conduct itself. Moreover, a Licensee is responsible for all actions and omissions of any Person acting on the Licensee’s behalf, and a Licensee may be subject to license denial or administrative action based on the acts and/or omissions of any Person the Licensee employs, contracts with, hires, or otherwise engages.
  • R204.5B clarifies that a Commercially Reasonable Royalty Interest Holder who receives a royalty of more than 30 percent is an Indirect Beneficial Interest Owner and holds a Financial Interest in the Retail Marijuana Establishment.
  • In contrast, R204.5C defines a Commercially Reasonable Royalty Interest Holder who receives a royalty of 30 percent or less as an Indirect Beneficial Interest Owner and holds an Affiliated Interests in the Retail Marijuana Establishment.
  • R231.1A has been added and states that a finding of suitability is valid for one year from the date it is issued by the Division. The failure of a non-Colorado resident, who is not already a Direct Beneficial Interest Owner, to obtain a finding of suitability within the year prior to submission of an application to become a Direct Beneficial Interest Owner to the State Licensing Authority shall be grounds for denial of the application.

R 300 Series – The Licensed Premises

  • A Marijuana Establishment and a Licensee must report any plan, act, or omission by any visitor or other person: (1) to commit theft or other crime; (2) to compromise the integrity of the Inventory Tracking System; or (3) that results in injury to any Person on the Licensed Premises or otherwise creates a risk to public health and safety
  • Co-locations of Medical Marijuana Centers and Retail Marijuana Stores, Co-locations of Optional Premises Cultivation Operation and Retail Marijuana Cultivation Facility, Co-locations of Medical Marijuana-Infused Products Manufacturer and Retail Marijuana Products Manufacturer, Co-locations of Medical Marijuana Testing Facility and Retail Marijuana Testing Facility, and Co-locations of Medical Marijuana Transporter and Retail Marijuana Transporter are all permitted under the circumstances listed in M304.1.
  • Pursuant to the new language of R305, any outdoor or greenhouse Retail Marijuana Cultivation Facility must comply with new fencing requirements, including:

(a) The entire Limited Access Area shall be surrounded by a fence that measures at least eight feet from the ground to the top of the fence and is constructed of at least six gauges or higher metal chain link fence or another similarly secure material but may not be wood. All support posts shall be steel and securely anchored.

(b) All entry gates shall measure at least eight feet from the ground to the top of the entry gate and shall be constructed of six gauge or higher metal chain link fence or a similarly secure material but may not be wood.

(c) The fence shall obscure the Limited Access Area so that it is not easily viewed from outside the fence.

(d) The perimeter of the fence shall be surrounded with lights illuminating all sides of the fence for at least 20 feet from the fence. The required lights may be, but are not required to be, motion sensing.

(e) A Licensee may, in writing, request that the Division waive one or more of the security requirements described in this subsection (a) through (d) above, by submitting on a form prescribed by the Division a security waiver request for Division approval. The Division may, in its discretion and on a case by case basis, approve the security waiver if it finds that the alternative safeguard proposed by the Licensee meets the goals of the above security requirements.

  • An RFID tag must be physically attached to every plant being cultivated that is greater than four inches tall or four inches wide.
  • Inventory Tracking System procedures now include, but are not limited to:

(1) Properly indicating the creation of a Production Batch including the assigned Production Batch Number;

(2) Accurately identifying the cultivation rooms and location of each plant within those rooms on the Licensed Premises;

(3) Accurately identifying when inventory is no longer on the Licensed Premises; (4) Properly indicating that a Test Batch is being used as part of achieving process validation;

(5) Accurately indicating the METRC category for all Medical Marijuana, Medical Marijuana Concentrate and Medical Marijuana-Infused Product; and

(6) Accurately including a note explaining the reason for any destruction of plants or adjustment of weights to Inventory Tracking System packages.

R 400 Series – Retail Marijuana Stores

  • A Retail Marijuana Store and its employees are prohibited from selling Transferring more than one ounce of Retail Marijuana flower or its equivalent in Retail Marijuana Concentrate or Retail Marijuana Product in a single transaction to a consumer. A single transaction is now defined to include multiple Transfers to the same consumer during the same business day where the Retail Marijuana Store employee knows or reasonably should know that such Transfer would result in that consumer possessing more than one ounce of marijuana.
  • A Retail Marijuana Store shall not Transfer any Retail Marijuana, Retail Marijuana Concentrate or Retail Marijuana Product to a Medical Research Facility, a Pesticide Manufacturer or a Research and Development Licensee.

R 500 Series – Retail Marijuana Cultivation Facilities

  • A Retail Marijuana Cultivation Facility shall only obtain Retail Marijuana seeds or Immature Plants from its own Retail Marijuana or from another Retail Marijuana Establishment.
  • The Colorado Department of Agriculture’s determination that the Licensee used any quantity of a Pesticide that would constitute a violation of the Pesticide Act or the Pesticide Applicators’ Act shall constitute prima facie evidence of a violation of the Pesticide Application Rule.
  • Contaminated product shall not be transferred and must be destroyed.
  • New guidelines for applications for additional plant counts can now be found in R506E.

R 600 Series – Retail Marijuana Products Manufacturing Facilities

  • The use of Dimethylsulfoxide (“DMSO”) in the production of Retail Marijuana Concentrate or Retail Marijuana Product shall be prohibited and possession of DMSO upon the Licensed Premises is prohibited.

R 700 Series – Retail Marijuana Testing Facilities

  • The MED has clarified that “a Person who is a Direct Beneficial Interest Owner or an Indirect Beneficial Interest Owner of a Retail Marijuana Cultivation Facility, Retail Marijuana Products Manufacturing Facility, Retail Marijuana Store, Medical Marijuana Center, Optional Premises Cultivation, or a Medical Marijuana Infused-Products Manufacturing Facility shall not be a Direct Beneficial Interest Owner or an Indirect Beneficial Interest Owner of a Retail Marijuana Testing Facility.”
  • Moreover, a “Retail Marijuana Testing Facility shall establish policies to prevent the existence of or appearance of undue commercial, financial, or other influences that may diminish the competency, impartiality, and integrity of the Retail Marijuana Testing Facility’s testing processes or results, or that may diminish public confidence in the competency, impartiality and integrity of the Retail Marijuana Testing Facility’s testing processes or results.”
  • The Inventory Tracking System reports from Marijuana Testing Facilities must include the results of any tests that are conducted on Retail Marijuana, Retail Marijuana Concentrate, Retail Marijuana-Infused Product or Industrial Hemp.
  • The language of what constitutes successful or unsatisfactory participation in a proficiency testing event has been revised to read: “Unless the Retail Marijuana Testing Facility positively identifies at least 80% of the target analytes tested, participation in the Proficiency Testing event will be considered unsatisfactory. A positive identification must include accurate quantitative and qualitative results as applicable.”
  • Important changes to Testing Facilities’ Inventory Tracking System and record retention requirements have also been added, including many technical changes. Testing Lab owners should review the R 700 Series for detailed amendments.

R 800 Series – Transport and Storage

  • Except as provided in the Rule R 1600 Series, any individual who transports Retail Marijuana, Retail Marijuana Vegetative plants, Retail Marijuana Concentrate, or Retail Marijuana Product on behalf of a Retail Marijuana Establishment must hold a valid Occupational License and must be an employee or Owner of the Retail Marijuana Establishment.
  • Transport of Retail Marijuana plants other than Vegetative Plants shall not be allowed.
  • Inventory Tracking System-generated transport manifest must be generated for any transportation of Retail Marijuana.
  • Licensees shall ensure that either the multiple Containers placed within a Shipping Container each have an RFID tag, or the Shipping Container itself must have an RFID tag. If the Licensee elects to place the RFID tag on the Shipping Container, the Shipping Container shall contain only one Harvest Batch, or Production Batch of Retail Marijuana, Retail Marijuana Concentrate, or Retail Marijuana Product. If a Shipping Container consists of more than one Harvest Batch or Production Batch, then each group of multiple Containers shall be affixed with an RFID tag.
  • Discrepancies between the quantity specified in a transport manifest and the quantity received by a testing facility will be handled in accordance with R 801J.
  • Products that have failed required testing or are contaminated must be physically segregated and contained in a sealed package to prevent cross-contamination during transport.

R 900 Series – Business Records

  • Business records must include a Waste Log, Surveillance Logs, the Licensee’s Identity Statement and Standardized Graphic Symbol, Testing Records, and all other records required by the Rules.

R 1000 Series – Labeling, Packaging, and Product Safety

*Effective Date. Compliance with this R 1000 Series is mandatory until January 1, 2018. During the period January 1, 2018, to June 30, 2018, Licensees have the option of complying with this Rule R 1000 Series or with the Rule R 1000-1 Series, but must be fully compliant with at least one of those two Labeling, Packaging, and Product Safety Series. Beginning July 1, 2018, this Rule R 1000 Series is repealed, and compliance with the R 1000-1 Series is mandatory.

  • Other than bulk flower, trim, or concentrate, a Cultivation Facility or Products Manufacturing Facility shall not transfer any Retail Marijuana to another Marijuana Establishment unless it has been placed into a Container and labeled in accordance with the R 1000-1 Series, except that the Store shall affix its license number and the date of sale prior to sale to the consumer.
  • A Retail Marijuana Store may, but is not required to, place a Container or Marketing Layer into an Opaque Exit Package at the point of sale to the consumer. The Exit Package is not required to be labeled but may include the Retail Marijuana Store’s Identity Statement and/or Standardized Graphic Symbol.
  • Several important changes have been made to labeling requirements in Section R 1002-1. This provision should be carefully reviewed; highlights include:
  1. Requisite font sizes
  2. Prohibition on using the word “candy”
  3. Information required for every label regardless of the products intended use
  4. Statement of intended use
  5. Required warning statements, including:
  6. “This product was produced without regulatory oversight for health, safety, or efficacy.”
  7. “This product complies with testing requirements.”

iii. “There may be long term physical or mental health risks from use of marijuana including additional risks for women who are or may become pregnant or are breastfeeding. Use of marijuana may impair your ability to drive a car or operate machinery.”

  1. Permissive information, such as the Store’s Identity Statement and/or Standardized Graphic Symbol or other additional information consistent with the requirements of the Rules.
  • Additional Labeling requirements are specified for Inhaled Products, Edible Products, and Skin and Body Products. Some changes include:
  1. The potency statement required by Rule R 1002-1(K.6) for vaporizer cartridges   shall be stated as the percentage of Total THC and CBD, and the number of    milligrams of THC and CBD per cartridge.
  2. Edible Product labels must now include an additional warning stating: “The intoxicating effects of this product may be delayed by up to 4 hours.”
  3. Required Expiration and Production Dates for skin and body products.
  • Revised labeling requirements for seeds and immature plants are included in Section R 1006-1.
  • Revisions to the packaging requirements for products of all intended uses other than immature plants can be found in Section 1007-1, and generally require a child-resistant containers, container and marketing layer labels, and special rules regarding bulk packaging. Packaging requirements for immature plants can now be found in Section R 1009-1.

R 1500 Series – Retail Marijuana Testing Program

  • Retail Marijuana Cultivation Facilities and Retail Marijuana Products Manufacturing Facilities must re-validate their process for contaminant testing every 12 months. After successfully obtaining process validation, a Retail Marijuana Cultivation Facility or Retail Marijuana Products Manufacturing Facility shall subject at least one Harvest Batch to all contaminant testing required by Paragraph (C) of this rule every 7 days. However, the Division may reduce the frequency on ongoing contaminant testing in its discretion.
  • Mycotoxin and Pesticide Contaminant Testing guidelines have been added to Section R 1501C.
  • If a Retail Marijuana Cultivation Facility or a Retail Marijuana Product Manufacturing Facility makes a Material Change to its cultivation or production process or its standard operating procedure manual, then it must notify the Retail Marijuana Testing Facility and have the first five Harvest Batches or Production Batches produced using the new procedures tested for all of the contaminants regardless of whether its process has been previously validated. For example, changing from one growing medium to another is a Material Change.
  • Revised requirements for test batch sample sizes are now included in Section R 1504.
  • Several new Failed Contaminant Testing and Quarantining of Product provisions have been added, including but not limited to: (1) the Division’s authority to implement a quarantine by indicating failed test results and limiting the licensee’s ability to transfer quarantined product, (2) clarification on retesting contaminated products, and (3) revised remediation measures for failed test batches.

R 1600 Series – Retail Marijuana Transporters

  • A Retail Marijuana Transporter shall maintain a Licensed Premises if it: (1) temporarily stores any Retail Marijuana or Retail Marijuana Product, or (2) modifies any information in the Inventory Tracking System generated transport manifest.
  • Only Retail Marijuana Vegetative plants may be transported between Licensed Premises and such transport shall only be permitted due to an approved change of location pursuant to Rule R 206. Transportation of Vegetative plants to a permitted off-premises storage facility shall not be allowed

R 1800 Series – Retail Marijuana Transfers to Unlicensed Medical Research Facilities and Pesticide Manufacturers

  • This is an entirely new section that establishes requirements associated with the Transfer of Retail Marijuana, Retail Marijuana Concentrate, and Retail Marijuana Product to Medical Research Facilities, including requirements for the possession and disposition of Retail Marijuana, Retail Marijuana Concentrate, and Retail Marijuana Product by Medical Research Facilities. If you partake in such transfers, this section should be carefully reviewed.

Medical Code Changes

*The changes listed above to Retail licenses were duplicated in the medical rules as well. The changes below are to medical licenses only.

  • New fees have been added for Marijuana Research and Development Facility Applications and Marijuana Research and Development Cultivation Applications.

M 400 Series – Medical Marijuana Centers

  • A patient’s designation of a Medical Marijuana Center as his or her primary center in accordance with these Rules establishes the center registration requirements set forth in sections 12-43.3-901(4)(e), and 25-1.5-106(8)(f), C.R.S.
  • Regarding notification to former Medical Marijuana Center, a Medical Marijuana Center must maintain a copy of a written or electronic notification that it provided to a patient’s former primary Medical Marijuana Center advising that the Medical Marijuana Center has been designated as the patient’s new primary Medical Marijuana Center. The questions and answers that were formerly required are no longer necessary.
  • Important language revisions have been made to the 30 Percent Rule, including a new definition of total on-hand inventory, which now means “the total amount of Medical Marijuana that a Medical Center received from its dedicated Optional Premises Cultivation Operation or any other Medical Marijuana Center in the preceding 12 months.” Finished Marijuana located at the Medical Marijuana Center’s dedicated Optional Premises Cultivation Operation shall count as on-hand inventory of the Medical Marijuana Center. Other changes to the rule should be carefully reviewed for compliance.

M 500 Series – Medical Marijuana Optional Premises Cultivation Operation: License Privileges

  • A Medical Marijuana Optional Premises Cultivation Operation is authorized to Transfer by donation Medical Marijuana to a Licensed Research Business pursuant to this Rule provided that it does not receive any compensation for the product.
  • A Medical Marijuana Optional Premises Cultivation Operation must only obtain Medical Marijuana seeds or Immature Plants from its own Medical Marijuana or from another Medical Marijuana Business as long as there is first a documented point-of-sale transaction at that OPC Operation’s designated Medical Marijuana Center or Medical Marijuana-Infused Products Manufacturer.
  • An Optional Premises Cultivation Operation shall not possess more plants than its commonly-owned Medical Marijuana Center is authorized to possess.
  • Loose bulk goods (e.g. granola, cereals, and popcorn), liquids, and powders are considered to be per se impracticable to mark with the Universal Symbol.

M 700 Series –Medical Marijuana Testing Facilities

  • New conditions have been added to outline under what conditions a Medical Marijuana Testing Facility is authorized to accept Samples of Medical Marijuana or Medical Marijuana Infused-Product from an individual person for testing.

M 1900 Series –Licensed Research Businesses

  • This is an entirely new section of the medical code and outlines the rules for Licensed Research Businesses. Highlights include: (1) authorized transfers, (2) prohibited acts of the Research Business, and (3) project authorization and approval. This detailed provision should also be carefully reviewed as applicable.

If you have any questions regarding these rule changes or seek further clarification, please do not hesitate to call our office for further assistance.

About Jeff Gard
Jeff Gard is a Colorado lawyer providing practical, affordable legal advice for patients, caregivers, dispensaries and anyone interested in medical marijuana.

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