Marijuana Regulations Completed, a few points.

Since my last blog entry, there have been a few changes to HB-1317, the bill which regulates retail marijuana businesses. The bill has now passed both the House and Senate and is on the Governor’s desk for his signature. Once that is completed, the bill will become a law (those of you familiar with School House Rock already know that!). The changes include:

1. There will be a 9 month waiting period for new businesses, instead of 90 days. If you do not already own a MMJ business, you will be able to apply on 9/1/14. Prospective business owners can file a notice of intent to own a MJ business after 1/1/14 and must provide a deposit that will be applied to the application fee. The deposit amount is not specified.
2. The bill expressly outlaws the “collective model” and requires that any sale or other distribution of MJ be done only by a licensed MJ business.
3. The MED is required to implement a “seed to sale” tracking system for all MJ sold. This idea was previously shelved by MED.
4. No delivery of MJ.
5. There is a THC content limit for edible MIP products.

There are two other bills that were passed, HB-1318 and SB-283. Here 5 things you should know about each of them.

HB-1318, “the tax bill”:

1. There is a 15% excise tax that will be assessed for wholesale sales of MJ to Retail Marijuana Centers (RMC).
2. The excise tax will be based on an average market price established by the State. The tax must be collected by the wholesaler and a report for such sales filed once a month.
3. The excise tax will apply to the transfer of MJ from the grow to the retail center even if the business owns both the grow and retail center.
4. There is a 10% State sales tax for MJ sold by the RMC. This can be raised to 15% without voter approval.
5. The sales tax will be shared with local governments, but local governments are also permitted to impose additional local taxes.

SB-283, the miscellaneous bill:

1. Local governments may ban the use of butane and compressed gas for use in extraction.
2. The bill creates a responsible vendor program that will require training. There will be created a “certified trainer” and all vendors must be certified.
3. Marijuana business contracts shall not be void despite the federal argument that all such businesses and their contracts are illegal.
4. There will be no exception to the state smoking laws that will permit a private club or other such business to permit MJ use.
5. No open containers of MJ in vehicles. The MJ must be in an unopened, sealed container or be placed in the trunk of your car.

State Rules on Amendment 64 Completed

The State of Colorado recently passed HB-13-1317, 1318 and Senate Bill 13-283.  The bills create a licensing a regulatory scheme for recreational marijuana businesses and address the interaction with medical marijuana businesses.  The bills can be viewed in their entirety here:

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/807A035CD583C95E87257B1F005CDB59?Open&file=1317_01.pdf

20 things you should know about the bill:

1. The Medical Marijuana Enforcement Division (MMED) will be changed to the Marijuana Enforcement Division (MED) and  will regulate both MJ and MMJ.
2. Existing MMBs can apply to convert after 10/1/13 and the conversion application is $500.  The businesses can begin operation as a MJ business after 1/1/14, assuming that local approval is also obtained during this timeframe.  The MMB may continue to operate as a MMJ business until such time as the application is approved at both the state and local level.  It is not clear whether the businesses themselves or the people who are currently licensed will be permitted to convert.�
3.  Everyone else can apply 9 months later, i.e., 9/1/14 and the application is $5000;
4. There is no vertical integration requirement for recreational marijuana businesses (RMB) after the first 9 months, i.e., 9/1/14.  After that, growers can be “grow only” businesses and sell to all RMBs and to infused product manufacturers.  RMBs can sell to anyone over the age of 21.  Existing MMJ business cannot be separated into a cultivation operation and retail sales operation.
5. Local approval still required for all MJ and MMJ business licensing.
6. In order to work at and/or manage a RMB, the person must be a Colorado resident and a person must be a 2 yr. state resident to own such a business.
7.  The RMB can sell up to ¼ oz  to non-residents over the age of 21.
8. The RMB cannot sell ANY product containing alcohol or nicotine.  This may impact some MIPs who make alcohol-based tincture.�
9. All MJ must be packaged and sealed at the point of sale in a non-transparent container.  There are also stringent labeling standards, including THC and cannabinoid content.
10. MED will issue further regulations by 7/1/13.
11. There is a 1000 ft. buffer between schools, alcohol and drug treatment facilities.  The definition of a school includes a residential child care facility.
12. Once the MMB elects to convert to a RMB, the plants and product automatically become retail plants and product.  It i possible that there will be limits on the number of plants or amount of product the business can possess.  The City of Boulder is proposing its own limits (500 plants) and the state law supports such limitation decisions by local licensing authorities.
13. A MMB can operate both a medical and non-medical MMB at same location only with local approval do so and would be required to create physical separation between the two businesses, including separate entrances.
14. An employer is not required to tolerate MJ use in the work place and each business is free to set its own drug policy, including zero tolerance.
15. There are a lot of lot of marketing prohibitions and you should carefully review this section if you plan to advertise.
16. There will be created a licensure class system. The licenses could be issued based on square footage, number lights, amount of lumens, the measured “lit canopy,” the number of plants or combination. Stay tuned.
17. MED is permitted to limit the number of licenses issued and also gives this power to local authorities.
18. Failure to pay taxes can result on denial – be careful to be current with the IRS.
19. The lifetime drug felony ban on ownership was changed to 10 years from the date the matter was concluded, including the completion of probation or parole.
20. Licensee may move his permanent location to any other place in Colorado with local approval.  It is unclear whether this can be made part of the conversion process or is to be done after the process is complete.