MMC and the “grow your own” requirement

Although I have previously discussed this issue, I need to address the concept of a MMC growing its own medicine. Here are the basic rules:

1. The MMC must grow up to 70% of its own MMJ.
2. The MMC can only purchase up to 30% of the MMJ from another, licensed MMC.
3. The MMC cannot buy MMJ from a caregiver or patient. Simply put, there is nothing legal a caregiver or patient can do with “excess” MMJ.
4. The effective date for the MMC to grow its own MMJ is 7/1/10. The 9/1/10 certification date is merely the date you tell the state that you are and have been growing your own MMJ.
5. You cannot contract with a grower to produce MMJ – you must grow your own.

Next, what is 70%? This is one of the more cryptic answers in this area of law. First, you must look to CRS 12-43.3-901, the unlawful acts section. At Sec. (e), it states that it is unlawful (i.e., illegal) for the MMC to possess more than 2 ounces and grow more than 6 plants for each patient that assigns the MMC as their “primary center.” Accordingly, the total amount of MMJ a MMC can possess is 2 ounces multiplied by the number of patients who have designated the MMC as their primary center. Using simple math, a MMC with 50 patients who have assigned the MMC as the primary center can possess no more than 100 ounces of MMJ. A MMC with 100 patients can possess 200 ounces and so on. Accordingly, a MMC with 50 patients must produce 70% of 100 ounces, which is 70 ounces. Again, the MMC can possess up to 100 ounces and no more. The practical result is that, in most cases, the production of the grow far outstrips the legal possession of MMJ by the MMC. Also, since you can only sell 30% of the total inventory to another MMC, in the 50 patient example, you can only sell 30 ounces to another MMC. Understand that the MMC is likely to produce “excess” MMJ, but cannot legally sell it. The key is to acquire more patients who assign the MMC as their primary center until your retail and cultivation capacity are equal. Otherwise, unlawful and illegal activities will have dire consequences.

Employees: felons, under 21, and out of state residents

As most of you know, the state prohibits people under 21, drug sale related felons and out of state residents from owning MMCs. The state also requires employees to “pass a criminal background check.” The question arises – does the drug felon, under 21 and out of state resident standards for owners apply equally to non-owner employees? At this point, the answer is yes. First, CRS 12-43.3.-101 et seq. prohibits employees under the age of 21 working in any capacity. Second, in speaking with Mr. Matt Cook, he advised that the “no drug sale felony” rule will be applied equally to non-owner employees. While the standard “pass a criminal background check” is vague, Mr. Cook believes (at least for the moment) that the felony issues are the same for owners and employees. Finally, Mr. Cook also states that the out-of-state resident, i.e., two years, applies equally to non-owner employees. Again, CRS 12-43.3-101 et seq. only states that employees must be state residents, Mr. Cook believes the two year standard applies. Perhaps several dozen letters might change his mind?

Medical Marijuana Center and 70/30 rule

HB1284 requires that a Medical Marijuana Center cultivate its own medicine. The concept is that one business, the MMC, will operate both a retail and cultivation operation. Many people believe that a grower can merely contract with a MMC and continue wholesale sales of MMJ to MMCs. This is not the case.

Only the MMC can apply for the optional grow premises license and only MMCs can sell MMJ, including to each other.

The state requires that MMCs established (a lease, payment of local and state sales tax and/or applied for local approval at both locations must certify that the MMC is growing at least 70% of its own medicine by 9/1/10.

The MMC can sell or purchase 30% of the medicine from another MMC (not a grower). The concept is that lag time between harvest and acquisition of unique strains can be facilitated between MMCs.

The question arises as to how the MMC will account for 70% cultivation of its own medicine. Here it is: the MMC can only possess 2 ounces and cultivate 6 plants for each patient that assigns the center as their “primary center.” Be reminded that the MMC can work with any patient (no more “temporary” caregiving) and a patient can go to any MMC. As such, “primary center” means favorite or main center and is not exclusive. This means that the 100% inventory is based on the number of patients who assigned the MMC as their primary center, multiplied by 2 ounces.

Be wary. The state may not be very good at this at first, but it will not be long before it is very experienced with MMJ cultivation. Do not take chances and keep good records in the event of a dispute. You do not want to lose your investment over a few ounces!

There is no 1 year state moratorium

There is a myth going around that there is a one-year, state moratorium on new MMJ businesses. This is incorrect.

It is true that the HB1284 summary contained such a statement, but the summary is from a prior version of the draft regulation and is a summary intended to give voting legislatures a summary of the bill. However, the bill itself, which is the actual regulation, does not contain any state moratorium language.

Accordingly, any state resident can apply to the state once local approval of their proposed MMJ business is obtained. Remember, the MMJ business must be locally approved for both cultivation and retail sale of MMJ. This usually requires approval of two separate locations. Once local approval is obtained, you may apply to the state for the Medical Marijuana Center/Optional Cultivation license(s) or Infused product manufacturers license. Be reminded that you may not engage in cultivation or sale of MMJ until both state and local approval are received.

Boulder Regulations inevitable

Last night the Boulder City Council moved forward with plans to roll out extensive medical marijuana business regulations by the end of March. A second reading of the proposed regulations is scheduled for 3/16. At this point, it appears the the regulations, in their current form, are inevitable.

Accordingly, it is time for all City of Boulder medical marijuana businesses to get moving toward compliance with the regulations.

Among other things, dispensaries and growing operations can’t operate within 500 feet of schools or day-care providers, or in areas that already have three or more dispensaries.

The regulations would create a licensing system for medical marijuana businesses. The city is proposing licensing fees of $6,000 for the first year, with a $2,000 annual renewal fee. The rules also would set security requirements, require owners to submit business plans and plans for being a good neighbor, prohibit on-site consumption of medical marijuana and require businesses to keep detailed patient records. Also being considered is restricting the amount of marijuana a business can have based on the number of patients it serves.

Once the regulations are enacted, Gard & Bond is glad to assist you with ensuring that you are in compliance before any deadline is reached and will be associating with other professionals (architects, security professionals, etc.) to help you. This process is likely to be complicated and we don’t want any businesses to suffer for lack of detailed preparation (like those poor folks in Denver!). Please call us to schedule a meeting to review and prepare the necessary paperwork. Also, stay on top of all medical marijuana laws and changes using our website: www.medicalmarijuanalawcolorado.com, which contains an up-to-the-minute Google newsfeed. Stay legal.

Jeff Gard

Read more: Boulder advances medical marijuana rules – Boulder Daily Camera http://www.dailycamera.com/ci_14501071#ixzz0h8DkeL3h

DEA on the warpath

Last week, the DEA raided a medical marijuana caregiver’s home in Highlands Ranch. This is one of several recent raids on medical marijuana businesses, including Full Spectrum Labs in Denver and another lab in Colorado Springs. It is clear that the DEA is not going to go away quietly. As we tell our clients, you should continue to remember that the federal government does not recognize medical marijuana and considers all medical marijuana activities illegal. It is possible that the DEA will continue to investigate medical marijuana sales and cultivation. Accordingly, it is necessary to stay under 100 plants when cultivating medical marijuana. Any plant over 100 requires a mandatory five-year federal prison sentence if convicted. Forfieture of any property used in the cultivation or sale of medical marijuana is also a real possibility. Until the federal government ceases any further prosecution of medical marijuana you should be as careful and quiet as possible in your medical marijuana endeavors. Stay legal and stay safe!

Doctors and dispensaries – a “no-no”

In anticipation of SB109 or whatever it becomes, it is important for doctors to continue working with patients independent of any relationships the doctor or patients may have with a primary caregiver/primary caregiver business. It is unclear whether a doctor’s association with a referral business will be affected. The transaction between primary caregivers should be seperate from any renumeration to the doctor. Better yet that the patient pays the doctor directly for the examination. If the doctor is shareholder of such a business and primary caregivers/primary caregiver business is a source of revenue, it will be quite problematic.

Also, the doctor is not permitted to see patients at any dispensary. It is unclear whether an office rented or occupied by the referral business would permitted. As we seek to restore our image with the public, it is necessary that legitimate doctors are making independent medical marijuana recommendations for legitimate patients. Even the appearance of impropriety should be avoided. In doing so, we are helping patients and their caregivers stay legal and avoid further media criticism.

Stay legal!

Jeff

Selling medical marijuana

There are only two classes of person legally entitled to possess and cultivate medical marijuana: (1) the patient and, (2) if the patient assigns his/her right to cultivate to one other person, the Primary Caregiver. The Primary Caregiver is therefore limited to working only with the patients who designate him/her to be their Primary Caregiver – not anyone who happens to be a medical marijuana patient. Under the case, People v. Clendenin, the Court of Appeals clarified that a Primary Caregiver must have a personal relationship with their patients and that other daily activity caregiving services must be provided, including meals, housekeeping, grocery shopping, etc. Accordingly, a Primary Caregiver and/or Primary Caregiving business, a.k.a., dispensary, is limited to working only with patients who have assigned them the right to cultivate and possess medical marijuana. This means that any temporary assignment of primary caregiving falls short of constitutional protection. Simply put, you cannot have a temporary personal relationship and you cannot meaninfully provide other caregiving services on a temporary basis. As such, the use of temporary caregiver assignment agreements, found in many dispensaries, have little or no legal basis and, therefore, afford little or no legal protection from prosecution. In order to become and remain legal, a Primary Caregiver/Primary Caregiver business must educate the prospective patient about the limited rights afforded to primary caregivers and secure the assignment of primary caregivership BEFORE providing the patient with any medical marijuana.

Selling medical marijuana to dispensaries

Under Amendment 20(18), a patient has three rights. (1) to possess 2 ounces of medical marijuana; (2) to cultivate 6 medical marijuana plants; and (3) if the patient does not want to grow, he/she can appoint one other person to cultivate medical marijuana on their behalf. This person is deemed a Primary Caregiver and is assigned the right to cultivate and possess medical marijuana by their patient(s). This is the only legal basis for cultivating medical marijuana on behalf of patients. The assignment of rights to grow and possess medical marijuana is made by the patient and the Primary Caregiver, therefore, is limited, to acting with and on behalf of only their own patient(s). This limits the ability of the Primary Caregiver to provide medical marijuana only to their patient(s). This means that the Primary Caregiver cannot sell medicial marijuana to anyone other than their patients, including dispensaries. This also limits the Primary Caregiver business, a.k.a., dispensary, to selling only to the patients who have assigned their rights to cultivate and possess medical marijuana to the Primary Caregiver.

Romer withdraws bill

Medical marijuana law changed again over the weekend! Senator Chris Romer withdrew his medical marijuana regulation bill on Saturday. His reasoning was that neither law enforcement, nor the medical marijuana community provided the necessary support for his bill. Law enforcement is proposing their own bill to restrict primary caregivers to only working with five patients. If passed, this would eliminate both dispensaries and commercial medical marijuana cultivation. After all, who can afford such an investment with only five patients to purchase the medical marijuana? Accordingly, conservative interpretation of Amendment 20 (18) and the Clendenin case remain the best legal protection. Next, it is vital to contact your state representatives and let them know you oppose law enforcement’s bill, as it impacts the patient’s choice of who they want to to act as their primary caregiver. As always, Gard & Bond is here to help you start and maintain your medical marijuana business and to help patients get the legal help they need in these uncertain times. Stay safe!

Jeff Gard