No more state moratorium and the procedure for new medical marijuana business licenses

As of 7/1/12, there is no more state moratorium for new medical marijuana business licenses. This means a new medical marijuana business can be formed and licensed. It also means that existing businesses can now expand, add another OPC, open a new MMC, or add a MIP.

According to MMED, the procedure for new licenses will be similar to “change of ownership.” This means that you will be provided with a checklist of items to be completed and documents to be provided to the state. Once the list is complete, it is necessary to schedule a meeting with either Mr. Lewis Koski or Mr. John Seckman to review the documents. Be advised that both the application and licensing fees are due at the time of application. MMED anticipates that there will be few such applications. Yeah, right!

Next, be reminded that you need local approval of any such business application. Be sure to check with the local authorities regarding their acceptance of such applications. If they won’t, the state won’t. If they will, the state will. For instance, the City of Boulder passed a 9-month moratorium. Mr. Seckman advises that state and local processing of the license can happen at the same time.

Additionally, new applications will be handled on a “first come, first serve” basis. No preference will be given to existing businesses. However, as a practical matter, MMED would already have a file on the business and a lot of the processing work may already be done.

Finally, be reminded that each MMC must have its own OPC. You cannot simply add a retail and attach your existing OPC to it. You may be able to subdivide your OPC into two OPCs, but local and state approval would be required. Of course, you can add more than one OPC to an existing MMC.  However,  unless and until the new license is granted by both local and state officials, YOU CANNOT START OPERATING!. You can only operate after both licenses are issued.

If you need our help, particularly in your meeting with MMED, please contact us.

MMJ Division/Matt Cook update

I have been corresponding with Mr. Cook on various legal issues that continue to arise. I wanted to share with you his responses.

1. Is the sale of the 30% inventory from MMC to MMC retail or wholesale? A: Wholesale and that normal business records must be kept. I suggest that you verify both local approval and timely filing of the state application with any MMC you deal with. Make a copy of any licensing if possible.

2. Can MMCs sell to caregivers on behalf of the caregiver’s patients? A: No, unless the patient is homebound AND has a waiver from CDPHE.

3. If you failed to meet the 9/1 certification deadline, can you continue to operate? A: No. However, if you met the 7/1 local approval/pending local approval deadline and filed the state application by 8/1, you are still considered “established” and do not forfeit your application fees. Nonetheless, you must cease operation until the state rules on your application.

4. Will there be a license fee(s) in addition to the application fee(s)? A: Yes. The license fees will be set in the spring. Start saving your money (what little you have) now!

5. Does the 2 year residency requirement also apply to employees and managers? A: Yes. As you know, I do not necessarily agree with this, but that is the state’s interpretation until a district court judge rules otherwise. You should also assume the felon criminal conviction rules for owners applies equally to employees and managers.

6. Can municipalities impose a different standard for who is permitted to own a MMJ business? A: No, it is the state who decides this issue. For instance, Fort Collins enacted an ordinance prohibiting someone from owning a MMC/MIP if the have a felony within 10 years of the completion of the sentence (the state limits this to 5 years).

7. Can municipalites use a different standard of measurement for the distance between MMCs, schools, day cares, etc.? A: No, the “pedestrian access” standard set from in CRS 12-43.3-308(d)(II) will be applied.

amending applications

In view of the rapid, changing circumstances for MMJ businesses, the Department of Revenue is permitting applicants to amend their applications in the following situations:

Replacing a cultivation location with a new cultivation location (filing an amended appendix A) to the original application. I suspect that another OPC fee must be tendered along with the new Appendix A;
Adding/deleting managers, members, shareholders. New keyperson applications must also be tendered;
Transferring or selling the business assets (internal changes to an LLC or corporation, including transferring all stock/ownership of that entity); or
Increasing or decreasing the size of the proposed premises.

This list is not exhaustive and amendment may (or may not) be permitted in other situations.

Next, you must first seek local approval for any of the above-changes to your business. Also, you may only amend the application if:

1) You were operating an established, locally approved business on July 1, 2010, (or you had an application on file by July 1, 2010, which was subsequently approved), and;

2) You filed the required applications and fees with the Department of Revenue on or before August 1, 2010; and

3) On or before September 1, 2010, you certified that you were growing at least 70% of the medical marijuana necessary for your operation.

Mr. Cook advises that continued operation of a medical marijuana business or without meeting all three of these conditions is in violation of 12-43.3-901(1)(c) and 12-43.3-901(1)(d) C.R.S. This means that if you were late with your 9/1/10 certification, you are no longer permitted to continue to operate while your application is pending and must submit an entirely new application.