City of Boulder Moratorium/Federal Threat

At last night’s Boulder City Council meeting, the Boulder City Attorney requested a six month moratorium for medical marijuana businesses. On the surface, this sounded like a good idea – keep new businesses from coming in for six months. However, the reality was that the proposed moratorium was intended to prevent existing businesses from bringing on investment, transfer the business to a new owner, expand the existing business or transfer to a new location. With the very real threat of Federal prosecution looming over the industry, the moratorium would prevent medical marijuana businesses from being able to move out of harm’s way.

In response, I drafted a letter to the City Council and, in particular, Councilperson K.C. Becker. I proposed that the moratorium not include existing businesses. Councilperson Becker took the letter and crafted a new ordinance that excluded existing businesses. After several hours of wrangling and heartfelt testimony from myself and several medical marijuana business owners, employees and patients, the City Council adopted the Becker Ordinance, City of Boulder Ordinance Number 7834. The ordinance permits existing businesses to proceed as usual.

In the waning moment of the public hearing, the moratorium was amended, as follows:

1. The moratorium for new businesses was extended until 11/9/12;
2. Existing businesses will be able to move forward with expansion, investment, sale and relocation after 3/8/12; and
3. New fees we added for change of business entity ($2,000), addition of financiers ($2,000), modification of premises ($3,000) and change of business manager ($150).

Finally, approximately 21 medical marijuana centers were identified as being in harm’s way of Federal prosecution. Those centers located within 1000 ft. of licensed day cares, schools (including the University of Colorado) and public housing units are a risk. Accordingly, I suggest that if you, or anyone you know, is within this danger zone the business should immediately obtain a new location before Federal prosecution visits the City of Boulder. I know this is a tough situation, but the prospect of federal prison should be incentive enough.

City of Boulder Medical Marijuana Business Moratorium

The Boulder City Attorney, Mr. Thomas Carr, recently requested and was granted a moratorium regarding medical marijuana businesses in the City of Boulder. The moratorium is expected to be extended for 6 months. I suspect this is a prelude to a request from Mr. Carr that the City Council enact a “cap” on the number of medical marijuana businesses in the City.

This is highly problematic. The moratorium affects existing businesses, not just new businesses. Under the current ordinance, the City requires a new license in the event the business wants to, or needs to, change locations. A new license is also required in order to transfer the business to a new owner. By contrast, the State of Colorado amends the existing license for both scenerios and does not require a new license.

In view of the recent Federal threat of criminal prosecution and civil forfeiture for landlords and medical marijuana businesses located within 1000 feet of a school, this is quite terrifying. For instance, if a medical marijuana business is within 1000 feet of a school (CU?, a day care?), the Feds require the business to move within 45 days. The City of Boulder moratorium makes this impossible.

Finally, the City’s actions demonstrate veiled hostility and fear toward the medical marijuana industry. The moratorium is likely only a first step. It is incumbent on all City of Boulder medical marijuana businesses to band together and oppose any further interference with medical marijuana businesses, which are the most regulated businesses in the history of the State of Colorado. City officials need to be reminded that they are representatives of the citizens of Boulder and personal political agendas have no place in representative government. If they are unwilling to support the industry, they need to be replaced with people who support local and state law regarding medical marijuana. Please attend the 2/7/12, 7:00 p.m., public hearing and let the Council know that further regulation, including the proposed moratorium, will not be tolerated.

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.

City of Boulder requires license for grow and retail

The City of Boulder elected to require seperate licenses for both the OPC (grow operation) and retail operations of a MMC. Be warned that is is not enough to submit a MMC business license application for the retail side of the business. Also, if you added the grow after June 18, you are required to submit the application for the grow by 8/31/10. Of course, if you had both the grow and retail in operation before June 18, you may submit both applications on or before 10/31/10. Please be advised that it appears that priority for location (i.e., within 500 ft. of three other MMCs) will be allotted based on date of submission of the application, not date of operation. This is not final, but you should get your application in a.s.a.p.

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

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.