2017 Proposed Additions to Colorado Marijuana Laws

Maine marijuana laws

Colorado marijuana laws are changing continually. Tuesday, the 14th of February 2017, a trio of Colorado legislators — two Representatives and one Senate member — proposed a 19 page bill that would create a framework for allowing medical patients and recreational customers at-home delivery within the state of Colorado, allow for businesses to transfer license type from recreational to medical under specific circumstances, and allow the Colorado marijuana licensing authority MED review the average market rate quarterly rather than biannually. This is just one of the handful of Bills proposed in the State thus far.

Pickup or Delivery

Delivery is hardly a new thing within the marijuana industry. Think about it: sales of the plant had largely been left to “phone a friend” distribution for much longer than it has been any type of legal. For the medical marijuana industry, delivery has been a legal grey area containing less statutory protections than just being a medical patient with a valid recommendation. That is, though it has been tolerated, delivery services are currently unable to be licensed within Colorado, barring the legal operation and distribution of delivery services from being uniformly judicially recognized.

Previous to the proposed bill, Colorado marijuana laws did already allow for delivery, yet it was never made clear from a regulatory compliance standpoint what the protocol for such a business function would be. For patients, this had meant that any delivery supplier is not subject to standards and regulation regarding taxes, pesticides, or testing. For businesses, this meant increased liability, possible insurance issues, and legal run-ins. Senate Bill 192, if codified into law, would direct the State to create a system that would allow medical marijuana centers and retail marijuana outlets apply for an endorsement allowing the company and their employees (under certain conditions) to drive and deliver medical and adult use products to customers.

Under the State endorsement, an employee can transfer up to the daily limits — an ounce of flower for recreational, two ounces for medical — to a qualifying patient or adult. Transporters must have proof that the person who submitted the order is the person picking it up and must get them to sign for it. The drivers themselves are required to be above the age 21 and not be intoxicated. All labeling and tracking requirements remain the same for packaging under Colorado marijuana laws, with the possibility of route manifests being used as compliance evidence.

The proposed rules would go into effect for medical on the second of January, 2018 with recreational sales expected a full year later, on January 2nd, 2019.

Single-Instance Transfers

Contained within the State Constitution, amendment 64 gives municipal, local, and county governments the authority to ban marijuana dispensaries from operating recreationally. This is not held back with any sort of deadline or expiration, allowing the walk on eggshells that is working with a federally illegal substance transform into a greater depth of perpetual regulatory anxiety.

Example: Imagine you open a new recreational store in a county that allows a total of twenty licensees within the county. Medical, recreational — it does not matter. The county decides 20 licensees is too many, dropping the county total to 18 and allowing for only 10 recreational licensees. Since you are new, you get denied a renewal of your recreational license, but find that there is still one license available to county medical dispensaries.

This provision to Colorado marijuana laws would allow recreational sales or recreational product manufacturers a single-instance license transfer from recreational to medical. This protection allows business owners a bit of legislative insulation in the face of a constantly evolving industry. An adaptive view of the industry, in this stage in the state marijuana industry, is a great thing for business.

Calculating the Excise Tax

Many recreational customers (and maybe even some in the industry) have yet to be informed on how exactly the product they purchase is taxed. The amendment allowing for adult use of cannabis defines a special sales tax and a specific excise tax levied on cultivators to manufacturers and retailers. Currently, the excise tax rate is 15%. The Average Market Rate (AMR) assesses the average cost by weight of transfers between the cultivator to the retailer. The rate does not include taxes in the rate. Simply put, it evaluates the cost per pound on average across Colorado’s marijuana industry.

Currently, Colorado marijuana laws require the Department of Revenue (DOR) to review the AMR every six months. This provides the state with a view into the current market costs as reported by the State inventory tracking system as well as the volume being transferred or sold. Proposed SB 192 aims to rewrite the rules when it comes to AMR measurement. Rather than DOR review, the Marijuana Enforcement Division (MED) will be in charge of calculating the AMR on a quarterly basis. In addition, cannabis products will be further distinguished from one another, with unprocessed marijuana for direct use and unprocessed marijuana for extraction being priced differently despite similarities in potency under this new rule.

Conclusions

Denver is entrenched in implementing Ordinance 300 while the State swims upstream against a variety of marijuana focused legislation. Other Bill topics from January or February 2017 include:

  • Marijuana advertising becomes a type two misdemeanor if done in a certain way
  • Medical marijuana inventory protocols (how much of the product do the center have to produce vs purchase)
  • Preventing marijuana use as bond condition invalid patients

Colorado marijuana laws continue to set the stage for marijuana interests nationwide. While the recreational market may still be in its infancy, a calculated investment in positive economic and public outcomes for the industry is something that can be heard across the world.