“Spark the Discussion” is a Legal Connection column highlighting the hottest trends in the emerging field of marijuana law. This column is brought to you by Vicente Sederberg, LLC, the country’s first national medical marijuana law firm.
In November of 2012, 55% of Coloradans voted in favor of Amendment 64, making the personal use, possession, and limited home-growing of marijuana legal for adults 21 years of age and older under state law. Additionally, Amendment 64 creates a state-wide system of regulated retail marijuana establishments that can grow, sell, produce, and test marijuana and marijuana products. Under this system, local governments have wide discretion in determining whether and how to regulate marijuana establishments. However, they do not have the power to re-criminalize the limited adult use, possession, and cultivation of marijuana as permitted by the amendment.
Governor Hickenlooper signed a series of marijuana bills into law on May 28, 2013. Chief among them were House Bill 13-1317 and Senate Bill 13-283. HB 13-1317, along with SB 13-283 create the regulatory framework governing retail marijuana, including directing the Department of Revenue to enforce comprehensive “seed to sale” regulations and a robust licensing scheme. HB 13-1317 includes a nine-month transition period during which time only certain existing medical marijuana businesses can apply for a retail marijuana license. An applicant can either: (1) surrender his or her current medical marijuana license and apply for a retail marijuana license; (2) convert his or her medical marijuana license into a retail marijuana license; or (3) keep his or her current medical marijuana license and add a new retail marijuana license. For a summary of the marijuana bills that were passed this legislative session, please see the table below.
It is important to note that Amendment 64 is self-executing, which means that certain activities are now legal without further government action. For example, even if a locality decides not to allow retail marijuana establishments in their community, individuals over the age of 21 still cannot be prosecuted under any state or local law for cultivating or possessing limited amounts of marijuana in compliance with the amendment. So, while certain elements of the retail licensing system have yet to go into place, other provisions of the law are already in effect.
Right now, the Marijuana Enforcement Division is crafting initial regulations for retail marijuana establishments. These regulations will include rules governing applications for new licenses, security requirements, labeling requirements and advertising restrictions, among others. These rules are being drafted on an emergency basis, and they will be published on or before July 1, 2013. This initial rule-making phase will not be open to additional input from the public. The permanent rule-making process will begin after July 1, 2013, and the public is encouraged to review the temporary emergency rules and participate in the permanent rule-making process.
After the permanent rule-making process is complete, the rules will be published and codified on or before October 1, 2013. Also, after October 1, 2013 local governments must appoint a local licensing authority to accept retail marijuana applications, provided, however, the locality has decided to allow retail marijuana establishments in their jurisdiction. As mentioned above, existing medical marijuana centers will have the choice to surrender their license or retain it.
In November of this year, there will be a statewide vote on an excise tax at 15% and a retail sales tax that can be up to 15% but will start at 10% with 15% of that 10% (1.5%) shared back to local governments where the business is located. This will allow local governments to receive a share of the revenue generated from retail marijuana establishments, but only if the local government allows retail marijuana establishments in its jurisdiction.
The first date a retail marijuana establishment can be licensed is January 1, 2014. This means that until that time, no retail marijuana stores will exist because it would be illegal to operate a retail establishment without a license. The first nine months of 2014 will allow existing medical marijuana businesses the opportunity to become licensed for retail operations. Remaining persons who would like to open a retail establishment can file a notice of “intent to apply” starting on January 1, 2014, but they will have to wait nine months in order to formally apply for a license.
In other marijuana related news, the state legislature also enacted House Bill 13-1325, which created a tougher DUI standard for driving while impaired. The passage of this legislation has been a long time coming in the eyes of many Colorado legislators, some of whom have been pushing for harsher DUI standards for driving while impaired for the past two legislative sessions, including last year’s special session.
Taken together, the recent bills passed by the Colorado legislature will help regulate and control marijuana responsibly. This is a crucial time for Colorado, as states across the county and places around the world are focused on our ability to regulate recreational marijuana. The legislature did a great job passing these laws, but it is up to the people of Colorado, both elected and unelected, to help implement a robust regulatory framework that will allow Colorado to be a model for drug policy change around the world.
Philip Snow is currently an associate at Vicente Sederberg LLC where he represents clients in licensing and transactional matters.