June 26, 2019

SB 16-040: Expanding Definition of “Owner” of Medical or Retail Marijuana Business

On January 19, 2016, Sen. Chris Holbert and Rep. Dan Pabon introduced SB 16-040Concerning Changes to the Requirements For Owners of A Licensed Marijuana Business. It was introduced into the Senate Business, Labor & Technology Committee and has since passed out of that committee and been referred to the Appropriations Committee.

This bill includes the definition of “owner”, in the medical and retail marijuana codes, a recipient of a commercially reasonable royalty associated with the use by a licensee of intellectual property and a licensed employee who receives a share of the profits from an employee benefit plan.

Under current law, an owner of a medical or retail marijuana business must have resided in Colorado for at least 2 years prior to applying for a license. The proposed bill would allow an owner to be either a 2-year resident of Colorado or a United States citizen on the date of the application for applications submitted on or after January 1, 2017. Additionally the bill would prohibit an owner from being a publically traded company and would require a controlling interest of the licensees to be Colorado residents and maintain that residency while holding a license.

The bill first proposes to add language to the definition of an “owner” under 12.3 of C.R.S. § 12-43.3-104 Definitions and 12 of C.R.S. § 12-43.4-103. The additional language would define an owner to be “a recipient of a commercially reasonably royalty associated with the use by a licensee of intellectual property; or a licensed employee who receives a share of the profits from an employee benefit plan.”

Second, the bill proposes to add Subsection XXI, which states “the parameters for a commercially reasonable royalty,” to C.R.S. § 12-43.3-202(2)(a) – Powers and Duties of State Licensing Authority. The bill proposes to add the same language to C.R.S. § 12-43.4-202(3)(a)(XVII).

Third, the bill proposes to remove subsection (m) of C.R.S. § 12-43.3-307(1) – Persons Prohibited as Licensees – and add subsection (n) “A publically traded company.” The bill proposes to add the same language to C.R.S. § 12-43.4-306(1)(l).

Additionally, the bill proposes the addition of the residency requirements discussed above under C.R.S. § 12-43.3-307.5 and the addition of the controlling interest language under C.R.S. § 12-43.3-310. The same language has been proposed to be added to C.R.S. § 12-43.4-306.5 and C.R.S. § 12-43.4-309.

Mark Proust is a 2016 J.D. candidate at the University of Denver Sturm College of Law.

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