Colorado Amendment 64 Task Force Report: Opportunities for Existing Dispensaries, Cultivators

By Anne Holland

The task force responsible for suggesting regulations tied to Amendment 64 – the legalized sale of cannabis to adults – announced its formal recommendations today. True to Colorado’s fairly careful nature regarding cannabis businesses, the task force does not recommend flinging open the doors to all newcomers. However, there are some encouraging suggestions for existing dispensaries, cultivation operations and testing companies in particular.

Following is an overview of the task force’s major recommendations, as well as our take on what it may mean for major industry sectors. (For more details on all task force recommendations and guidelines, here’s a link that includes the full report and a recorded video conference.) State lawmakers will consider these proposals as they develop concrete rules and regulations on the cannabis industry.

Task force recommendations for…

Dispensaries:
– Only existing dispensary license holders in good standing should allowed to apply for a permit to open an adult-use retail center – or to transition to adult-use entirely (versus focusing on goods and services for patients) – for at least the next year. New permit fees could be higher than $5,000.

– License holders and all staff must reside in Colorado, although financial backers may live elsewhere.

– No consumer may possess more than an ounce of cannabis at a time, so retail transactions will be limited to less than an ounce per purchase. The limits are tighter on out-of-state consumers.

– Retail shops can sell via vending machines, as long as these are inside your establishment.

– If you open a smoking club, you should not be able to allow tobacco smoking on the premises. However, vending machines offering cannabis products should be allowed.

– Local governments should still have a lot of power: municipalities could decide to not allow any retail sales, regardless of state laws – meaning you’d need to keep on the good side of the city council.

Cultivation Operations:

– For at least the next three years, Colorado’s 70/30 supply chain rules should remain in effect. This means dispensaries and adult retailers would have to grow at least 70% of the cannabis they sell. Given the expanded market, we anticipate independent operators would still have a chance to grow their businesses if state lawmakers adopt this suggestion.

– Cultivators may also be subject to a 15% tariff at the point where they transfer their crop to retailers.

– The state should regulate the types of chemicals you use in your cultivation, and probably mandate some sort of lab testing to make sure you stick to rules. If you’ve considered going organic, now is a good time to get serious about it.

– The General Assembly should pass legislation in 2013 allowing the cultivation and sale of industrial hemp. This may be a great area for expansion while you’re waiting for the 70/30 rule to run out three years from now.

Ancillary Businesses:

– Great news for testing labs – the task force is strongly in favor of mandated testing and labeling for potency, and possibly the presence of banned substances. Get involved by joining the “good lab practices task force” that’s expected to launch by Jan. 1, 2014.

– Colorado should be a “baggie-free” zone, and professional packaging should be mandated.

– Edibles makers should be limited to no more than 10mg of active THC per serving. If this rule takes effect, your labels will need to show number of servings per package and “serving size” – just like regular food products. Retail stores would not be able to sell products with both THC and tobacco or alcohol.

– Landlords may be somewhat protected from banks foreclosing on mortgages if your tenant is a dispensary or adult-use retailer. The task force has asked the General Assembly to clarify in a statute that legal contracts should not be voidable if your tenants are operating locally-legal marijuana businesses.

11 comments on “Colorado Amendment 64 Task Force Report: Opportunities for Existing Dispensaries, Cultivators
  1. Jesse on

    In your story it says that financiers do not have to be colorado residents. My reading of the news release is that they DO have to be colorado residents. Can you point out where in Amendment 64 this is stipulated?
    Thanks

    Reply
  2. Kayvan Khalatbari on

    Anne, what does this mean: “Packaging suppliers should also rejoice because Colorado is going to be ‘baggie-free’ zone.” We haven’t gone through these pages 100%, but it would appear using transparent baggies is just fine, as long as it’s placed into an opaque “exit package” before leaving the facility.

    Reply
  3. Leef on

    great article! a lot of us have been waiting for this for a long time. ecstatic to see this in my lifetime. another green rush begins…

    Reply
  4. CassandraF on

    Hi Jesse, in our reading of the documents, the recommendations around residency requirements for license holders and staff are explicitly stated. There are no such stipulations recommended for financiers. Add to that fact that money itself is easily transferable through contracted agreement among private individuals to bypass such financier residency requirements, and our reading is that you can reside anywhere and provide financial backing.

    Reply
  5. CassandraF on

    Hi Kayvan – this is our interpretation of section 8.2 of the full report. There’s also the consideration of the child-proof packaging. We’ve also heard from packaging suppliers who strongly suspect Colorado is going to move to a “no baggies” rule as a result.

    Reply
  6. Kayvan Khalatbari on

    I guess we would have to wonder which packaging suppliers you are speaking of as there currently exists only one in Colorado that is MJ specific: MMCDepot.com. My money is on baggies being around for a long time, especially now that many places are moving towards bio-degradable “plastic” baggies.

    Reply
    • CassandraF on

      Could be – we’ll have to see as things develop. The crystal ball for this industry has always been a bit foggy. 🙂

      Reply
  7. Jesse on

    I agree that such a reading regarding financiers is possible, but if said financiers are looking for equity in the business, which many would, that seems to fall under the category of owner and therefore precludes any financier taking an equity position in a colorado rec. MJ business (back room dealings amongst private individuals excluded). Thoughts?

    Reply
    • CassandraF on

      My thought, based on my background in banking, is that if someone wants to make it happen, there will be all kinds of creative ways to set up financial relationships and contract to enable this sort of investment while protecting the equity stake of the investor. I agree that investor won’t be able to have his or her name on the door (or license), but most of the financiers are going to be in it for the money, rather than for that publicity.

      Reply
  8. Michael on

    Who are the most used lawyers or best or most knowledgeable concerning licensing for cultivation, dispensaries, and recreational facilities in Colorado

    Reply

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