The retail marijuana picture in Colorado and Washington is starting to take shape.
Last week, both states moved forward with setting up an overall framework for their respective recreational cannabis industries. In Colorado, officials submitted emergency marijuana rules in order to meet a statutory deadline, while in Washington the Liquor Control Board approved proposed regulations covering recreational cannabis. (Here’s a link to Colorado’s emergency rules and one offering highlights of Washington’s regulations.)
Retail marijuana businesses in both states will have to implement thorough tracking systems to account for the marijuana they grow or sell and adhere to other requirements covering everything from packaging, labeling and records-keeping to advertising, security, sanitation and the transportation of marijuana.
To get an idea of the future marijuana business climate in Colorado and Washington, here’s a sampling of the initial rules in each state:
– The state must approve or deny retail business applications within 90 days of receipt – a much-needed provision given the long delays and logjams medical marijuana applicants faced. All state marijuana business licenses are subject to local approval, meaning cities and counties can (and many already have) banned retail marijuana stores.
– Existing medical marijuana dispensaries can sell to the recreational cannabis market at the same location – and have shared entrances and exits – as long as they only serve adults 21 and older and use separate display areas. Otherwise, they will need different locations. Businesses targeting both medical and recreational users at one location must maintain separate and distinct inventory tracking processes. Medical and retail inventories must be clearly tagged or labeled as such, and the store must maintain virtual or physical separation of facilities, plants, inventory, ingredients and product manufacturing.
– Application fees will run $500 for those currently operating medical marijuana businesses and $5,000 for all others. The fee structure for actually obtaining a license: $3,750 to $14,000 for a retail store – depending on size – and $2,750 for a cultivation, products manufacturing or testing facility.
– From January through September, retail stores must grow at least 70% of their total on-hand marijuana inventory – meaning they can only buy 30% on the wholesale market, though they can petition to purchase more than if there’s a catastrophic event.
– Stores can only sell one ounce to a Colorado resident in a single transaction, or a quarter of an ounce for out-of-stater consumers. Internet sales are not allowed, nor are sales of cigarettes, alcohol or non-infused food and drinks at retail shops. Customers and employees are not allowed to consume on-site.
– Retail marijuana businesses must test their marijuana to ensure it doesn’t contain residual solvents, poisons, toxins, harmful chemicals, dangerous molds and mildews. They also need to test for THC and overall potency. Testing facilities can’t also have a retail, cultivation or product manufacturing license and are barred from selling, distributing or transferring marijuana to retail businesses.
– Retail stores can sell up to an ounce of marijuana, 16 ounces of infused product in solid form or 27 ounces of infused product in liquid form in a single transaction to adults 21 and over.
– Application fees will run $250 for producers, processors and retailers. The license will cost $1,000 and must be renewed on an annual basis. Each applicant will need to submit a detailed operating plan covering everything from security to employee qualifications and training. They also need to meet minimum insurance requirements. The state will initially open a 30-day window for applications, likely sometime starting in mid-September.- The state will cap the number of marijuana stores (the number will be determined later) but will not impose limits on the number of licenses for cultivation sites and infused products companies.
– All marijuana and related products must be tested through third-party, certified labs, which must employ a scientific director with an advanced degree in biological or chemical science and have professional experience. Retailers have to disclose the name of the accredited third-party lab and test results for cannabis and infused products if the customer requests such information.
– Labels on containers or packaging at retail stores have to include detailed information, such as the business or trade name and state unified business identifier number of the licensees that produced, processed and sold the usable marijuana; the lot number; the concentration of THC, THCA, CBD, CBDA, CBN, CBG; and the net weight.
This isn’t the last word on the matter in either state, by any means. Officials will tweak and refine the rules in the coming months and introduce more detailed regulations before retail stores open. But the general regulatory structure will be very similar to what the states have put out there now.
In other cannabis developments last week, Oregon took a big step toward creating a legitimate, state-legal marijuana distribution network when the state House of Representatives passed a bill to regulate and license medical marijuana dispensaries. The measure now sits on the desk of the governor, who has not said he whether he will sign it. (Check out the full text of the bill here.)
The measure could create some turmoil for the state’s medical marijuana industry but would lead to more stability and a stronger business climate in the long run. Dispensaries are technically illegal under the state’s MMJ law, but an estimated 200 exist. The state and individual cities have more or less turned their heads so far, but that could change at any time if officials decided to devote resources to a crackdown.
If the governor signs the bill, however, there would be a clear set of rules for dispensaries to follow and legal justification for their existence. Some certainly would not meet the regulations and would be forced to close. But those able to make the transition – and any new players that arise – should be positioned well after the initial shakeout.