By 2010, there were hundreds and hundreds of marijuana businesses in operation. In response to the growing unregulated commercial medical marijuana industry, the Colorado State Legislature became one of the first governing bodies to enact legislation to implement a regulatory structure for commercial licensed medical marijuana businesses when it enacted HB10-1284.
This piece of legislation created the regulatory structure for medical marijuana; naming the Executive Director of the Department of Revenue as the State Licensing Authority, creating the Medical Marijuana Enforcement Division (“MMED”, now “MED”), and setting up a licensing construct for cultivations, products manufacturers, and centers – all of which were required to undergo financial and criminal background checks. Additionally, it required all employees in the industry to be licensed and undergo criminal background checks.
Key points of HB10-1284:
- Reiterated that the only lawful sale of medical marijuana was through the licensed system
- Allowed existing medical marijuana businesses to continue operating pending licensure under certain circumstances
- Allowed local jurisdictions to opt out
- Required medical marijuana centers to certify that they were growing 70% of the medical marijuana needed for their patient and plant count
- Required the State Licensing Authority to establish the licensing program – rules, processes, and operations to grant, deny, revoke, and sanction licensees; and for renewal and transfer of licenses
- Required the State Licensing Authority to prohibit licensure to persons who were not of good character – thus a fingerprint-based FBI criminal background check
- Established distance requirements
- Prohibited unlawful financial assistance – thus a complete disclosure of all persons with a financial interest
- Specified a list of per se unlawful acts, and
- Set a sunset period of five years – July 1, 2015
Previews of Upcoming Discussions
Implementing these requirements, setting up an entirely new Division, promulgating an entirely new set of regulations on a product that was illegal at the federal level, licensing the operating businesses, many of whom were not accustomed to regulation or taxation, and dealing with an unsustainable funding model would prove challenging. In the next post, I will lay out those challenges in detail and provide a list of lessons learned.