Marijuana

Colorado Will Soon Decide the Rules for Selling Pot

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Jacob Sullum

This week the Colorado General Assembly, which will be in session only two more weeks this year, is considering two bills that lay the groundwork for regulation and taxation of marijuana sold by the state-licensed stores that are expected to start operating early next year. H.B. 13-1317 would transform the Colorado Department of Revenue's Medical Marijuana Enforcement Division into a more general Marijuana Enforcement Division, charged with writing regulations for the new industry by July 1, subject to the legislature's guidelines. Here are some of the major regulatory issues that would be settled by statute if the bill is approved:

  • After receiving a license application, the Marijuana Enforcement Division would coordinate with the government of the municipality where the proposed business is located, making sure it complies with "local regulations governing the time, place, manner and number of retail marijuana establishments" as well as any local licensing procedure, should the municipality decide to establish one.
  • Current medical marijuana centers (MMCs) would have a 90-day head start in the licensing process, with new competitors barred from applying until January. That is substantially shorter than the one-year "grace period" favored by the Amendment 64 Implementation Task Force, which was appointed by Gov. John Hickenlooper to advise the legislature on how to regulate marijuana.
  • MMCs that decide to get into the recreational market would have the option of continuing to serve patients, but they would have to keep the two retail operations separate.
  • Vertical integration would be permitted but not required. Marijuana stores could obtain cutivation licenses to grow their own inventory, or they could buy from growers. This approach is more flexible than the one favored by some MMCs and the task force, which recommended retaining a rule requiring stores to grow at least 70 percent of what they sell. 
  • Owners of marijuana businesses must live in Colorado at least two years before applying for a license, a requirement that would seem to bar out-of-state investors from getting involved in the new industry, at least if they receive equity in exchange for their money.
  • Pot stores would be banned within 1,000 feet of "a school, an alcohol or drug treatment facility, the principal campus of a college, university, or seminary, or a residential child care facility." The same rule already applies to MMCs, although those operating when the restriction was enacted were exempted. If one of the listed locations began operating after a license was issued, the marijuana store would not have to move.
  • Packages of marijuana products would carry labels indicating THC content, the amount of THC per serving, nonorganic chemicals used to grow the marijuana, solvents used in the extraction process, ingredients, nutritional information, an expiration date, and a warning that "there may be health risks associated with the consumption of this product."
  • Customers who do not live in Colorado would not be allowed to buy more than a quarter of an ounce per transaction. It is not clear how this restriction, which is aimed at discouraging diversion of marijuana to other states, would be enforced, since Amendment 64 says the state "shall not require a consumer to provide a retail marijuana store with personal information other than government-issued identification to determine the consumer's age." (Buyers must be at least 21.) If a customer uses a passport or another form of ID that lists his date of birth but not his address, how will the seller know where he lives?

Potentially contentious issues to be settled by the Marijuana Enforcement Division include restrictions on advertising, limits on the amount of THC per serving, child-resistant packaging, and health and safety regulations for cultivation of marijuana and manufacture of cannabis-infused products.

The other marijuana bill, H.B. 13-1318, imposes an excise tax of 15 percent, as authorized by Amendment 64, on "the average market rate of unprocessed retail marijuana statewide on the date that it is sold or transferred," as determined by the Department of Revenue. The bill also imposes a special sales tax of 15 percent on marijuana products, on top of current state and local sales taxes (which total 8 percent in Denver, for example). Both taxes would have to be approved by voters in November, and the legislature would be authorized to reduce (but not increase) either rate. Although Amendment 64 says marijuana should be "taxed in a manner similar to alcohol," the impact of this double whammy on the retail price of marijuana products would be much more dramatic than the impact of state and federal alcohol taxes on the retail prices of beer, wine, and liquor.

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  1. “Pot stores would be banned within 1,000 feet of “a school, an alcohol or drug treatment facility, the principal campus of a college, university, or seminary, or a residential child care facility.”

    This raises an interesting question: Would home schooling homes be considered “schools”?

    1. Are liquor stores banned within 1,000 feet of a school?

      1. They may be in some places, but I do not think they should be. Paul, I am not defending these regulations (with the possible exception of prohibiting its use by minors). But it would be an interesting legal question whether or not homeschools are recognized as schools under the law.

        1. They tend not to be. I think they have to be registered as a school for laws saying “within X feet of school” to apply.

        2. I know you’re not, I’m just asking the question outloud. Ie, is Marijuana going to continue to be treated as extra-scary dangerous-ey and therefore the chillinz cannot even lay eyes upon the demon weed?

          Are they going to treat it like a concealed weapons permit in seattle: you register for a license at the same window sex offenders register?

    2. Sure Q o A, give them ideas.

      What kinds of things do you have in your house that are not allowed near schools? Guns, alcohol, etc. Time for a visit from the CPS. Kiss your kids goodbye.

  2. Regulations contradicting themselves?!?!? NO WAI!

  3. Was Jake a it too high to include the alt-text?

  4. If they keep piling on the taxes until it’s cheaper to buy the stuff off the black market, they can prove that legalization doesn’t work!

    1. As they say in the world of software: “It’s not a bug; it’s an undocumented feature!”

  5. Speaking of alt text, our new boss here at work hired one of his buddies for a Fed gov job that wasn’t even announced. This buddy was supposed to have been in charge of section 508 compliance for various web sites owned by the Marine Corps. When he was being trained, he admitted he didn’t know what alt text was.

    Alt text is one of the very basics aspects of 508 compliance. Trying to do 508 compliance without knowing what alt text is is like trying to do algebra without knowing your multiplication tables.

    Gotta lub the gubmint and its hiring of the least competent individuals for 100s of years!

    1. The fed guy with the purse strings for the contract I work under does not understand that while the current version of a software project is being tested, work can be done on the next version. Nope. By his edict, there may be no development between testing and analysis of the next list of requirements. So the developer team spends two thirds of their time doing absolutely nothing, because some bureaucrat is too stupid to understand basic software development principles.

    2. That bastard. And he’s in Vermont too?

  6. It is not clear how this restriction, which is aimed at discouraging diversion of marijuana to other states, would be enforced, since Amendment 64 says the state “shall not require a consumer to provide a retail marijuana store with personal information other than government-issued identification to determine the consumer’s age.”

    How many government IDs don’t contain an address? I’m guessing this will be a vanishingly small percentage of transactions.

  7. The lawyers are already salivating over this. I can see several cases that will hit the courts very soon.

    (a) IN THE INTEREST OF THE EFFICIENT USE OF LAW ENFORCEMENT RESOURCES, ENHANCING REVENUE FOR PUBLIC PURPOSES, AND INDIVIDUAL FREEDOM, THE PEOPLE OF THE STATE OF COLORADO FIND AND DECLARE THAT THE USE OF MARIJUANA SHOULD BE LEGAL FOR PERSONS TWENTY-ONE YEARS OF AGE OR OLDER AND TAXED IN A MANNER SIMILAR TO ALCOHOL.
    (b) IN THE INTEREST OF THE HEALTH AND PUBLIC SAFETY OF OUR CITIZENRY, THE PEOPLE OF THE STATE OF COLORADO FURTHER FIND AND DECLARE THAT MARIJUANA SHOULD BE REGULATED IN A MANNER SIMILAR TO ALCOHOL SO THAT:

    Looks like the asshats are going outside what they can do from the wording of Amendment 64.

    http://www.regulatemarijuana.o…..l-act-2012

    1. IN THE INTEREST OF THE EFFICIENT USE OF LAW ENFORCEMENT RESOURCES, ENHANCING REVENUE FOR PUBLIC PURPOSES, AND INDIVIDUAL FREEDOM

      the modern legislative template.

      #1: Help the police!

      #2: Get the state mo’ money!

      #3: Oh, yeah, and some freedom and rights…

  8. Although Amendment 64 says marijuana should be “taxed in a manner similar to alcohol,” the impact of this double whammy on the retail price of marijuana products would be much more dramatic than the impact of state and federal alcohol taxes on the retail prices of beer, wine, and liquor.

    ‘Cause that’s how they do.

    1. Growing your own is so easy. There will be a market limit as to how much they can tax this.

      Making good alcohol is time consuming. Growing good weed? Not so challenging.

  9. What the rules should be:

    Seller must have pot.

    Buyer must have something acceptable to trade for said pot.

    Exchange is made.

    What the rules are:

    *Drops massive binder on table* – I haven’t had a chance to read it yet.

  10. Both taxes would have to be approved by voters in November

    Heh, good old TABOR. Just about the only thing preventing the CA transplanted progresso-tards from completely turing CO into East California. I plan on voting no on the taxes. Unless they put some kind of poison pill in there where Ammendment 64 automatically goes away if the taxes aren’t passed. I don’t think they can legally do that though, not that I would expect that to stop them.

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