Do Marijuana Collectives Have a Future in Colorado?


MJ Proper

The marijuana legislation signed by Colorado Gov. John Hickenlooper on Tuesday includes language aimed at preventing unlicensed pot stores from operating as nonprofit corporations:

No person shall form a business or non-profit, including but not limited to a sole proprietorship, corporation, or other business enterprise, with the purpose or intent, in whole or in part, of transporting, cultivating, processing, transferring, or distributing marijuana or marijuana products without prior approval of the state licensing authority and the local jurisdiction.

The Denver Post reports that MJ Proper, a 501(c)(3) organization that delivered marijuana buds and marijuana-infused beer to its members, has suspended operations in response to this provision. The paper says "collectives that provide pot to members at or below cost…face uncertain prospects now that laws governing legalized marijuana in Colorado are on the books." But on its face, the new prohibition applies only to formally organized nonprofits like MJ Proper, not to collaborative efforts by friends, neighbors, or acquaintances. And a mere statute cannot override Amendment 64, the marijuana legalization initiative that is now part of the state constitution. Among other things, Amendment 64 allows people to grow up to six plants for personal use, possess the marijuana produced by those plants, transfer up to an ounce at a time "without remuneration," and "assist" others in growing and consuming marijuana. That leaves considerable leeway for people to pool their efforts and resources to produce marijuana, either as an alternative to state-licensed outlets or as a stopgap measure before they open next year.

The Post cites two Denver attorneys who offer somewhat different advice on how to take advantage of these new freedoms:

Robert Corry, a Denver lawyer whose firm has helped establish more than a dozen pot collectives, said he believes existing collectives are grandfathered in and can continue.

Corry said he would advise others starting out to not formally incorporate. He also argues the right for adults to organize collectives is protected under Amendment 64, no matter the intent of legislators.

"Any reading of it allows my clients to keep on doing exactly what they are doing—and they will," Corry said…

Corry advises collective operators to seek reimbursement from members for rent, power, fertilizer, chemicals and other expenses. He said he believes collectives also can include their labor costs but advises against it because documentation is more difficult.

Denver lawyer Warren Edson said he thinks the new pot regulations prohibit assignment of growing rights but allow for more hands-on collectives with members taking active roles in the growing process.

While some Colorado legislators may view these alternative sources of marijuana as an abuse of Amendment 64, the so-called loopholes help ensure that the initiative's goal of establishing a legal supply of cannabis will be reached, regardless of how the federal government decides to respond.