Bills in CO Establish New Marijuana Regulations for Buyers and Sellers

Marijuana regulations
Ever since Amendment 64 was voted through last November, Americans have wondered what the implications of legalized marijuana might be for the state of Colorado.

While lawmakers have taken their time in drafting regulations for a recreational system, recently passed bills are starting to paint a picture of marijuana’s future in what seems to be an already pot-friendly state.

Last week, the state Legislature voted in favor of two bills, House Bill 1317 and House Bill 1318, which now await Governor John Hickenlooper’s signature before becoming law.

According to the Denver Post, Colorado’s governor has already indicated his approval, suggesting that a legal system for marijuana is just a formality away from being realized.

Once signed, citizens of Colorado will finally be allowed to take full advantage of the liberties enacted by Amendment 64.

While marijuana has been legal for anyone over 21 to possess since November, buyers and sellers were left to traverse the “grey areas” of Colorado’s marijuana laws, which have yet to be addressed until now.

House Bill 1317 creates the regulatory framework for legal marijuana, outlining what business activities are permissible as well as processes for licensing, monitoring, and fee collection.

House Bill 1318 is solely dedicated to the issue of taxes and will still need to be approved by Colorado voters before taking effect.

Retail stores will be set to open around January 1, 2014.

House Bill 1317 – Legal Marijuana Regulations

Beginning on October 1, 2013, already licensed or license-pending medical marijuana businesses will be given priority for vetting under the new system.

In the process of applying for a license, all business personnel, including owners, managers, contractors, and employees, will be subject to a background check that evaluates “good moral character,” including a criminal history check.

While medical marijuana businesses may choose to forfeit the medical status of their products, the new laws also allow businesses to sell both medical and recreational marijuana from the same location.

The application fee is set at $5,000, which will be equally split between a Marijuana Cash Fund – the MMED’s money pool – and the businesses’ local jurisdictions.

Granted licenses will not be effective until January 1, 2014, which is also the date when applications will open up to all other prospective businesses.

The regulations impose strict security requirements on marijuana sellers in order to reduce the risk of theft as well as diversion of marijuana to non-qualified users (i.e. individuals under the age of 21). Likewise, retail stores are prohibited from being within 1,000 feet of a school, child care center, or drug treatment facility.

Businesses may choose to cultivate marijuana themselves or buy marijuana from other licensed businesses. Cultivators will be required to track every product from seed to sale.

Marijuana products must meet specific requirements, including quality assurance, THC and CBD analysis, child-resistant packaging and health and safety labeling.

Products are also banned from containing substances that are toxic or addictive as well as addictives that increase the product’s appeal to children. For example, adding nicotine or alcohol to marijuana is prohibited.

Advertising will be restricted from involving misleading health claims, internet pop-ups and banners, or text messages.

The new laws also limit purchases to an ounce for Colorado residents and a quarter-ounce for non-residents. Transactions must take place at the businesses’ physical locations and customers will be carded at the point of sale.

Enforcement of the regulations will fall on the state’s Medical Marijuana Enforcement Division (MMED), which currently oversees the medical marijuana system.

In accordance with the state constitution, local jurisdictions may impose their own set of regulations or even choose to prohibit retail marijuana completely.

House Bill 1318 – Legal Marijuana Taxes

On top of local and state sales taxes, marijuana will be subject to a 10 percent sales tax at retail and a 15 percent excise tax at wholesale. This could mean an effective tax rate of over 30 percent in certain jurisdictions.

Two-thirds of the marijuana sales tax will go towards local jurisdictions, whereas the first $40 million collected on wholesale transactions will be used to fund construction of public schools. The remaining tax revenue will end up in the Marijuana Cash Fund.

The proposed taxes still need to be approved by voters during the next statewide election before taking effect on January 1, 2014.