Amendment 64 Implementation

State and Local Government Mandates and Regulatory Requirements

R Kammerzell Ron K ll Deputy Senior Director of Enforcement C l d Department Colorado D t t of fR Revenue

Facts About Amendment 64

Regulate the growth, manufacture, and sale of marijuana in a system of licensed establishments overseen by state and local governments; All Allow individuals i di id l who h are 21 years old ld or older to possess, use, display, purchase, transport and transfer (without transport, remuneration), to individuals who are 21 years old or older olderone ounce or less of marijuana;

Implementation p Timeline for Amendment 64

July 1, 2013 Department shall adopt necessary regulations October 1, , 2013 Department p shall begin g accepting and processing license applications October 1, 2013 Localities must enact an ordinance or regulation g specifying p y g the entity y within the locality that will be responsible for licensing January 1, 2014 Department must begin issuing licenses (90(90-day requirement) January 1, 2014 through October 1, 2014 additional triggers under HB 1313-1317

Local Mandates of A64

October 1, 2013 Each locality shall enact an ordinance identifying the entity responsible for licensing Local governments may enact ordinances governing time, place, manner and number of establishment operations Local governments can prohibit the operation of marijuana enterprises within their local limits by passing an ordinance or by initiated or referred measure appearing on the ballot during an even numbered election year Local governments may establish a schedule of operating fees for marijuana establishments

Local Mandates of A64 contd td

Local governments may establish civil penalties for violation of ordinances or regulations governing time, place and manner of operation The Department must provide the local government with a copy of the license application and half of the application fee ($250 or $2,500) upon receipt Local governments must notify the Department if an applicant is not in compliance with local ordinances prior to the issuance of the state license

Local Mandates of A64 contd td

If the local government has imposed a limit on the number of licenses to be issued, the Department must solicit and consider input from the local government t concerning i their th i preference f f li for license approval If the Department does not issue a license within 90 days da s of receipt, eceipt the applicant can rere e-apply appl with ith the local government who will have the authority to approve the license without the consent of the Department

Local Mandates of A64 contd td

If the Department does not adopt regulations required by July 1, 2013, an applicant may submit an application directly to the local government after O t b 1, October 1 2013 and d the th local l l government t is i authorized to issue a license without the consent of the Department Licenses iss issued ed b by local go governments e nments without itho t state consent will have the same force and effect as a license issued by the Department for the term of the license

State Mandates A64

The Department must adopt regulations necessary for the implementation of Amendment 64 not later than July 1, 2013 Regulations adopted by the Department must address dd the h following: f ll i
Procedures for the issuance, renewal, suspension and revocation of a license to operate a marijuana establishment

State Mandates contd d

Fee schedules for application, licensing and renewal fees (the application fee shall not exceed $5,000 adjusted annually for inflation, unless l the th Department D t td determines t i a greater t f fee is necessary) An entity currently licensed under the Medical Ma ij ana Code may Marijuana ma not be subject s bject to an application fee of more than $500 to apply for a license to operate a recreational marijuana establishment Qualifications for licensure to operate a marijuana establishment

State Mandates contd d

Security requirements for the operation of a marijuana establishment Labeling requirements for marijuana and marijuana products sold or distributed by a marijuana ij establishment bli h Health and safety standards for the cultivation lti ti of f marijuana ij and d the th manufacture of marijuana products

State Mandates contd d

Restrictions on the advertising and display of marijuana and marijuana products Civil penalties for the failure to comply with i h adopted d d regulations l i

State Mandates contd d

In any competitive application process, the Department p shall consider:

If the applicant has prior experience producing p g or distributing g marijuana j under the Medical Marijuana Code in the locality in which the applicant wishes to operate Compliance history of the applicant under the Medical Marijuana Code

State Mandates contd d

State has no jurisdiction over licenses issued by local governments, due to inaction by the State, during the term of the license License types established by Amendment 64: 64
Marijuana Cultivation Facility Marijuana Product Manufacturing Facility Marijuana Testing Facility Retail Marijuana Store

HB 13 13-1317 - Majority Bill

Designates the Department of Revenue (DOR) as the state licensing authority for both medical and retail marijuana. Requires the DOR to promulgate rules on the h following, f ll i prior i to July J l 1, 1 2013: 2013 Licensing, fees, qualifications, i d independent d t testing t ti and d certification, tifi ti lab l b standards, labeling and packaging requirements production limits, requirements, limits etc. etc

HB 13 13-1317 contd

No retail license can be issued by DOR prior to January 1, 2014. On or before April 1, 2014 and on or before April 1 each year thereafter, the DOR shall submit b i a report to the h JBC and d Finance Fi Committees on retail marijuana. C t M Creates Marijuana ij Cash C h Fund F d which hi h includes i l d application and license fees, and all sales and excise taxes collected. collected

HB 13 13-1317 contd

MED receives appropriation funding from medical and retail marijuana general sales tax revenues (2.9%) and application and license fees deposited in the marijuana cash fund. fund On or after October 1, 2013, an existing medical marijuana licensee or applicant that applied prior to December 10, 2012, may apply for a retail marijuana license.

HB 13 13-1317 contd

Two options for licensure:

Applicant may surrender the medical marijuana license upon issuance of retail marijuana license Applicant may opt to operate both retail and medical establishments

Can only have both establishments at same location if th local the l l jurisdiction j i di ti permits it it. it Retail and medical stores must have a physical separation between the two establishments unless b th establishments both t bli h t intend i t d only l to t sell ll to t persons 21 years or older.

HB 13 13-1317 contd

After January 1, 2014, any person who did not meet the requirements of being a current medical licensee or applicant can submit a notice of intent to apply for retail marijuana license. license On July 1, 2014, anyone can apply for a retail marijuana license. license Preference shall be given to applicants that submitted a notice of intent.

HB 13 13-1317 contd

Once an application is received by the, MED the division has seven days to forward a copy of the application to the local jurisdiction. Th local The l l jurisdiction j i di i shall h ll determine d i whether the application complies with local restrictions. restrictions MED can conditionally approve a license, conditioned upon local approval. approval

HB 13 13-1317 contd

The local jurisdiction shall inform the MED whether the applicant complies with local restrictions and must either approve or deny the applications sent to it from the MED. Th applicant The li is i prohibited hibi d from f operating i a retail marijuana establishment without a licensed approved by both the local jurisdiction and the DOR.

HB 13 13-1317 contd

If the applicant has state approval, but doesnt receive local jurisdiction authority approval within 1 year from the date of the state approval the state license shall expire and may not be renewed. renewed If an application is denied by the local jurisdiction then the MED shall revoke the jurisdiction, state issued license. Beginning October 1, 1 2014 the 70/30 vertical integration is no longer required

HB 13 13-1317 contd

Local jurisdictions can:

prohibit retail marijuana within their jurisdictions impose p separate p local licensing g requirements p and enforce regulations g for retail adopt marijuana that are at least as restrictive as Article 43.4 of Title 12 impose operating fees

HB 13 13-1317 contd

Unlawful Acts include:

allowing retail marijuana or marijuana products to be consumed on licensed premises selling retail marijuana or marijuana products to a person under 21 years of age without checking the persons identification selling more than a of an ounce of retail marijuana and no more than of an ounce equivalent of retail marijuana product during a single transaction to a non-resident non resident of the state

HB 1313-1318 - Marijuana j Tax Bill

This bill requires the Secretary of State to submit a ballot question at the statewide election in November 2013 asking voters to approve an additional sales tax and excise tax on marijuana Impose a retail marijuana sales tax at a rate not to exceed 15% of the sale of retail marijuana and marijuana products (This is in addition to the 2.9% already imposed)

HB 1313-1318 - Marijuana j Tax Bill

Impose a retail marijuana excise tax at a rate not to exceed 15% of the average market rate of unprocessed retail marijuana when sold or transferred to a retail store, retail product manufacturer or another retail cultivation facility Allow the general assembly to increase or decrease the rate of either the excise or sales tax as long as the rate doesnt doesn t exceed 15%

HB 1313-1318 - Marijuana j Tax Bill

If sales tax is approved:

Effective on January 1, 2014 Rate would be 10% of the amount of the sale (This is in addition to the standard 2.9%) General Assembly can adjust rate up to 15% DOR can require returns and payment to be made electronically y DOR is required to promulgate rules regarding electronic payment and returns

HB 1313-1318 - Marijuana j Tax Bill

Distribution of Sales Tax

15% of the gross retail marijuana sales tax will be distributed to local governments City or Town share calculated based on retail marijuana sales tax revenues collected in the boundaries of the city or town vs the total retail marijuana sales tax collected statewide County share calculated based on retail marijuana sales tax revenues collected in the unincorporated area of the county vs the total retail marijuana sales tax collected statewide

HB 1313-1318 - Marijuana j Tax Bill

If excise tax is approved:

Effective on January 1, 2014 Rate would be 15% of the average market rate and is imposed on the first sale or transfer of unprocessed retail marijuana Every six months, the DOR sets the average market rate General Assembly can adjust tax rate but it cannot exceed 15%

HB 1313-1318 - Marijuana j Tax Bill

Distribution of excise tax

1st $40 million will be transferred annually to the public school capital construction assistance fund Any remaining amount will be transferred to the marijuana cash fund

SB 1313-283 Consensus Bill

Allows local governments to ban the use of a compressed, flammable gas as a solvent in the extraction of THC or other cannabinoids in a residential setting All Allows retail il marijuana ij businesses b i to participate in the medical marijuana responsible vendor program

SB 1313-283 Consensus Bill

Requires that a drug policy task of the Colorado Commission on Criminal and Juvenile Justice make recommendations to the Commission who shall make recommendations by December 15 15, 2013 2013, to the General Assembly regarding criminal laws that need to be revised to ensure that Title 18 CRS and other relevant criminal statutes are compatible with intent and plain meaning of Section 16 of Article XVIII of the State Constitution.

SB 1313-283 Consensus Bill

Authorizes Governor to designate the appropriate state agency to:

Create a list of banned substances in the cultivation or processing of marijuana Work with private advisory group to develop good cultivation and handling practices Work with a p private advisory y group g p to develop p good laboratory practices Establish an educational oversight committee for marijuana issues

SB 1313-283 Consensus Bill

Required the Division of Criminal Justice in DPS to undertake or contract for a scientific study of law enforcement activities related to retail marijuana implementation
DCJ isnt i t required i d to t perform f th these d duties ti until til the marijuana cash fund has received sufficient revenue to fully y fund the DOR appropriations pp p related to Article 43.3 and 43.4 of Title 12 and the General Assembly has appropriated funds for this purpose from the marijuana cash fund

SB 1313-283 Consensus Bill

CDPHE to monitor changes in drug use patterns, broken down by county and race and ethnicity and the emerging science and medical information relevant to the health effects associated with marijuana use use.
CDPHE isnt required to perform these duties until the marijuana cash fund has received sufficient revenue to fully fund the DOR appropriations related to Article 43.3 and 43.4 of Title 12 and the General Assembly has appropriated funds for this purpose from the marijuana cash fund

SB 1313-283 Consensus Bill

Adds marijuana to the Colorado Clean Indoor Air Act Allows certain state tax deductions for retail marijuana establishments that are not otherwise h i permitted i d by b federal f d l law l effective ff i January 1, 2014 C t an open container Creates t i offense ff f for marijuana to mirror the open container offense for alcohol

Other Information

HB 13 13-1238 De De-coupling Bill Emergency g y Rulemaking g Announcement

Emergency rules adopted by July 1, 2013 Permanent rulemaking to begin after July 1, 2013 Working group approach to permanent rulemaking Permanent rulemaking hearing the week of August 19, 2013

Questions