Mountain Law: Could new regs kill the green rush buzz? |

Mountain Law: Could new regs kill the green rush buzz?


A new law called the Colorado Medical Marijuana Code (CMMC) was recently signed into law by Gov. Ritter. The CMMC is intended to place new regulations on a buregeoning industry that has been largely unregulated since limited use of medical marijuana was legalized in 2000 by amendment of the state constitution.

The new code provides that a medical marijuana business that is “established” and “locally approved” on July 1, 2010 (or for which the owner has applied for approval before July 1, 2010, that is subsequently granted) will be allowed to continue operating if it complies with applicable state and local laws. The term “established” is defined in CMMC to mean (1) owning or leasing a space “with a storefront”; and (2) remitting sales tax in a timely manner on retail sales as required by state and local law.

The CMMC appears to have created a “green rush” in many communities as aspiring medical marijuana entrepreneurs seek to establish their businesses before the July 1 deadline. In the down economy, these new businesses are creating demand for commercial space where none may otherwise exist.

Becoming established before the deadline may allow medical marijuana businesses to operate, but perhaps only for a limited period of time. The continued operation of such businesses will require owners to comply with forthcoming regulations issued by state and local governments, the substance of which are still largely unknown.

Some of the known requirements are as follows:

• A person wishing to run a medical marijuana business must apply for a state license on or before August 1, 2010, and pay a state licensing fee in an amount that is not yet determined (but could be substantial).

• The CMMC requires each local government (city, county, or city and county) to establish its own medical marijuana licensing regulations. The local regulations are not yet adopted and could be burdensome. In lieu of adopting their own regulations, local governments may permanently ban these businesses (a power that was in question before CMMC).

• On or before September 1, 2010, a medical marijuana business must grow 70 percent of its own medicine (the remaining 30 percent can be purchased from another source). The business can utilize a large space that is both a growing operation and a dispensary or it can designate a separate growing location.

• A medical marijuana business must post a bond of $5,000 as security for its sales tax liability.

• The owner, and any employees of the business, can’t have a felony conviction in the last five years (or any felony conviction related to controlled substances); can’t be in default on student loans; can’t have unpaid child support; and must meet certain state residency requirements.

• A medical marijuana business cannot be located within 1,000 feet

of a school, an alcohol or drug treatment center, or a child care facility as measured from the property line at the time the license is issued.

• A medical marijuana business must be located in a zoning district for which the use of medical marijuana is “contemplated.” This means that, even if a zoning district permits uses – such as a plant store, nursery, drug store, or sale of any commodity – that could arguably inlcude medical marijuana use, a business may not be permitted if the zoning regulations do not expressly permit such use. Those local governments that wish to allow medical marijuana businesses must designate permitted zones; a business established by the July 1 deadline may later be disqualified because it is not in the proper zoning district. There is no guarantee that the business would be permitted to move to a permitted zone.

While the green rush is now on as medical marijuana businesses seek to become established by the July 1 deadline, the coming state and local regulations may kill the buzz. New medical marijuana businesses should consider the potential affect of new regulations before incurring expenses trying to become established.

Noah Klug is principal of The Klug Law Firm, LLC, a general law practice

in Summit County emphasizing real estate, business and litigation.

He may be reached at (970)468-4953


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