Major Changes for Colorado’s Medical Marijuana "Ganjapreneuers"

New licensing requirements mean big changes for Colorado's medical marijuana industry. A constitutional amendment allowing medical marijuana use and distribution was approved by Colorado voters more than a decade ago, but the regulation of dispensaries was left mostly to local officials. Now the Colorado Legislature has passed a law requiring medical marijuana centers to be licensed by the state in an effort to centralize and strengthen regulation.

The number of medical marijuana centers operating in Colorado greatly expanded after the federal government signaled that it would not seek prosecution against marijuana sellers who follow state medical marijuana laws, and also after Colorado decided not to regulate the number of patients to whom a caregiver can provide marijuana. According to the Colorado Department of Revenue (DOR), there are currently 1,100 medical marijuana dispensaries in Colorado.

The Medical Marijuana Center Licensing Law

The proliferation of medical marijuana centers prompted state legislators to create a licensing law. Under the new law, all medical marijuana center owners must get a license to operate from the state, cities and counties can ban the centers locally and dispensaries must grow 70 percent of their marijuana themselves.

The law also includes restrictions on who can receive a license. Among other limitations, a person is prohibited from receiving a license if he or she:

  • Is under 21 years old
  • Is in default on government-issued student loans
  • Is in arrears for taxes or child-support obligations
  • Was not a Colorado resident for the two years prior to applying for a license

Most significantly, owners of medical-marijuana centers must undergo background checks. If they have had a felony sentence within the last five years, they cannot get a license. Owners with felony drug convictions face a lifetime ban from the medical marijuana business.

According to DOR Senior Director Matt Cook, a team of investigators for the Medical Marijuana Enforcement Division will conduct an exhaustive check of arrest records, business associations and tax returns for anyone who applies for a medical marijuana center license.

The state application is 22 pages long, and dispensary owners must pay a licensing fee that ranges from $7,500 to $18,000. Cook said that anyone who lies on their license application will be arrested and charged for filing a false instrument.

How the Licensing Law Affects Colorado's Medical Marijuana Industry

Officials expect the new licensing requirements to reduce the number of medical marijuana centers in Colorado by about 50 percent. According to statistics from the Drug Enforcement Administration (DEA), more than half of the dispensary owners in Colorado have criminal arrest or conviction records for serious crimes.

The DEA reported that 18 percent of the state's medical marijuana center owners have been convicted of felonies. In addition, while eight percent of all Colorado adults have been arrested for drug crimes, 29 percent of dispensary owners have drug histories. According to the DEA, charges that have been filed against Colorado's dispensary owners include:

  • 77 assaults
  • 22 burglaries
  • 34 domestic violence cases
  • 11 rapes
  • 29 weapons charges
  • 4 arrests for murder, attempted murder, or involvement in a homicide

Kevin Merrill, assistant special agent in charge for the Denver field division of the DEA, said that the DEA investigates all drug crimes, and the DEA's job is to be familiar with dispensary owners "because we may come into contact with them at some time." He opined that there are people in the medical marijuana industry who only care about making a profit, and they are not the type of person who was portrayed to voters as someone who cares for people when they are very sick or nearing the end of their lives.

The director of the Medical Marijuana Division of the DOR, Dan Hartman, agrees that collecting information on applicants seeking a medical marijuana center license is important. He stated that the DOR collects so much information from the applicants in order to ascertain where their money came from and to make sure licensees "are the type of people that the legislature wanted in this business."

Some marijuana advocates argue that the rule excluding felons will likely drive barred dispensary owners to the black market. In addition, so-called "ganjapreneurs" may be wary of disclosing information that could get them in trouble should the federal government change its mind regarding drug prosecution.

Ultimately, through strengthened regulation and new licensing procedures, state officials aim to weed out the bad seeds in this growing industry. The new law may ensure that marijuana does not get into the hands of the wrong people while providing a legitimate and accessible marketplace for medical marijuana suppliers and users.