Current Status
Government regulation is the linchpin for state actions changing the legal status of the cannabis industry from a criminal environment into a legal environment. Whether for medical or recreational use, state and local government regulators and regulations will define the geography for cannabis businesses.
This factor should be included as an important focal point in any cannabis related business’s strategic planning. An important aspect of government regulation of commercial cannabis activity is the fact that it is a relatively new area for state and local legislators and regulators:
- States with between 16 and 19 years of experience (5)
- States with between 5 and 15 years of experience (11)
- States with 4 years or less experience (8)
- States likely to legalize cannabis (medical or recreational) within the next 12 to 18 months (7)
When “Certainty of Operation” Isn’t Possible
For any regulated industry, a key to growing and operating a successful business is “Certainty of Operation.” Predictability underlies successful strategic planning. Unfortunately, given the flux in regulatory actions affecting cannabis businesses, this level of certainty doesn’t exist today and won’t for years to come. In fact, frequently there will be multiple regulators exercising authority over a business, certainly if you conduct business in more than one state or internationally. So what can the cannabis businessperson do?
In the current regulatory environment, the most critical factor for your business is to identify where and how you can be involved in and affect the outcome of your state’s regulatory process and in some cases your local government’s regulatory process. As for the Federal government, the extent of your ability to influence the development of regulations is diluted because of the sheer number of people and businesses likely to be affected.
Colorado’s Marijuana Enforcement Division (MED) - Regulators Impact
It is critical that you recognize that regulators are in position to affect your business, even the viability of your entire business. You also need to be aware that they are learning as they go. Early laws and regulations are likely to be flawed. The regulators enforcing the laws and regulations are inexperienced, as are many of the new people doing business in the cannabis industry. The regulatory systems will be incomplete, inconsistent and confusing. Time and experience are required to resolve these types of problems.
Colorado is to be commended for immediately recognizing these factors. As one of the first states to legalize both medical and recreational use of marijuana, Colorado is a leader and serves as an excellent model for collaborative rule-making.
After the Colorado Legislature legalized the use of marijuana, implementation and enforcement within the Executive Branch was assigned to the Department of Revenue which created the Marijuana Enforcement Division (MED). The legislation also designated the Department of Revenue as the State Licensing Authority for both medical and recreational cannabis. (See C.R.S. 12-43.3-201 (2015) and C.R.S. 12-43.4-201 (2015))
At the outset, MED convened a work group made up of stakeholders and subject matter experts to deliberate and provide direction and guidance for the final proposed rule-making language. Stakeholders were welcome to attend meetings of the various Work Groups and the public Rules Hearings held in accordance with Colorado’s Administrative Procedures Act (C.R.S. 24-4-101 et. seq.)
Continued next week: Impacting Your Business - the Scope of Medical and Retail Regulations
