This paper is primarily focused state regulatory processes; with Colorado as a micro-environment we can study. There are significant aspects of business, not just cannabis businesses - that are subject to regulatory control from Federal, state and local governments. It is important to note that regulations do not exist in a vacuum, behind any set of regulations is a government agency and the bureaucrats who implement the rules!
Putting criminal statutes aside and excluding the Department of Justice, at the Federal level cannabis related businesses can still expect to deal with the Food and Drug Administration; the Federal Trade Commission, the US Patent and Trademark Office; the Treasury Department; the Internal Revenue Service; the Equal Employment Opportunity Commission; the Environmental Protection Agency; the Department of the Interior; the Department of Health and Human Services and the Social Security Administration. Examples of particularly complex regulatory areas include:
- Environmental statutes and regulations such as the Clean Water Act (33 U.S.C. §1251 et seq.); the Clean Air Act (42 U.S.C. §7401 et seq.) and the Endangered Species Act (16 U.S.C. § 1531 et seq.)
- Financial statutes and regulations affecting Banking (See Canopy Blog “Moving the Cannabis Industry from Criminal to Legal – Nobody Promised Us a Rose Garden”)
- Taxation, Investment Solicitations and Shareholder Rights
- Business statutes and regulations addressing Equal Employment; Packaging and Labeling; Banking; Medicare and the Health Insurance Portability and Accountability Act (HIPAA) [See breakout section on HIPAA]
While Colorado’s MED takes a collaborative approach to its regulatory process that is not always the case with Federal agencies. The wide ranging scope of Federal activities that cover multiple jurisdictions makes the regulatory process much more arm’s length.
In regard to the Federal and state governments, one factor to keep in mind is how regulations can be interconnected. For example, a surface mine in New Mexico can involve Indian, public and private lands. The Department of the Interior’s Minerals Management Service regulations require a mine plan every 5 years. This triggers the National Environmental Protection Act and implementing regulations. Now you’ve started down a path that involves coordination with numerous other agencies, such as the Environmental Protection Agency (EPA) which administers the Clean Water Act and is responsible for issuing permits for the discharge of treated wastewater and storm water. You can imagine the complexities involved in trying to meet all of these types of requirements.
Moreover, it goes without saying that the involvement of the Federal courts always lies behind compliance with and enforcement of Federal laws and regulations. Finally, so long as cannabis is illegal at the Federal level, the last place a cannabis business wants to be is in Federal Court.
Additional Regulatory Concerns (Local)
The local level is likely to involve more direct participation from the local citizens, which raises its own complexities in terms of creating, implementing and enforcing rules and regulations from zoning to business licenses. Typically, resident to resident communications are most personal at this level as people tend to know their neighbors. Potentially, this can be a complicating factor.
