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New Colorado Marijuana Laws Effective 2021

Posted by Ryan M. Newburn | Jul 12, 2021 | 0 Comments

History of Colorado Marijuana Laws

Colorado has a reputation for being one of the most progressive states in passing reforms to marijuana laws. Colorado's legal framework has cultivated a booming billion-dollar marijuana industry that presently makes up 2% of the state's budget. However, like all other states, Colorado did not begin with an accepting view of marijuana usage.

Colorado was actually among the first states to criminalize marijuana. In 1917, Colorado legislators made the use and cultivation of marijuana a misdemeanor, but criminalization did not last long compared to other states. In 1975, Colorado also became one of the first states to decriminalize marijuana. A couple of decades later, in 2000, Colorado voters passed Amendment 20, which amended Colorado's Constitution to allow for the use of medicinal marijuana in the state for approved patients with medical consent.

In 2012, Colorado, along with Washington, became the first state to legalize the recreational use of marijuana following the passage of Amendment 64, another voter ballot measure. Thus, recreational legalization took effect in 2012, and state-licensed retail sales commenced in 2014, creating the cannabis industry that is readily recognizable in Colorado today. Currently, residents and visitors aged 21 and older can possess up to one ounce of marijuana, and residents can grow up to 12 cannabis plants at home for personal use.

New Laws Effective in 2021

Social Equity Program

One of the most notable laws passed in 2021 was the creation of a statewide equity program for permitting. Similar programs implemented in states like Illinois might have influenced Colorado to pass this law. The equity program provides cannabis social equity licenses and support services, like mentorship programs and financial incentives, for aspiring business owners to kickstart their cannabis businesses.

The law provides a statewide definition for social equity licenses, declaring that an eligible licensee is a Colorado resident who can demonstrate: (1) residency for 15 years in an area designated as an opportunity or a disproportionally impacted, according to the Marijuana Enforcement Division (“MED”), between 1980 and 2010; (2) the applicant or an immediate family member was arrested for or convicted of a cannabis offense; or (3) their household income does not exceed 50% of the state median income for their household, which the Colorado Department of Revenue determines each year.

Under the law, social equity licensees can participate in the state's accelerator licensing program, which pairs the social equity licensee with existing cannabis businesses to learn the tools of the trade. The social equity licensee must hold at least a 51 percent ownership stake in any marijuana business that the license is granted for. Also, the law gives licensees reductions for the hefty application and licensee that currently total $7,000.

The law has additional provisions advancing social equity goals. The law gave the governor the power to grant pardons to those convicted of possessing up to one ounce of marijuana. Colorado Governor Jared Polis immediately acted on this bestowed power, pardoning more than 2,700 people in October 2020. Also, the law modified the felony requirement for licensure, mandating that a cannabis conviction cannot serve as the sole basis for license denial. Despite its socially equitable aims, some have criticized the bill for coming too late as the cannabis marketplace has been established in Colorado for seven years, making the existing barriers to marketplace entry challenging for socially disadvantaged persons to overcome.

Residency Requirement

Before 2021, all managers and employees of a medical or retail marijuana business with day-to-day operational control had to be Colorado residents when they applied for licensure. HB20-1080, which was passed in 2020, repealed that requirement. 

Marijuana Delivery Services

HB 19-1234, passed in 2019, created marijuana delivery permits for licensed medical marijuana centers and licensed retail marijuana stores, allowing these businesses to deliver marijuana products directly to consumers. Medical marijuana delivery was allowed in 2020, but recreational marijuana delivery was not allowed until the start of 2021. The act gives the state ultimate rule-making authority over the permit and delivery systems. However, municipalities chose whether to enact delivery systems.

Aurora and Denver are the only cities that have approved marijuana delivery programs. Aurora decided to implement its delivery program with a focus on social-equity applicants. Only social-equity applicants will be able to receive a delivery license for the first three years of the plan, and the application fees for the delivery license are mostly covered with a city grant. Deliveries are limited to one per day, cannot be more than one ounce or eight grams of marijuana concentrate, and cannot be made to college campuses. Permits granted are valid for one year.

Increasing Possession Allowance

On May 21, 2021, Jared Polis signed a bill that increases the legal amount of cannabis an adult can possess from one to two ounces. The new law took effect immediately. Polis announced that he would begin reviewing records to prepare additional pardons for a person convicted of possessing between one and two ounces of marijuana. The law also included a streamlined process for sealing the records of people convicted of possessing between 1 and 2 ounces of marijuana.

Previously, those convicted had to file a petition with the court, which included notifying the district attorney's office that charged them and additional court hearings. Under the new law, those seeking to seal their records must still file petitions in court; however, courts are now automatically required to seal the convictions so long as all the criteria are met. This streamlined process only applies to citizens that have not been convicted of another crime since their release from probation or parole.

New MED Rules effective in 2021

The MED passed several new rules that went into effect in 2021, most simply being a codification of past practice.

Environmental Measures

The MED can implement and enforce these rules independently of the state legislature because it is granted regulatory and enforcement power over the state's medical and retail marijuana industries. Colorado implemented several waste measures to curb the environmental impact the marijuana industry produces. This impact is quite substantial: the marijuana industry produced 3,650 tons of marijuana plant waste in 2019. The MED opened several avenues around the state's 50/50 requirement, requiring that unused plant matter can be mixed with other materials such as sawdust, bleach, and coffee grounds as long as the marijuana-to-waste ratio is 50/50.

The new MED rules offer marijuana licensees four alternative methods to be exempt from the 50/50 requirement: (1) on-site composting; (2) anaerobic digestion; (3) pyrolyze into biochar; or (4) biomass gasification. The last three options merit explanation if you're not up to date in environmental phraseology.

Under these new rules, marijuana growers can send their leftover stalks, leaves, and other unusable plant matter to facilities for anaerobic digestion, which is an accelerated composting process that captures the emitting gases. This is a superior method to composting because, while composting does recover nutrient value from the plant material, it still releases gases into the atmosphere. Biocharring is the process of burning plant material into nutrient-dense charcoal that can be used as a cultivation additive. Biomass gasification is a thermochemical conversion of plant matter into usable gases.

These exceptions will substantially help marijuana businesses' bottom line because most commercial composting companies charge by the pound for pick-ups. Also, the new rules allow customers to recycle marijuana packages purchased from different stores and included a provision allowing marijuana businesses to reuse the packaging if the packaging has been sanitized and is equipped with sufficient child restraints.

To-go and Drive-up Windows

In response to the COVID-19 pandemic, the MED decided to make walk-up and drive-up windows, once thought to be a temporary measure, a permanent option for marijuana businesses to encourage social distancing. Marijuana businesses must apply for a permit to make such a window, and they cannot display marijuana at the windows. Also, stores must have a video surveillance system that enables recording the patient's identity and recording an employee verifying the customer's identification.

Denver, in particular, is now considering allowing permanent walk-up and drive-thru windows.

Vaporizer Products

The MED also implemented new emission testing and storage requirements for vaporizer products. Effective July 1, 2022, a marijuana products manufacturer that produces marijuana vaporizer devices must establish expiration dates for the products. The new rule mandates that potency and contaminant must be used to determine the expiration date.

Also, the licensee must consider any expiration dates of additives used to make the vaporizer, the vaporizer's final formulation, and the vaporizer's ideal storage conditions when determining expiration dates. Licensees must create business records of their expiration date determinations and any data used to make those determinations.

The MED also implemented new emissions testing standards for vaporizer products that become effective on January 1, 2022. The rule requires that a licensee submit every produced batch of regulated marijuana concentrate in a vaporized device to an accredited Colorado laboratory to be tested for metal contamination via emissions testing. Heavy metals can contaminate crops in several different ways during the cultivation and production processes.

For instance, the soil, water, fertilizers, nutrients, and pesticides can contaminate marijuana during the growing process. Furthermore, machinery and equipment used in the production process and equipment used to package marijuana vaporizers can contribute to contamination. This testing is pivotal because heavy metals have been linked to various adverse health outcomes, including increased cancer risk, causing adverse reproductive effects, and accumulating to alter the functions of vital organs in the human body.

Miscellaneous Rules

MED set forth new procedures for a licensee's recall of marijuana. The new rule mandates that a licensee must have a written recall plan. Also, the MED overhauled its sampling procedures for marijuana testing, including adjusting the minimum number of sample increments to be collected depending on what marijuana product is being sampled. Finally, a rule was adopted to reinstate a license that was expired for less than 30 days.

Future Marijuana Laws

SB 21-111

On March 21, Colorado Governor Jared Polis signed SB 21-111 that establishes the new Cannabis Advancement Program, which the Office of Economic Development and International Trade (“OEDIT”) will oversee. The bill provided that the new program will be supported with $4 million in loans, grants, and technical assistance for marijuana business applicants that qualify under the state social equity program. State marijuana tax revenue will be used to fund the program.

To be eligible for assistance under the program, an applicant must prove one of the following: (1) the War on Drugs negatively impacted them or their families; (2) they earn less than 50 percent of the state median income; or (3) they are a resident from a community designated as a low-economic opportunity zone. The law authorizes OEDIT to oversee the program and allocate funding amongst applicants. However, OEDIT is still required to establish its policies under the program with other relevant state agencies, industry experts, the Colorado Economic Development Commission, and other stakeholders.

HB 1317

HB 1317, a bill concerning the regulation and effects of high-potency THC products, awaits the governor's approval after it passed the Senate unanimously and without much opposition in the House. The bill proposes sending the Colorado School of Public Health $1 million per year over a three-year period to conduct a study of existing research on the impact of high-potency THC marijuana and concentrates on physical and mental health and to fill in the gaps of that resulting research.

Coroners must also order a toxicology screen to test for THC in non-natural deaths of those under 25 under the bill. The Department of Public Health and Environment must compile a report on hospital discharge data that identifies patients who display conditions or diagnoses reflecting marijuana usage. Also, the purchase limit on concentrates for both medical and recreational purchasers would be reduced from 40 grams to 8 grams per day. Finally, the bill would require doctors who recommend medical marijuana to review a patient's mental health history in addition to the already required analysis of their physical health. 

Interested in learning more about the Colorado cannabis laws effective in 2021? Contact the experienced cannabis lawyers at Newburn Law today!

About the Author

Ryan M. Newburn

Ryan Newburn is a business and legal expert trusted by Executive Teams and Boards of Directors to apply sound business principals to solve legal and financial problems. Ryan's practice focuses on mergers and acquisitions, financings, corporate formations and corporate governance in a broad range of industries including energy, distribution services, healthcare, medical devices, and technology. Leveraging his formal business training and years of practical experience, including as an executive at public and private companies, Ryan has advised hundreds of companies in dozens of industries of unique legal and financial issues.

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