State lawmakers put a considerable focus on cannabis this legislative session, passing four important bills that will change the landscape of the industry in Colorado. The new laws range from minor stylistic changes to the Colorado Marijuana Code and statutory adjustments to allow more flexibility for cultivators, to largescale changes in the regulation of concentrates.
In mid-November, Colorado’s Marijuana Enforcement Division (MED) released its Final Adopted Rules implementing the bills. Following a monthslong rulemaking effort that included significant public input from stakeholders throughout the industry, these adopted rules are slated to go into effect on Jan. 1, 2022.
The most significant changes in each bill are discussed below:
HB21-1178 – Correcting Errors in the Colorado Marijuana Code:
This bill corrects citations in the marijuana code and updates grammar, wording and terminology throughout. Specifically, the bill replaces citations in the Colorado Marijuana Code from broad federal acts to more specific U.S. Code citations; updates the terminology used to describe various marijuana products, industry players and processes; and updates the contact information for subpoena requests, appealing agency decisions and other executive functions. It was signed into law on May 10, 2021.
HB21-1216 – Marijuana Licensees Ability to Change Designation:
This bill permits the redesignation of medical marijuana to recreational and vice versa. It was signed by Gov. Polis on June 23, 2021. Intended to provide more flexibility to cultivators and manufacturers, this bill allows both cannabis flower and concentrate to be redesignated when the sending and receiving facilities have at least one identical controlling beneficial owner. Cannabis products that are redesignated must also pass all required testing.
Historically, under Colorado’s strict seed-to-sale tracking system, regulated cannabis products were designated as either medical or recreational and products maintained these designations throughout their lifecycle. This bill is aimed at improving MED’s ability to enforce regulations given the varying requirements companies are subject to depending on what type of cannabis designation they typically produce.
Under this bill, once cannabis product has been transferred to another facility and has been redesignated as either medical or recreational, it may not be transferred back to its original facility. Redesignated product may not be designated back to its original classification. Additionally, redesignations must be updated in the medical or recreational marijuana facility’s seed-to-sale tracking system to ensure proper records are kept with respect to the product’s redesignation.
Finally, the bill specifies that transfers and designation changes do not qualify in a right to a refund of marijuana excise taxes by virtue of the reclassification.
HB21-1301 – Cannabis Outdoor Cultivation Measures:
HB21-1301 is another new bill aimed at providing greater flexibility and protection to the state’s growing cannabis industry. It was signed into law the same day as the redesignation bill.
In the wake of climate change and increasing frequency of unpredictable weather events, this bill creates a framework for cannabis cultivators to establish contingency plans to combat the effects of adverse weather events. The bill broadly defines adverse weather events as damaging weather involving drought, freeze, hail, excessive moisture, wind or other adverse natural occurrences such as wildfires, floods or earthquakes. Beginning Jan. 1, 2022, cultivation facility licensees with outdoor cultivation facilities may begin to submit these contingency plans to the state licensing authority for approval. Contingency plans must specify the type of adverse weather event the plan applies to. Once approved, cultivators may use the contingency plan submitted in the event of such an adverse weather event.
The bill also authorizes MED to study methods to reduce cross-pollination of outdoor marijuana plants and to engage in rulemaking on procedures for implementing contingency plans and issuing conditional employee license identification cards subject to background checks and initial investigations.
Another important feature of this bill is language directing the formation of a working group to examine existing tax laws and rules applicable to the state’s wholesale cannabis cultivation market. The goal of this provision is to understand the state’s market and to competitively position existing business to the greatest extent possible in the event that cannabis is federally legalized, which would almost certainly entail additional taxes on cannabis.
Finally, the bill appropriates funds from the Industrial Hemp Registration Program Cash Fund and the Marijuana Cash Fund to various departments for enforcement and the purchase of legal services.
HB21-1317 – Regulating Marijuana Concentrates:
Perhaps the biggest and most controversial bill of the last legislative session, HB21-1317 was signed into law by Gov. Polis on June 24, 2021, and contains a number of significant changes in the regulation of marijuana concentrates. Largely viewed as a legislative compromise in the face of pressure to enact cannabis potency limits, this bill directs the Colorado School of Public Health (“CSPH”) to conduct a systematic review of potential health effects of high-potency THC cannabis and concentrates and creates a variety of new rules regarding advertising, sales and daily medical and retail sale limits.
There are a number of provisions specifically related to the disputed physical and mental health effects of high-potency THC cannabis products: The bill establishes a Scientific Review Council charged with reviewing the recommendations given by CSPH and directs CSPH to produce an education program for the general public on the effects of cannabis concentrates on the developing brain. Also, with regard to education, the bill requires that medical and recreational retail cannabis stores provide customers with a tangible educational resource created by the state licensing authority on concentrates when making such sales. The educational resource includes health disclosures and suggestions for consuming concentrates (including a suggested serving size). Current law requires a medical doctor to conduct a full medical assessment of a patient before recommending medical marijuana; the bill now requires that the patient’s mental health and mental health history also be assessed prior to such recommendations. The bill outlines a number of restrictions for medical marijuana prescriptions for individuals between the ages of 18 and 20 who suffer from what the bill refers to as a debilitating or disabling medical condition.
There are also several notable changes with respect to cannabis advertising, inventory tracking and quantity limits. The bill requires all facilities to immediately record each sale in the seed-to-sale inventory tracking system when completing patient sales. This provision is intended to allow facilities to identify discrepancies with daily authorized quantity amounts and THC potency authorizations. The act additionally limits the amount of both medical and retail marijuana concentrate to 8 grams unless certain exceptions apply for medical marijuana patients only. Finally, the bill prohibits cannabis advertisements that are specifically directed at individuals 18 to 20 years old and requires that all advertisements for concentrate contain a notice of potential risks of overconsumption.
As with any highly regulated industry, consultation with counsel is key to ensuring compliance. The information contained here is for educational purposes only. If you have questions about the cannabis industry, please contact the authors listed below.
This document is intended to provide you with general information regarding updates to Colorado's cannabis laws. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.