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The 2024 legislative session in Colorado ended last week on May 8, 2024. In a mad dash, SB24-76 “Streamlining Marijuana Regulations” made it out of committee and was passed on the very last day of session this year. We have mentioned this bill on social media over the past few months, but now that it has been heavily amended and is on its way to the Governor to become law, here’s some details about the impacts of this bill:
Import & export of immature plants, seeds, and genetic material.
These changes put the definition of genetic material (defined as cannabis seeds, tissue culture, immature plants under 15 inches and clippings) in statute and away from regulation. It allows for medical or retail cultivation facilities to obtain genetic material from testing facilities or licensed cultivators in other jurisdictions, and allows medical and retail cultivation facilities to sell, transfer, or ship such genetic material to testing facilities, licensed cultivators of other jurisdictions, or any other person permitted by MED rule. We will definitely be keeping an eye out for the proposed rules on this.
Testing requirements reduced.
If a test result indicates the presence of a microbial substance above the level determined to be harmful to health, the licensee must immediately quarantine the product and notify MED, but the licensee will be allowed to remediate or decontaminate the product. If the product is remediated or decontaminated and passes retesting, it can be sold and does not have to be labeled that it has undergone decontamination. This comes as a direct result of a rule that was promulgated during the 2023 session that would have required, beginning in January 2025 a label indicating that a marijuana product was decontaminated.
This bill also allows for retesting of products that test above the limits for pesticide presence.
Changes to badge requirements for some owners and new applicants.
Only those individuals who are working in or will have unescorted access to the limited access areas of a licensed premises will need to get an MED identification badge. Hopefully MED will incorporate our recommendation from the last rulemaking session to change the design on the owner identification badges so they look like all other employees - having a red badge (compared to the blue employee badge) needlessly and harmfully places a target on the necks of regulated marijuana business owners.
Changes to the Social Equity Program.
Beginning on February 1, 2025, the criteria to be considered a Social Equity Licensee in Colorado will change and include more qualifying criteria, including reducing the number of years living in a disproportionately impacted area or impact zone, adding those who resided in low-income housing or were the recipient of certain public benefits in the years prior to application, different conditions if the status is conferred through the arrest of a sibling or child of the applicant, and prohibiting conferral of social equity status after February 1, 2025 on individuals who are already owners of three or more marijuana business facilities.
Changes to Track & Trace of Marijuana Inventory
Removal of RFID tags!*
SB24-76 directs the Marijuana Enforcement Division to promulgate rules removing RFID requirements. MED made changes to the rules in 2023 removing reference to RFID technology required in the required inventory track and trace program administered by Florida-based METRC. However, to date, METRC fails to offer any other options for plant and package tags but the expensive and needless RFID-tags. Combined with the state’s apparent unwillingness to enforce the contract it has with METRC to align METRC’s fulfillment of the contract in line with current state regulation and policy (i.e. force METRC to offer plant and package tags without RFID technology like the current rules state), this provision of the law is relatively meaningless.
This bill also makes some changes to the Reduced Testing Allowance program and directs MED to develop specific rules surrounding an electronic manifest system. (FYI: you can currently utilize electronically stored, digital manifests, but apparently this was confusing enough that it made its way into this law.) Keep an eye out for future blogs on these once rule-making is underway this autumn.
Changes to license renewal process.
Licenses & fingerprints are good for 2 years!
While this is good news since it will cut paperwork in half, don’t expect too much cost savings here. You won’t be paying RZA Legal every year to seamlessly handle your license renewal needs, but it’s expected the MED will simply double (if not increase further) the existing renewal fees. But again, in the spirit of streamlining, this should free up some resources and lessen the regulatory burden of annual renewals at the state level. We shall see what local jurisdictions do with their licensing renewal cycles - hopefully follow suit.
Unified application for renewal for licensees who hold multiple licenses.
This will help MED and any licensees who operate more than one license simplify their paperwork burden to renew regulated marijuana business licenses. They didn’t name this bill Streamline Marijuana regulations for nothing.
MED must categorize violations as safety vs. technical. Technical violations can be expunged from a licensee’s record on the later of one year or at their next renewal.
I personally like this one - at RZA Legal, our focus is to provide proactive legal and compliance support so licensees can AVOID disciplinary actions, but listen: they happen. And when they do, we go into crisis management mode - guiding clients on the next best steps, preparing mitigating material, and negotiating on our client’s behalf to effectuate outcomes that help licensees keep their businesses and minimize fines. Until now, it is unclear how a prior disciplinary administrative (which would remain on your license’s record) could impact subsequent disciplinary actions or renewals, and the charges of violation were not categorized as one of safety, which should be treated more seriously, than a technical rule violation. This will also help gather better data surrounding the level of fines associated with different types of infractions.
Exemption from excise tax for transfers of unprocessed cannabis transferred exclusively for microbial control.
Current law states that the state excise tax is due on the first transfer of unprocessed cannabis from a cultivator. Now, if that first transfer is for the sole purpose of processing the flower to control for microbials, that transfer does not count for excise tax purposes.
A few notes:
Many of the provisions of this bill will become effective over the next few YEARS. Don’t be caught off guard by changes when they occur a while from now - go put these dates on your calendar NOW, and add another reminder 6 months before those dates to give yourself a heads up! Future you will thank the present you. :)
Some of these changes were prompted by rulemaking that took place in the fall, and will impact upcoming rulemaking sessions. Staying involved with the rulemaking process will be imperative so you can be prepared to pivot your business to stay ahead of the rules and focus on successful, compliant operations.
Reach out if you have questions - we are here to support our clients through the ever-changing regulatory climate of the cannabis industry.y.
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