Legal Guide to Colorado Marijuana Business Licensing
July 29, 2019 | Bill Henry
In this guide, you’ll learn about how to get a relevant Colorado Marijuana business license and how to keep it.
In Colorado there are three sections of cannabis law. Medical marijuana is the first, retail the second, and industrial hemp the third.
Before you can get into a business in one of these areas, you must meet the requirements to apply.
First, you’ll need to complete a Marijuana Business License Application through the Colorado State Licensing Authority.
There are several types of marijuana business licenses, and which one(s) you need will depend on the type of business you want to start.
Everyone involved in your proposed business must have clean criminal histories.
They must also not be employed by a local or state authority (such as a sheriff’s department). You must also be free of any convictions involving controlled substances within the last 10 years (although never is better) and be fully discharged of any other felony convictions for at least five years. The state licensing authority will perform background checks on everyone, so it’s best to sort this out before beginning the application process.
You must also be at least 21 years old and a Colorado resident for at least two years.
The same goes for financial partners and employees.
If you’re in the Denver metro area, the city has a complete set of documents and requirements located here.
Applications and Fees
The first step to getting a marijuana business license is completing relevant applications. Which ones you need will depend on what type of marijuana business you intend to open.
Once all applications have been filled out and all necessary fees are paid, you will need an appointment with the Marijuana Enforcement Division. You’ll need to bring copies of all documentation, every part-owner of the potential business, and personal identification (such as a drivers’ license or passport) for all parties under the application.
Once approved, owners will be fingerprinted and will then pay the state application/licensing fee along with the Local Authority Application fee.
These are the classes of Retail Marijuana Business Licenses, directly from colorado.gov:
- Retail Marijuana Store: license type necessary to operate a business that sells Retail Marijuana to an individual twenty-one years of age or older as described in section 44-12-402 C.R.S.
- Retail Marijuana Cultivation: license type necessary in order to operate a facility to grow and harvest Retail Marijuana plants as described in section 44-12-403 C.R.S.
- Retail Marijuana Product Manufacturer: license type necessary in order to operate a facility that manufactures retail marijuana-infused products such as edibles, concentrates or tinctures as described in section 44-12-404 C.R.S.
- Retail Marijuana Testing Facility: license type necessary in order to operate a facility that conducts potency and contaminants testing for other MED Licensed Retail Marijuana businesses as described in section 44-12-405 C.R.S.
- Retail Marijuana Transporter: license type necessary in order to provide transportation and temporary storage services to Retail Marijuana Businesses as described in section 44-12-406 C.R.S.
- Retail Marijuana Operator: license type necessary to provide professional operational services to one or more Retail Marijuana Businesses as described in section 44-12-407 C.R.S.
Once you’ve completed your materials, you’ll send them here:
MED Lakewood Office at 1701 Cole Blvd., Suite 300, Lakewood Colorado, 80401
Hours: 8:00 – 11:00 AM and 1:00 – 4:00 PM, Monday – Friday.
Costs at a Glance
- New application fee: $4,000
- New application for converting medical cultivation facility to adult-use: $1,750
- Annual renewal fee (1,801 to 3,600 plants): $1,100
- Annual renewal fee (3,601 to 6,000 plants): $1,800
- Annual renewal fee (6,001 to 10,200 plants): $3,300
- Annual renewal fee (10,201 to 13,800 plants): $5,300
- Retail Marijuana Cultivation (same as “new application fee” above): $4,000
- Retail Marijuana Transporter: $4,900
- Retail Marijuana Operator: $2,700
- Affiliated Interest: $200
- Commercially Reasonable Royalty Interest Holder with more than 30% stake: $400
- Commercially Reasonable Royalty Interest Holder w stake less or equal to 30%: $200
- Permitted Economic Interest $400 Profit Sharing Plan Employee $200
- Qualified Limited Passive Investor – Limited Initial Background Check $75
- Qualified Limited Passive Investor – Full background for reasonable cause $125
- Qualified Institutional Investor $200
- All fees must be paid by check or money order.
Local fees will also apply depending on the county/city you plan to operate in. Localities that allow marijuana sales (Excel document). You need a local license as well as a state-level license to operate, so keep in mind that you will need to pursue the relevant local credentials before operating in that area.
These are the classes of medical marijuana businesses, taken directly from colorado.gov:
- Medical Marijuana Center: license type necessary to operate a business that sells Medical Marijuana to Colorado Medical Marijuana Registry Patients and Transporting Caregivers. Owners of this type of facility must also own and operate at least one Medical Marijuana Cultivation and produce a minimum of 70% of all on-hand inventory as described in section 44-11-402 C.R.S.
- Medical Marijuana Optional Premises Cultivation: license type necessary operate a cultivation business to grow and harvest Medical Marijuana. There are no Independent Medical Marijuana Optional Premises Cultivation (OPC) Licenses – these facilities must be affiliated with either a Medical Marijuana Center or Infused Product Manufacturer facility as described in section 44-11-403 C.R.S.
- Medical Marijuana Infused Product Manufacturer: license type necessary to operate a business that produces Medical Marijuana Infused Products such as edibles, concentrates or tinctures. These licensees are only authorized to wholesale their products to MED licensed Medical Marijuana Centers as described in section 44-11-404 C.R.S
- Medical Marijuana Testing Facility: license type necessary operate a facility that conducts potency and contaminants testing and research for MED Medical Marijuana business licensees as described in section 44-11-405 C.R.S.
- Medical Marijuana Transporter: license necessary in order to provide transportation and temporary storage services to MED Licensed Medical Marijuana Businesses as described in section 44-11-406 C.R.S.
- Medical Marijuana Operator: license type necessary in order to provide professional operational services to one or more MED Licensed Medical Marijuana Businesses as described in section 44-11-407 C.R.S.
- Medical Marijuana Research and Development Facility or Cultivation: license necessary in order to grow, cultivate possess and transfer marijuana for use in research only as described in section 44-11-408 C.R.S.
The Medical Marijuana Business License Application form is used to apply for all of the above license types – you will need to fill out an application form for each license you want to get.
You can register for an Industrial Hemp license using this form.
The Colorado Department of Agriculture, not the Marijuana Enforcement Division (MED) is the government division that registers and inspects industrial hemp cultivation, meaning there is a different set of rules to abide by. However, recent legislation passed that was designed to make the cultivation and harvest of industrial hemp easier.
Amendment 64, s.16 to the Colorado Constitution defines industrial hemp as “a plant of the genus Cannabis and any part of the plant, whether growing or not, containing a delta-9 tetrahydrocannabinol (THC) concentration of no more than three-tenths of one percent (0.3%) on a dry weight basis.” Any cannabis plant with THC over 0.3% is considered to be marijuana and not “industrial hemp.” Keep in mind that this is simply a regulatory distinction and is NOT a botanic one.
Industrial Hemp Tips:
- If you’re interested in industrial hemp, you are probably aware that its cultivation is intensely agricultural, and a profitable grow operation will be larger, in comparison, to that of cannabis meant for medical or recreational consumption.
- THC levels of Cannabis seeds naturally vary, so sourcing reliable seeds is extremely important to the legality of an industrial hemp operation. Hemp grow operations are randomly sampled by the Colorado Department of Agriculture, and if plants are found with THC levels higher than 0.3%, then you may face fines or a revocation of your growing license.
- There are no pesticides, herbicides, insecticides, or fungicides currently allowed for use on cannabis, including industrial hemp. These chemicals are regulated on the federal level, and because cannabis cultivation remains federally restricted, you cannot currently obtain permission to use them in an industrial hemp growing operation. Keep this in mind when planning the location and method of cultivation.
- Federal farm programs (like crop insurance, farm loans, etc.) are managed by the USDA, which is a federal agency. We highly recommend getting legal advice in this territory, as the possibility of participating in these programs could be jeopardized by the cultivation of hemp.
- Banks are still averse to servicing marijuana cultivators, and this includes industrial hemp growers. A business attorney can help you navigate this obstacle.
- Finally, you might be surprised by how often a grow operation gets very far in the registration process, only for the owners to realize that the area they planned for the grow was not zoned for that type of activity. Regulations on zoning and hemp cultivation are highly localized (by county) in Colorado, so make sure you know the rules in the area you plan to grow before getting started.
Tips for a Successful Application
Colorado’s state licensing authority is meticulous about the quality of cannabis-based businesses they want to see in Colorado, to put it mildly. Your application must reflect that your business has been well thought out, planned, and that you have the resources and know-how necessary to run it legally and effectively. Lacking important traits will get your application a flat rejection from the Marijuana Enforcement Division.
The following factors will increase your odds of an accepted application:
Team: “Lone Wolves” are not taken seriously in this business. Any successful operation has a well-rounded team of financial experts, horticulturalists, and business managers who understand how to manage their facilities and employees. You need to demonstrate that your team knows how and is motivated to stay compliant with state regulations.
Local Relevance: Your proposed business needs to be welcome in the jurisdiction you are applying for. Just because it’s legal there doesn’t mean that locals will buy marijuana from you (if you’re opening a retail establishment) or that the locality isn’t already saturated by other cannabis businesses.
Finances: The Colorado marijuana industry is famously lucrative, but the price of admission is high. Having sufficient investments and a solid financial plan are essential to even getting started. Having a dedicated financial team, while not a requirement, is definitely good for the state licensure’s opinion of your potential business. As for starting capital, not counting overhead costs of starting operations, a generally good starting liquid budget (financial cushion, in other words) should be around $250,000. The reason for this is the state does not want to allow financially risky or struggling marijuana businesses to enter a market where they might be tempted to sell products illegally to make higher profits.
Know the Regulations: Demonstrating to the MED that you understand and are up-to-date on the most recent marijuana business laws in Colorado will go a long way to getting your application accepted. Have a Colorado lawyer on retainer whom you can consult before making any decision. State laws and local ordinances change often, and in such a new industry, changes to the law should be expected and accounted for. Be legally prepared for whatever comes—get a lawyer.
Real Estate: Wherever your business will be located, make sure you are prepared for the practical requirements of that location. For example, if you are planning a grow operation with hundreds of plants, make sure you have developed a floor plan for the operation of the indoor grow that is based on real floor plans and accounts for the day-to-day operational requirements that will be needed.
Risky Legal Territory
No matter how well-prepared to break into the Colorado cannabis industry you may find yourself, legal marijuana is still a highly contentious and questionable legal area as of this writing. There are many legal pitfalls and there are even roadblocks built into the system that intentionally make the process of becoming a legitimate marijuana business difficult, and thus, you should NOT proceed without legal counsel.
A Colorado marijuana business lawyer from Robinson & Henry, P.C. can answer your questions and walk you through each step of the process to license and legitimize your marijuana enterprise. A business attorney will also help you stay informed and compliant on new regulations or laws which appear in the years to come, and help you and your company maintain a good relationship with the state licensing authority—maximizing your chances of staying in the business long-term. Proceeding without legal advice is not only ill-advised, but will be looked down upon by the Marijuana Enforcement Division as a source of unpreparedness.
Maximize your chances of a successful application, stay compliant, and see road bumps before they happen with an experienced, capable business lawyer from Robinson & Henry.
Call (303) 688-0944 today for a free legal consultation on how to get your business started.
Licensing your new marijuana business in Colorado is no walk in the park. Get more than just a lawyer for legal advice—get a whole team of legal experts who can answer your every question about opening your Colorado marijuana business. Read Robinson & Henry, P.C.'s legal guide to learn more.