Legislators in Colorado have until July 1 to setup rules for legal marijuana stores scheduled to open January 1, 2014. As usual, the legislators making the rules are just about the last people you want to be doing that. Their lack of understanding of the subject matter would be funny, if not for the consequences.
Up to this point, there are medical marijuana stores that are run by the state's Medical Marijuana Enforcement Division (MMED). These came about after President Obama was elected and he indicated that he would not pursue medical marijuana patients (CA may beg to differ).
Recently, a CO state audit discovered that the MMED had squandered much of the money provided by dispensary fees. They bought $1000 office chairs and leased a fleet of black SUV's. Whoops!!!
Legislators are currently working out the details of the new legal marijuana stores and here is some of their handiwork:
- Tax rate of 30% i.e. $200 ounce is $260 with tax. Any increase in taxes must be put to the voters in CO. There is a good likelihood that these taxes get voted down which will leave the state to pay for the regulation of the new industry.
- Out of state visitors are limited to purchasing 1/8 ounce at a time. Residents are limited to 1/4 ounce at a time. This is asinine. WTF are legislators thinking? I can buy one beer or a case or a keg. Limiting purchases defeats the intent of the law which was to end prohibition.
- Edibles limited to max of 100mg THC. Another solution in search of a problem. There are cancer patients who use stronger edibles currently. Another move that will push business back underground.
- No radio or TV advertising. Stupid but they were considering also banning print ads. I think this will fail in court.
- Retail and medical marijuana must be sold at separate locations. This is due to retail being for adults 21 and over, while medical marijuana is available for 18 and over. Needless to say, smart college freshmen get their red card at 18.
He discovered he was 3x over the limit while sober.
Another huge issue still to be sorted out is the structure of new legal businesses. Current medical marijuana businesses are vertically integrated and are required to grow at least 70% of what they sell. They are allowed to purchase up to 30% of what they sell from other dispensaries. Unfortunately, the best businessmen are usually not great growers and vice versa. As a result, the vast majority of dispensaries produce large amounts of very mediocre marijuana.
These proposed rules are a start but I suspect that legislators will continue to find ways to kill the golden goose. It's what they do. They are going to drive the industry back underground by over-regulating and overtaxing this newfound source of state revenue.
Unless the Feds try to stop it. It is going to be very interesting in 2014 in Colorado