2016 Colorado Revised Statutes
Title 12 - Professions and Occupations
Health Care
Article 43.4 - Colorado Retail Marijuana Code
Part 2 - State Licensing Authority
§ 12-43.4-202. Powers and duties of state licensing authority - rules

(1) The state licensing authority shall develop and maintain a seed-to-sale tracking system that tracks retail marijuana from either seed or immature plant stage until the marijuana or retail marijuana product is sold to a customer at a retail marijuana store to ensure that no marijuana grown or processed by a retail marijuana establishment is sold or otherwise transferred except by a retail marijuana store.

(2) The state licensing authority has the authority to:

(a) Grant or refuse state licenses for the cultivation, manufacture, distribution, sale, and testing of retail marijuana and retail marijuana products as provided by law; suspend, fine, restrict, or revoke such licenses upon a violation of this article or any rule promulgated pursuant to this article; and impose any penalty authorized by this article or any rule promulgated pursuant to this article. The state licensing authority may take any action with respect to a registration pursuant to this article as it may with respect to a license pursuant to this article, in accordance with the procedures established pursuant to this article.

(b) Promulgate, on or before July 1, 2013, rules for the proper regulation and control of the cultivation, manufacture, distribution, sale, and testing of retail marijuana and retail marijuana products and for the enforcement of this article and promulgate amended rules and such special rulings and findings as necessary;

(c) Hear and determine at a public hearing any contested state license denial and any complaints against a licensee and administer oaths and issue subpoenas to require the presence of persons and the production of papers, books, and records necessary to the determination of any hearing so held, all in accordance with article 4 of title 24, C.R.S. The state licensing authority may, at its discretion, delegate to the department of revenue hearing officers the authority to conduct licensing, disciplinary, and rule-making hearings. When conducting such hearings, the hearing officers are employees of the state licensing authority under the direction and supervision of the executive director and the state licensing authority.

(d) Maintain the confidentiality of reports or other information obtained from a licensee containing any individualized data, information, or records related to the licensee or its operation, including sales information, financial records, tax returns, credit reports, cultivation information, testing results, and security information and plans, or revealing any customer information, or any other records that are exempt from public inspection pursuant to state law. Such reports or other information may be used only for a purpose authorized by this article or for any other state or local law enforcement purpose. Any customer information may be used only for a purpose authorized by this article.

(e) Develop such forms, licenses, identification cards, and applications as are necessary or convenient in the discretion of the state licensing authority for the administration of this article or any of the rules promulgated under this article; and

(f) Prepare and transmit annually, in the form and manner prescribed by the heads of the principal departments pursuant to section 24-1-136, C.R.S., a report accounting to the governor for the efficient discharge of all responsibilities assigned by law or directive to the state licensing authority.

(3) (a) Rules promulgated pursuant to paragraph (b) of subsection (2) of this section must include, but need not be limited to, the following subjects:

(I) Procedures consistent with this article for the issuance, renewal, suspension, and revocation of licenses to operate retail marijuana establishments;

(II) Subject to the limitations contained in section 16 (5) (a) (II) of article XVIII of the state constitution and consistent with this article, a schedule of application, licensing, and renewal fees for retail marijuana establishments;

(III) Qualifications for licensure under this article, including but not limited to the requirement for a fingerprint-based criminal history record check for all owners, officers, managers, contractors, employees, and other support staff of entities licensed pursuant to this article;

(IV) (A) Establishing a marijuana and marijuana products independent testing and certification program, within an implementation time frame established by the department, requiring licensees to test marijuana to ensure at a minimum that products sold for human consumption do not contain contaminants that are injurious to health and to ensure correct labeling.

(B) Testing may include analysis for microbial and residual solvents and chemical and biological contaminants deemed to be public health hazards by the Colorado department of public health and environment based on medical reports and published scientific literature.

(C) In the event that test results indicate the presence of quantities of any substance determined to be injurious to health, the licensee shall immediately quarantine the products and notify the state licensing authority. The state licensing authority shall give the licensee an opportunity to remediate the product if the test indicated the presence of a microbial. If the licensee is unable to remediate the product, the licensee shall document and properly destroy the adulterated product.

(D) Testing shall also verify THC potency representations and homogeneity for correct labeling and provide a cannabinoid profile for the marijuana product. An individual marijuana piece of ten milligrams or less that has gone through process validation is exempt from continued homogeneity testing. Homogeneity testing for one hundred milligram servings may utilize validation measures.

(E) The state licensing authority shall determine an acceptable variance for potency representations and procedures to address potency misrepresentations. The state licensing authority shall determine an acceptable variance of at least plus or minus fifteen percent for potency representations and procedures to address potency misrepresentations.

(F) The state licensing authority shall determine the protocols and frequency of marijuana testing by licensees.

(G) The executive director of the department of public health and environment shall provide to the state licensing authority standards for licensing laboratories pursuant to the requirements as outlined in sub-subparagraph (A) of this subparagraph (IV) for marijuana and marijuana products.

(V) Security requirements for any premises licensed pursuant to this article, including, at a minimum, lighting, physical security, video, and alarm requirements, and other minimum procedures for internal control as deemed necessary by the state licensing authority to properly administer and enforce the provisions of this article, including reporting requirements for changes, alterations, or modifications to the premises;

(VI) Requirements to prevent the sale or diversion of retail marijuana and retail marijuana products to persons under twenty-one years of age;

(VII) Labeling requirements for retail marijuana and retail marijuana products sold by a retail marijuana establishment that are at least as stringent as imposed by section 25-4-1614 (3) (a), C.R.S., and include but are not limited to:

(A) to (H) (Deleted by amendment, L. 2016.)

(I) Warning labels;

(J) (Deleted by amendment, L. 2016.)

(K) Amount of THC per serving and the number of servings per package for marijuana products;

(L) to (N) (Deleted by amendment, L. 2016.)

(O) A universal symbol indicating the package contains marijuana; and

(P) The potency of the retail marijuana or retail marijuana product highlighted on the label.

(VIII) Health and safety regulations and standards for the manufacture of retail marijuana products and the cultivation of retail marijuana;

(IX) Limitations on the display of retail marijuana and retail marijuana products;

(X) Regulation of the storage of, warehouses for, and transportation of retail marijuana and retail marijuana products;

(XI) Sanitary requirements for retail marijuana establishments, including but not limited to sanitary requirements for the preparation of retail marijuana products;

(XII) Records to be kept by licensees and the required availability of the records;

(XIII) The reporting and transmittal of monthly sales tax payments by retail marijuana stores and any applicable excise tax payments by retail marijuana cultivation facilities;

(XIV) Authorization for the department of revenue to have access to licensing information to ensure sales, excise, and income tax payment and the effective administration of this article;

(XIV.5) Rules effective on or before January 1, 2016, relating to permitted economic interests including a process for a criminal history record check; a requirement that a permitted economic interest applicant submit to and pass a criminal history record check; a divestiture; and other agreements that would qualify as permitted economic interests;

(XV) Compliance with, enforcement of, or violation of any provision of this article, section 18-18-406.3 (7), C.R.S., or any rule issued pursuant to this article, including procedures and grounds for denying, suspending, fining, restricting, or revoking a state license issued pursuant to this article;

(XVI) Establishing a schedule of penalties and procedures for issuing and appealing citations for violation of statutes and rules and issuing administrative citations;

(XVII) Retail marijuana transporter licensed businesses, including requirements for drivers, including obtaining and maintaining a valid Colorado driver's license; insurance requirements; acceptable time frames for transport, storage, and delivery; requirements for transport vehicles; and requirements for licensed premises;

(XVIII) Retail marijuana establishment operator licensees, including the form and structure of allowable agreements between operators and owners;

(XIX) Nonescorted visitors in limited access areas; and

(XX) The parameters and qualifications of an indirect beneficial interest owner and a qualified limited passive investor.

(a.5) (I) Pursuant to the authority granted in paragraph (b) of subsection (2) of this section, on or before January 1, 2016, the state licensing authority shall promulgate rules establishing the equivalent of one ounce of retail marijuana flower in various retail marijuana products including retail marijuana concentrate.

(II) Prior to promulgating the rules required by subparagraph (I) of this paragraph (a.5), the state licensing authority may contract for a scientific study to determine the equivalency of marijuana flower in retail marijuana products including retail marijuana concentrate.

(b) Rules promulgated pursuant to paragraph (b) of subsection (2) of this section must also include the following subjects:

(I) Specifications of duties of officers and employees of the state licensing authority;

(II) Instructions for local jurisdictions and law enforcement officers;

(III) Requirements for inspections, investigations, searches, seizures, forfeitures, and such additional activities as may become necessary from time to time;

(IV) Repealed.

(V) Development of individual identification cards for owners, officers, managers, contractors, employees, and other support staff of entities licensed pursuant to this article, including a fingerprint-based criminal history record check as may be required by the state licensing authority prior to issuing a card;

(VI) Identification of state licensees and their owners, officers, managers, and employees;

(VII) The specification of acceptable forms of picture identification that a retail marijuana store may accept when verifying a sale, including but not limited to government-issued identification cards;

(VIII) State licensing procedures, including procedures for renewals, reinstatements, initial licenses, and the payment of licensing fees; and

(IX) Such other matters as are necessary for the fair, impartial, stringent, and comprehensive administration of this article.

(c) Rules promulgated pursuant to paragraph (b) of subsection (2) of this section must also include the following subjects, and the state licensing authority may seek the assistance of the department of public health and environment when necessary before promulgating the rules:

(I) Signage, marketing, and advertising, including but not limited to a prohibition on mass-market campaigns that have a high likelihood of reaching persons under twenty-one years of age and other such rules that may include:

(A) Allow packaging and accessory branding;

(B) A prohibition on health or physical benefit claims in advertising, merchandising, and packaging;

(C) A prohibition on unsolicited pop-up advertising on the internet;

(D) A prohibition on banner ads on mass-market websites;

(E) A prohibition on opt-in marketing that does not permit an easy and permanent opt-out feature; and

(F) A prohibition on marketing directed towards location-based devices, including but not limited to cellular phones, unless the marketing is a mobile device application installed on the device by the owner of the device who is twenty-one years of age or older and includes a permanent and easy opt-out feature;

(II) Repealed.

(III) Prohibiting the sale of retail marijuana and retail marijuana products unless:

(A) The product is packaged by the retail marijuana store or the retail marijuana products manufacturer in packaging meeting requirements established by the state licensing authority similar to the federal "Poison Prevention Packaging Act of 1970", 15 U.S.C. sec. 1471 et seq.; or

(B) The product is placed in an opaque and resealable exit package or container meeting requirements established by the state licensing authority at the point of sale prior to exiting the store;

(IV) The safe and lawful transport of retail marijuana and retail marijuana products between the licensed business and testing laboratories;

(V) A standardized marijuana serving size amount for edible retail marijuana products that does not contain more than ten milligrams of active THC designed only to provide consumers with information about the total number of servings of active THC in a particular retail marijuana product, not as a limitation on the total amount of THC in any particular item, labeling requirements regarding servings for edible retail marijuana products, and limitations on the total amount of active THC in a sealed internal package that is no more than one hundred milligrams of active THC;

(VI) Labeling guidelines concerning the total content of THC per unit of weight;

(VII) Prohibition or regulation of additives to any retail marijuana product, including but not limited to those that are toxic, designed to make the product more addictive, designed to make the product more appealing to children, or misleading to consumers, but not including common baking and cooking items;

(VIII) Permission for a local fire department to conduct an annual fire inspection of a retail marijuana cultivation facility; and

(IX) (A) A prohibition on the production and sale of edible retail marijuana products that are in the distinct shape of a human, animal, or fruit. Geometric shapes and products that are simply fruit flavored are not considered fruit. Products in the shape of a marijuana leaf are permissible. Nothing in this subparagraph (IX) applies to a company logo.

(B) The rules promulgated pursuant to this subparagraph (IX) shall take effect on October 1, 2017.

(c.5) (I) Pursuant to the authority granted in paragraph (b) of subsection (2) of this section, on or before January 1, 2016, the state licensing authority shall promulgate rules requiring that edible retail marijuana products be clearly identifiable, when practicable, with a standard symbol indicating that it contains marijuana and is not for consumption by children. The symbols promulgated by rule of the state licensing authority must not appropriate signs or symbols associated with another Colorado business or industry.

(II) On or before August 1, 2014, the state licensing authority shall convene a stakeholders group, including but not limited to representatives of the department of public health and environment, retail marijuana store licensees, retail marijuana products manufacturers licensees, child abuse prevention experts, and advocates for children's health, to make recommendations for rules on how edible retail marijuana products can be clearly identifiable, when practicable, to indicate that it contains marijuana, is not for consumption by children, and is safe for consumers. Prior to February 1, 2015, the state licensing authority shall report its findings to the health and human services committee of the senate and the health insurance and environment committee of the house of representatives, or any successor committees.

(d) Nothing in this article shall be construed as delegating to the state licensing authority the power to fix prices for retail marijuana.

(e) Nothing in this article shall be construed to limit a law enforcement agency's ability to investigate unlawful activity in relation to a retail marijuana establishment. A law enforcement agency shall have the authority to run a Colorado crime information center criminal history record check of a licensee, or employee of a licensee, during an investigation of unlawful activity related to retail marijuana and retail marijuana products.

(f) The general assembly finds and declares that matters related to labeling as regulated pursuant to subparagraph (VII) of paragraph (a) of this subsection (3) and subparagraphs (V) and (VI) of paragraph (c) of this subsection (3), packaging as regulated pursuant to subparagraph (III) of paragraph (c) of this subsection (3), and testing as regulated pursuant to subparagraph (IV) of paragraph (a) of this subsection (3) are matters of statewide concern, and the sole regulatory authority for labeling, packaging, and testing is pursuant to this section.

(4) (a) The state licensing authority shall create a statewide licensure class system for retail marijuana cultivation facilities. The classifications may be based upon square footage of the facility; lights, lumens, or wattage; lit canopy; the number of cultivating plants; a combination of the foregoing; or other reasonable metrics. The state licensing authority shall create a fee structure for the license class system.

(b) (I) The state licensing authority may establish limitations upon retail marijuana production through one or more of the following methods:

(A) Placing or modifying a limit on the number of licenses that it issues, by class or overall, but in placing or modifying the limits, the authority shall consider the reasonable availability of new licenses after a limit is established or modified;

(B) Placing or modifying a limit on the amount of production permitted by a retail marijuana cultivation license or class of licenses based upon some reasonable metric or set of metrics including, but not limited to, those items detailed in paragraph (a) of this subsection (4), previous months' sales, pending sales, or other reasonable metrics as determined by the state licensing authority; and

(C) Placing or modifying a limit on the total amount of production by retail marijuana cultivation licensees in the state, collectively, based upon some reasonable metric or set of metrics including, but not limited to, those items detailed in paragraph (a) of this subsection (4), as determined by the state licensing authority.

(II) Notwithstanding anything contained in this article to the contrary, in considering any such limitations, the state licensing authority, in addition to any other relevant considerations, shall:

(A) Consider the total current and anticipated demand for retail marijuana and retail marijuana products in Colorado; and

(B) Attempt to minimize the market for unlawful marijuana.