Medical marijuana: 9 license rejections, 50 fines, says enforcement division's Dan Hartman

The medical marijuana licensing process has been underway for just shy of two weeks, and according to Dan Hartman, head of the state's Medical Marijuana Enforcement Division (MMED), things have been running smoothly for most owners and staffers. Which isn't to say every business has sailed through. Thus far, nine applications have been denied, with another fifty outfits receiving fines of up to $5,000.

The names of fine targets can't be released at this point, because the licensing process is not yet complete. However, Hartman says, "the fines range between $1,000 and $5,000 depending on where they were in their 9-1 certification" -- a reference to a September 1, 2010 filing deadline for dispensaries and the like. "Some didn't complete the form, some were late and some didn't file at all. But we went out with an investigator and did an inspection of all the ones we had, to see if they were able to verify that they were meeting the 70 percent rule," which calls for centers to grow at least 70 percent of their own product; they can purchase up to 30 percent from other sources. "Then, to move them forward administratively in the licensing process, we came to a stipulated agreement based on where they were in the process."

And those that didn't pass muster? Here's the latest list:

Click to enlarge.
Click to enlarge.

July 1 marks the date for official implementation of HB 1284, the state's main MMJ regulatory measure. But that doesn't mean MMED is on the cusp of completing its checks for all 700-plus dispensaries statewide that are still in the pipeline.

"Right now, we're going through backgrounds," Hartman notes, "and once those are substantially done, we'll go back to the local authority they're in and ask them for their approval, to make sure they've met all the local standards. Then it's sent back approved or denied -- and if it's approved, we send out an investigator to do a substantial-compliance inspection prior to giving them a license. And if all those tests are met, we'll send them a letter saying they've reaching the point where we're now requesting their license fee for next year."

The number of dispensaries that have come up short thus far doesn't seem excessive to Hartman in comparison with operations in different industries.

"In any business, when you talk about startups and how many actually make it and how many fail the first year, I don't know that we'll see a high rate of failure" for medical marijuana establishments, he says. "But folks who are under-capitalized or in a bad location -- I would expect to see some of them fail, just as you'd expect to see in any other business.

"The regulatory piece may be causing some people to rethink what they're doing," he concedes, "but I really think success is more about location, capitalization and being able to have all the pieces in the business you need. Because it's vertically integrated, you need to be a good grower, a good business person, and have some caregiver skills that may set you apart from other businesses. And the better businesses are going to be able to push forward -- and the business people who maybe rushed into it, thinking they could just make money without having to do all the things every business has to do, they may find it a harder."

Meanwhile, HB 1043, the latest piece of MMJ legislation, extends a moratorium on new centers until 2012 -- one reason attorney Rob Corry thinks Governor John Hickenlooper shouldn't sign the bill. But Hartman sees positives in the delay.

"We're okay with the moratorium," he acknowledges. "It helps us make sure that we do everything we need to do. We understand that the business of dispensaries and all the other stuff had quite a head start on state regulation, and this gives us a little bit of room to make sure all of our systems and people are up to speed."

As of now, MMED has 24 permanent employees and sixteen part-timers dealing with background checks and so on. Down the line, Hartman expects more of the former and fewer of the latter, with a focus on field investigators who'll be staffing four offices statewide -- the Denver headquarters, plus not-yet-opened branches in Fort Collins, Colorado Springs and Fruita, on the Western Slope. From there, these staffers will keep close tabs on Colorado's unprecedented medical marijuana experiment.

More from our Marijuana archive: "Medical marijuana attorney Lauren Davis tells why lawyer group hasn't sued to stop HB 1284."

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