Medical marijuana: Jessica Corry on Carbondale telling centers adding infused products is illegal

Colorado's Department of Revenue will introduce the final draft of medical marijuana regulations on Monday. But interpretations of HB 1284, the state's main MMJ law, continue to be made on the local level, with Carbondale telling centers that adding infused products to its menu before July is illegal.

That's the word from the Glenwood Springs Post Independent, which quotes a statement from the town's building and planning department about an HB 1284 passage establishing a moratorium until July 1, 2011 against new centers, in order to give the state and communities the opportunity to establish rules for the industry. The statement reads in part:

The state of Colorado prohibits the establishment of all new medical marijuana businesses, which includes the expansion of existing medical marijuana businesses, until such time as rules and regulations are established and in place...

The town interprets this restriction to include existing facilities to the extent that there is no local permission to add new 'services' or components to their operation, such as infused products or grow operations.

Is this apparent expansion of the moratorium justifiable? Jessica Corry, an attorney and medical marijuana advocate, shared some thoughts on the subject in an e-mail interview.

"The medical marijuana industry finds itself in a very complex legal environment today," she acknowledges. "While Carbondale officials may believe they are acting lawfully in reliance on the state's new rules, this may be up for debate. We currently have five or six different lawsuits around the state challenging municipal regulations relating to this industry. We anticipate the possibility for several more."

Corry notes that "there are multiple factors at play in determining the legal viability of Carbondale's actions. The State required those local governments permitting medical marijuana businesses in their jurisdiction to provide this approval by July 1, 2010. In the absence of MMCs getting this approval, they would generally fall under a one-year moratorium prohibiting them from opening (there are a handful of narrow exceptions here).

"Once the businesses got this approval, they were required to submit an application with the State by August 1st, where they could apply as a Medical Marijuana Center, an edibles producer, or a optional premises grow location. A single applicant could apply for all three, and if the applicant had local approval for multiple centers or multiple grows, the applicant could apply for multiple state licenses.

"So the question becomes this: How specific was Carbondale in granting its local approval? Did it insinuate, suggest or provide business owners with regulations -- either temporary or permanent -- that could be reasonably interpreted as approval for uses that might also permit the subsequent introduction of infused/edible products or require additional building permits?"

In Corry's view, however, Carbondale's reliance on state law for its latest dictate may be shaky depending on the "meaning and value of 'local approval,'" a concept that's "at the heart of nearly every lawsuit we are currently engaging in.

"Colorado has a long history of statutes and cases establishing that once a local government has granted approval for an industry to operate, even if only through temporary regulations, it must tread very carefully in any effort to restrict or remove the ability of businesses in that industry to operate," she continues. "Otherwise, such official actions could subject a municipality to a strong regulatory takings claim, meaning that taxpayers could be on the hook for compensating operations forced out of business due to retroactive enforcement of rules and regulations.

"House Bill 1284 says that businesses cannot add new centers or operations between July 2010 and July 2011 -- but this requirement does not apply to those businesses who properly applied with (and informed) state and local officials of their intent to open an infused products center or build out a new grow operation between now and July 2011."

To Corry, the most important factor to keep in mind is the state's requirement "that medical marijuana businesses must have been 'established' by July 2010 to lawfully operate prior to next July. But 'established' has been interpreted to require only that an applicant had possession of a property (through lease or purchase), all appropriate local approval (whatever was available at the time), and where applicable, that an MMC had both a lawful grow and retail operation as part of its company.

"Assuming Carbondale granted local approval for 'established' applicants using the framework above, its decision to use the permitting or local zoning/licensing process to deny businesses the ability to operate is a move that is not only arbitrary but could also result in the shuttering of viable businesses."

The bottom line? In her words, "A thriving business should be entitled to increase its production or its diversity of products and services without being pinned with an over-broad interpretation of the new state rules."

More from our Marijuana archive: "Medical marijuana: Jessica Corry, Bob Hoban on what's wrong with new Denver MMJ regs."