A legislative gaffe has made dispensaries selling both medical and recreational marijuana non-compliant with the law for the past two years, according to the Colorado Marijuana Enforcement Division.
Selling medical marijuana and recreational marijuana require separate state licenses in Colorado, with approximately 575 dispensaries currently permitted for both by the MED. And all of them are technically running afoul of the state's rules.
"They're out of compliance because of legislative oversight, not because of their business practices," Representative Edie Hooton told a House committee on February 16.
A 2019 law that resulted from an extensive sunset review of state marijuana industry regulations merged medical and recreational pot codes, but the bill's drafters accidentally left out the paragraph for dual-use dispensaries, or co-locations, according to Representative Matt Gray.
"It was never the intent to sever the right to co-locate whatsoever," he said during the committee hearing.
Licenses for both medical and recreational sales at the same address remain active, and because the issue stems from a legislative error, the MED hasn't taken action against any dual-use dispensaries for this technical non-compliance. But the department doesn't have the authority to fix it, either: Lawmakers have to enact new legislation for the paragraph in order for it to be added back into the state marijuana code.
Hooton and Representative Kevin Van Winkle introduced House Bill 1037 earlier this year to restore the language allowing dual-use dispensaries. The measure would keep previous rules requiring separate points of sale for medical and recreational products, and continue giving local jurisdictions final authority over marijuana dispensary licensees.
Hooton and Van Winkle's bill's first reading was approved by the House Transportation and Local Government Committee 11-2. It will now move on to the full House.
The state Department of Revenue, which is responsible for overseeing the MED, first approached Hooton in 2019 about fixing the error, but lawmakers pushed the issue aside in 2020 and 2021 in order to address the COVID-19 pandemic, she said.
The MED anticipates "significant business disruptions across the state" if lawmakers don't fix the error eventually, including a potential surrender of licenses as well as forced updates of marijuana industry regulations for local governments, according to MED Policy and Regulatory Affairs Director Allison Robinette.
"This offers a technical correction that we believe was inadvertently omitted during the sunset review process," Robinette said during the hearing. "This bill simply restores the MED's expressed rulemaking authority to allow medical marijuana businesses and retail marijuana businesses to operate at the same address."
Colorado dispensaries sold nearly $2.3 billion worth of marijuana products in 2021, according to the DOR; around half of those dispensaries boasted dual-use sales.