Marijuana Social Equity Bill Advances After Contentious Hearing

A bill proposing to overhaul Colorado's marijuana social equity program moved forward in the state legislature after a long and contentious committee hearing involving testimony from bill advocates and the recreational pot industry.

Introduced by Representative Naquetta Ricks, House Bill 23-1020 would add a handful of features to the state's social equity program, created less than three years ago, including new preferential marijuana delivery opportunities and changes to Colorado's social equity licensing requirements. While the majority of recreational marijuana industry representatives said they supported social equity initiatives, allowing delivery services to operate without dispensary involvement was a step too far for them.

Concerns about quick implementation, the bill's drafting process and tax loopholes were all flagged as concerns by recreational industry owners and lobbyists, but current delivery owners and social equity advocates believe they're already being unfairly shut out by dispensaries. And after over three hours of testimony and lawmaker discussion and one amendment, the bill passed out of the House Business Affairs & Labor Committee, 7-4, on February 23.

Colorado has been criticized for not having social equity provisions for communities impacted by the drug war in place from the start of legalization. While several state measures and Denver initiatives have tried to make up for lost time and past injustices over the last three years, entrepreneurs who've attained delivery licenses under the social equity program have struggled to stay afloat.

Although recreational marijuana delivery has been legal in Colorado since 2020, Aurora and Denver are the only two cities with dispensaries that have opted into the practice. According to the Denver Department of Excise & Licenses, delivery has accounted for less than one half of 1 percent of total marijuana sales in Denver since the service began in 2021, and fewer than 5 percent of the cities' 200-plus dispensaries currently offer the service.

"if this doesn't change, people are going go out of business," says HB 1020 bill proponent and social equity marijuana business owner Sarah Woodson.

Woodson, who was just approved for Denver's first licensed mobile marijuana lounge and works as a consultant for social equity business owners, says that the vast majority of Denver dispensaries abstain from delivery because of a local law requiring marijuana stores to partner with social equity delivery services. By allowing delivery companies to operate out of licensed storage facilities instead of partnering with dispensaries, the service would get off the ground in Colorado, she asserts.

Established marijuana business owners and representatives of multi-state operators in the pot industry told lawmakers that the bill, introduced January 9, was drafted without their input.

"This bill had major process flaws," VS Strategies associate Bia Campbell told the committee. "We do not believe that this is the way to make public policy in this state."

VS Strategies serves as a consultant for cannabis companies across the state, many of which took issue with HB 1020's language about tax applications to independent delivery services and the speed of their implementation. Under the bill's current language, the state would have to begin accepting applications by October of this year, with only social equity licensees allowed to apply until 2027.

"From an operability and implementability perspective, we are giving the Marijuana Enforcement Division three months to set up a whole entire new license," Campbell said, arguing that the MED would need more time to establish the licensing framework effectively.

If approved, HB 1020 would create a committee to publicly review and issue state-funded grants from the state's new Cannabis Business Office, a branch of the Colorado Office of Economic Development and International Trade; it would also add more financial benefits for companies participating in the MED's accelerator program, an initiative that allows established growers and product manufacturers to host startup marijuana businesses, as well. And starting in 2024, it would ban any new social equity applicants who already own interests in three or more marijuana businesses.

Approved by lawmakers in 2020, Colorado's marijuana social equity definition requires applicants to prove one of the following: They or their families were arrested on certain drug charges, they earn less than 50 percent of the Colorado median income, or they come from a community designated as a low-economic opportunity zone by the state. Under Ricks's bill, a low-income-housing qualification for prospective licensees would be added to that definition.

An amendment that closes the feared loophole regarding marijuana excise tax evasion by independent delivery services and adds further requirements for prospective delivery services was approved by the committee, but the measure is expected to continue receiving criticism from recreational industry proponents and organizations representing parents against commercial marijuana.