Colorado Officials Propose Banning Marijuana Businesses From Unlicensed Events

With two months left in a state rulemaking period, Colorado regulators are proposing a significant restriction to marijuana brands and cannabis event holders.

During the Colorado Marijuana Enforcement Division's final public rulemaking hearing today, October 30, MED officials proposed banning licensed marijuana businesses such as dispensaries, growers and extractors from participating in unlicensed cannabis activities, such as ticketed or money-oriented cannabis dinners and food pairings, movie screenings, art exhibitions and other events where pot consumption is allowed. With few options for public social consumption, these private functions comprise most of the cannabis events in the state.

Colorado legalized recreational marijuana in late 2012, but the event and hospitality space is still struggling to take hold. Social consumption licenses for businesses interested in allowing cannabis use weren't created at the state level until 2019, and only a handful of local governments currently allow such businesses to operate within their borders: Adams County, Blackhawk, Central City, Denver, Dillon and Huerfano County.

The MED's newly proposed event rules, added to other drafts released earlier this month, would ban licensed marijuana brands from promoting, participating in or providing cannabis for "consumption activities that do not occur on the premises of a licensed hospitality business."

This late proposal goes too far, according to business owners and their representatives, who argue that marijuana advertising restrictions at the federal and state levels, as well as a lack of licensed event options, have created unfair obstacles against marketing their brands or otherwise connecting with customers.

"Regulated marijuana businesses have been severely limited in how they can advertise their businesses since the inception of our program in Colorado," marijuana attorney Rachael Ardanuy of RZA Legal said during the meeting. "This addition is really a step in the wrong direction. It would really hurt licensees of all types and all brands. ... At this point in our state, nearly 100 percent of consumption takes place in private places or illegally in public."

Ardanuy, who represents licensed cannabis businesses in Colorado and Florida, called the MED's proposed hospitality rule addition "bold," adding that participating in private events makes a "substantial difference for the licensed industry."

All five of Colorado's licensed and operating venues and mobile lounges are located in the metro area. In Denver, the majority of cannabis events take place at unlicensed venues, with just one lounge, the Coffee Joint, and three pot-friendly tour services operating under the local hospitality rules. The tour services are all less than one year old, however, while the Coffee Joint only allows edibles and electronic vaping.

The owner of the Coffee Joint, who also owns the dispensary next door, openly admits that the venue loses money as a dispensary attraction. JAD's Mile High Smoke, Colorado's only licensed venue for cannabis use and sales, is located just outside of Denver in unincorporated Adams County; the owner of JAD's has previously said that if sales limits aren't raised for licensed venues, another topic of discussion during MED rulemaking, his business will struggle to survive.

Entrepreneurs often cite state and local rules such as liquor-sale bans and location restrictions as their main obstacles to getting licensed for public consumption, and instead choose to go the private route instead. And despite looking the other way at an annual 4/20 festival at which thousands of attendees openly light up at Civic Center Park, Denver's licensing department and law enforcement have levied fines upon and shut down private pot venues and events since recreational legalization began.

Over the past three months, the Denver Department of Excise & Licenses has cracked down on unlicensed cannabis events, arguing that they aren't legal under state and city laws. The MED has been taking similar enforcement action this fall, according to event promoters.

Several business owners trying to obtain local hospitality licenses have complained about Denver's restrictive ventilation, building plan and location requirements, which they say have prevented them from attaining their pot consumption permits for over a year. During today's hearing, the Cannabis Experience and the Canna Cabana Bus, two licensed mobile lounges currently operating in Denver, said that they oppose the unlicensed event ban, as does the Marijuana Industry Group, one of Colorado's largest marijuana trade organizations.

"This really wasn't stakeholdered, and to bring it up this late in rulemaking is pretty rough. The phrases 'participate, promote and provide' are just super broad, and it makes it sound like people in the industry can't spend time with other people consuming cannabis, which is absolutely absurd," Marijuana Industry Group executive director Truman Bradley argued. "This rule be very difficult to objectively and fairly enforce."

During the meeting, MED officials said that the proposed rule was added after "feedback" from stakeholders who'd been participating in marijuana policy discussions, but didn't elaborate further. However, department policy and regulatory affairs director Allison Robinette acknowledged that critical feedback could shape the final rules.

"What you see today may or may not be adopted by the state licenses authority," she said in response to a handful of objections to the proposed event ban.

The MED has been meeting throughout the summer and fall to discuss new marijuana regulations; today's meeting is slated as the last public hearing before rules are adopted on January 8. Other significant changes — such as 2023 legislative implementations, new advertising rules and updated product safety testing requirements — are also being discussed.

At the same meeting, the MED recommended banning marijuana product manufacturers from including any health benefit claims on packaging, which the majority of industry members also opposed.