Inside Colorado's New Marijuana Rules

The Marijuana Enforcement Division has approved an updated set of rules for the recreational and medical marijuana industries. Many of the changes appear to be procedural and mostly clarify existing processes for things like converting a medical dispensary to a recreational or dual-use shop.

The timing was key, as new recreational marijuana producers can begin selling their own cannabis. And as of October 1, grows no longer need to be directly tied to a specific recreational dispensary -- meaning they can wholesale to any state-licensed entity.

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In addition, a controversial proposal that would have capped greenhouse marijuana production at half of that allowed for energy-eating indoor cannabis grows failed to make it into the new rules, which go into effect October 30.

The original plan was to limit greenhouse grows to half the plants of an indoor facility. Outdoors, growers can generally produce much larger plants than indoor grows -- so state officials had assumed that putting a cap on outdoor production was a way to limit the amount of marijuana being produced in the state and thus help prevent black-market diversion. But several dispensary owners argued that greenhouse grows are also more energy-efficient: They feel that putting stricture limits on the number of plants allowed in greenhouses compared with indoor facilities (new recreational dispensaries and grows are allowed a max of 3,600 plants) was merely protecting the interests of those with indoor facilities.

Other rules that were adopted further define what makes a package child-resistant and require opaque packaging that is resalable for anything meant to be used more than once (like a bag of herb). All packaging has to be labeled with MED rules as well as pertinent product information. The revised regs also clarify how medical dispensaries that want to make the jump can legally transition to either dual-use or full-recreational shops -- including requirements that all inventory being transferred is entered into the state's computerized inventory tracking system. Fees for transitioning businesses were also lowered. For example, licenses for a medical marijuana center applying for a retail marijuana-store license dropped from $3,750 to $3,000.

The new rules also set a limit on the number of plants each medical-turned-recreational shop can have. If the shop was a type 1 medical center before, it can't grow more than 3,600 recreational plants. Type 2 centers converting over can grow up to 6,000 plants, and Type 3 centers making the switch can grow up to 10,200 plants. The department reserves the right to lower those allowed plant counts on an individual basis if a center can't prove that it is using or selling all of its cannabis. Businesses that want to increase plant counts can also apply for waivers, though they'll have to demonstrate the need by showing at least three months of financial data with the state. Shops that have already hit the 10,200 plant maximum will not be given waivers for more.

Any new facilities -- those that weren't originally medical marijuana businesses -- will be limited to 3,600 plants at the start. If one of these enterprises wants to expand a grow, it will have to apply for a waiver -- and prove that it sells at least 85 percent of its products.

New rules discuss production limits, too, but they make it clear that an even more permanent set of rules will be made by January 2016, after the state has a couple years' worth of sales data to study.

Concentrate manufacturers will be required to have a set, standard operating procedure for their production. These procedures must be detailed, with step-by-step instructions on everything from preparing the pot to be converted to cleaning the equipment once everything is completed. According to the revised rules, all owners and licensees have to understand and be aware of the processes, even if they aren't actually conducting the extractions. Solvent-based extractions are defined as those using chemicals with a flash point below 100 degrees Fahrenheit; those must be done in specifically licensed labs. Water-based extractions and C02 extractions are allowed in any grow facility, provided a sanitary space has been set aside for their production.

To read all of the new rules and regulations, go to the Colorado Department of Revenue website.

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William Breathes
Contact: William Breathes