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Colorado's Marijuana Regulation & Taxation Bills Filed

By Thomas H. Clarke April 20, 2013 Colorado's Marijuana Regulation & Taxation Bills Filed
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DENVER, CO — Months after Colorado voters approved a ballot initiative to legalize, tax and regulate marijuana, a 57-page bill outlining the regulatory framework for the budding recreational marijuana industry was introduced Thursday to the House of Representatives, along with a companion bill that implements marijuana taxes.

House Bill 1317, sponsored by Rep. Dan Pabon (D-Denver), takes recommendations from the Colorado Amendment 64 Task Force and formulates it into law, while House Bill 1318, sponsored by Rep. Jonathan Singer (D-Denver), establishes the tax structure for legal marijuana sales.

The bills also rename the state’s Medical Marijuana Enforcement Division to the Marijuana Enforcement Division, who will regulate both medical and recreational marijuana sales.

House Bill 1317, while taking into account some input from the Amendment 64 Task Force, creates a new set of guidelines that will establish the country’s first recreational marijuana industry:

  • The bill calls for a three month moratorium on new retail, recreational use marijuana license applications. Existing medical marijuana dispensaries, or those who have already applied for a medical marijuana sales license, are exempt from the moratorium, giving Colorado’s existing medical marijuana industry a three-month exclusive on recreational sales.  The three-month exclusive would begin in October, 2013.
  • The bill requires the Marijuana Enforcement Division to act upon retail marijuana licences no sooner than 45 days after the application has been filed, and no later than 90 days later.
  • The bill requires licensing for all retail marijuana stores, marijuana product manufacturers, marijuana cultivation facilities and cannabis testing facilities.
  • Marijuana growers and retailers can operate independently, unlike the current model used by the medical marijuana program, which requires dispensaries to grow at least 70% of the marijuana they sell.
  • Applicants must undergo a background check.
  • Owners of marijuana a businesses must have two years of residency within the state of Colorado before applying for a retail marijuana license.
  • Only Colorado residents can be employed in the recreational marijuana industry.
  • Retail marijuana stores are limited to selling a quarter-ounce of marijuana in a single transaction to visitors who are not Colorado residents.
  • Retail marijuana products can not contain nicotine or alcohol.

House Bill 1318 establishes the sales and excise taxes that will be enacted on recreational marijuana:

  • Beginning January 1, 2014, a 15 percent excise tax will be imposed on recreational marijuana sales and marijuana products.
  • The state’s 2.9 percent sales tax, and any local government sales taxes, will also be applied to all retail sales.
  • Ten percent of the sales tax will be shared with local governments that have at least one recreational marijuana store within their boundaries.
  • The 15 percent excise tax will also be applied to the wholesale sale or transfer of marijuana by the cultivation facility.
  • Marijuana cultivation facilities are required to maintain records pertaining to the wholesale transfer of marijuana, to collect the tax and remit to the state.
  • The first $40 million in excise tax revenue will be assigned to the public school capital construction assistance fund.
  • Voters will have to approve the bill in November before the taxes can take effect.

The twin bills must pass three votes each in the House and Senate before May 8, the end of the legislative session.

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