PART 2: DISPENSARIES AND DELIVERIES
This article is the second of a three-part series that addresses the new laws under the Medical Marijuana Regulation & Safety Act (MMRSA). If you haven’t already read the article on cultivators and manufacturers then go check it out here. This article will highlight some of the new laws for dispensaries and delivery services under MMRSA.
Your State License Type
Every dispensary and delivery service is required to obtain a state license and a local license or permit, if required by the city or county. There are 2 types of licenses available: Type 10 (general dispensary license) and Type 10A (dispensary with no more than 3 retail sites). Note: A licensee holding a Type 10A may also apply for a cultivation and/or manufacturing license; whereas a Type 10 license holder cannot.
Delivery services have no specific license available to them. Instead, a delivery service licensee must apply for a Type 10 or 10A license for now. However, there is talk that the legislature might amend AB 266 to allow for a separate delivery license so keep an eye out for this legislative update!
Are You Eligible for Priority Licensing?
A dispensary or delivery service that can demonstrate to the state’s satisfaction that it was “in operation and in good standing” with its local jurisdiction by January 1, 2016 may receive priority licensing by the state. “In operation and in good standing” can be interpreted to mean that you are compliant with all local and state laws, all your taxes are paid, your entity filings are up-to-date, and that you and your employees will pass certain criminal background checks.
January 1, 2018 Deadline: If you are operating in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018, you may continue your operations until your license application is approved or denied. In other words, get compliant now so that you can continue operating!
Changes to Your Business Structure
For-Profit Entities: Under MMRSA, cannabis businesses are allowed to be organized as a for-profit entity, such as an LLC, LLP or a corporation. The benefits of this entity structure include greater investor interest and increased control and ownership of the business. However, check your local municipal code to ensure it allows for-profit cannabis businesses to operate within city or county limits before you make the transition.
Collectives and Cooperatives: All patient collectives and cooperatives will end one year after the Bureau of Medical Marijuana Regulation (BMMR) posts a notice on its website that they’ve started to issue licenses. Thereafter, all collectives must obtain a license except for individual patient and caregiver gardens.
Delivery Services: One of the most troubling of these new laws is that all delivery services are required to have a licensed dispensary in order to continue operations. Delivery services no longer can operate directly from a cultivation or manufacturing site (or out of a residence). Additionally, all deliveries must be documented and delivered to qualified patients. Be aware that cities and counties have the power to ban deliveries in their territory, but they cannot ban deliveries passing through their territory. Check the municipal code of all of your delivery locations to avoid fines and penalties!
Prior to retail sale or dispensing, all medical cannabis must be tested. The Department of Public Health shall specify how such testing shall be conducted. Dried flower must be tested for concentration, pesticides, mold, and other contaminants. Extracts must, at a minimum, be tested for concentration and purity of the product.
All medical cannabis products must also be labeled in tamper-evident packages with certain warning statements and information. Labels and packages must include, but is not limited to, the following information: the date and source of manufacture and/or cultivation; specific warning statements; any known allergens; the list of pharmacologically active ingredients; and clear indication that the package contains medical cannabis
Dispensaries must implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing medical cannabis or medical cannabis products and theft of medical cannabis or medical cannabis products. Some of these security measures include: loitering prevention; limited access areas accessible only to authorized dispensary personnel; and keeping all medical cannabis and medical cannabis products locked away, except for limited amounts of cannabis used for display purposes, samples, or immediate sale.
Marijuana Business Daily™ reports the most common regulatory compliance infractions in Colorado are related to physical inspections and security of business premises- the top issue being a failure to achieve adequate visual coverage with surveillance cameras. Don’t let this happen to your business!
Although dispensaries and delivery services should already have a record keeping system in place, MMRSA imposes specific regulations for records of commercial cannabis activity. All records related to commercial cannabis activity must be maintained for a minimum of 7 years. Licensees must keep records on the premises of the location licensed. Additionally, BMMR may examine the books and records and inspect the premises of a licensee as the state or local agency deems necessary. Licensees must provide and deliver copies of documents to the licensing agency upon request.
Serious penalties will be imposed for a licensee or its agent, or employee, that refuses, impedes, obstructs, or interferes with an inspection of the premises or records. If a licensee or an employee of a licensee fails to maintain or provide the records requested, the licensee shall be subject to a citation and fine of $30,000 per individual violation.
Get Compliant Now
Each week, local municipalities are passing regulations and prohibitions on the operation of medical marijuana dispensaries and delivery services in their city or county. California cannabis businesses have already faced fines and penalties for operating in violation of local laws. It’s up to you to know whether your business complies with the latest city, county and state regulations. Furthermore, it’s in the best interest of your business to come into compliance as soon as possible to ensure uninterrupted operation during this transitional time. Our firm can help you take the necessary steps now to be eligible for local and state licensure.