City Council Study Session Agenda and Packet 2010 10 26

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Malcolm Fleming, City Manager May 25, 2010 Page 3 of 6 LIGHT, HARRINGTON & DAWES, P.C. cultivation or sale of medical marijuana." C.R.S. § 12- 43.3- 103(2)(a). However, this broad authority is limited in other portions of the Bill as explained below. A. Local LicensingfRegulations Pertaining to Commercial Operations The Bill provides for a licensing procedure for medical marijuana sales which follows closely statutes for liquor licensing procedures. In order for a person to engage in the commercial sale of medical marijuana as specified in the Bill, it is necessary for the person to obtain both a state and local license. C.R.S. § 12- 43.3 - 310(2). Local licenses are issued by a Local Licensing Authority. A person must first obtain "approval of an application for local licensure" by the Local Licensing Authority, which will then "notify the State Licensing Authority of such approval, who shall investigate and either approve or disapprove the application for state licensure." C.R.S. § 12- 43.3- 303(5). Pursuant to C.R.S. § 12- 43.3- 301(1), a Local Licensing Authority may "issue only the following types of licenses upon payment of the fee and compliance with all local licensing requirements to be determined by the local licensing authority" as well as compliance with other provisions in the Bill: • Medical Marijuana Center License - This category of license covers businesses that are commonly referred to as "medical marijuana dispensaries" and permits a licensee to operate a business that sells medical marijuana or medical marijuana infused products (defined below) to registered patients or primary caregivers, but a medical marijuana center licensee may not be a primary caregiver. C.R.S. § 12- 43.3 - 104(8). A Medical Marijuana Center Licensee may only sell "medical marijuana grown in its medical marijuana optional premises," as defined below, but is also authorized to "purchase not more than thirty percent of its total on -hand inventory of medical marijuana from another licensed medical marijuana center in Colorado." C.R.S. § 12 -43.3- 402(3) & (4). This provision, coupled with the certification requirement noted above, appear to essentially provide that existing facilities must cultivate 70% of their product on -site. If the facility does not certify the same by September 1, 2010, or as a matter of fact does not comply with this requirement after such date, the Bill provide such conduct is unlawful, with potential consequences being license revocation and prosecution as a class 2 misdemeanor. • Optional Premises Cultivation License- A Local Licensing Authority may issue this license only to Medical Marijuana Center Licensees and Medical Marijuana - Infused 8 A Local Licensing Authority may be designated by municipal ordinance or municipal charter. C.R.S. § 12 -43.3- 104(5). The Bill does not dictate the composition of the Authority; therefore, the City has leeway to determine whether the Authority would be a single person or an appointed body of several members. 9 "Each application for a local license...filed with a local licensing authority shall be accompanied by an application fee in an amount determined by the local licensing authority." C.R.S. § 12- 43.3 -503. 10 "A medical marijuana center may sell not more than thirty percent of its total on -hand inventory to another Colorado licensed medical marijuana licensee." C.R.S. § 12- 43.3 - 402(4). 13