Legislators bummed out with slowness of establishing recreational marijuana regulations

Audit shows medical marijuana industry is poor model
The Colorado Statesman

A legislative committee recommending legislation to implement marijuana legalization in Colorado on Thursday withdrew an original suggestion to create a single enforcement division after a blistering audit revealed that the division grossly misspent taxpayer resources.

Fears have already been growing that the legislature will not have enough time to come up with the groundbreaking rules and regulations by the end of the session, as has been mandated by voters. Taking a step back on the recommendations likely exacerbates those concerns.

Chairman of the implementation committee Rep. Dan Pabon, D-Denver, announced that the committee has been granted an extension on its deadline to April 8. The last meeting was supposed to be on Thursday. Assuming the committee takes until that time to propose an omnibus, the legislature would only have about a month to pass the package. And with the House taking up debate of the annual budget, time will certainly be a factor.

As the Grateful Dead would say, “What a long strange trip it’s been.”

The most recent twist came Tuesday when a state audit documented that the Department of Revenue’s Medical Marijuana Enforcement Division has not adequately defined the oversight activities it must perform, or determined the resources needed to regulate the 1,440 medical marijuana businesses in the state.

Key findings in the audit include:

• An inability to track medical-marijuana inventory, license businesses within deadlines and keep felons and other disqualified citizens from operating such businesses;

• Spending around $250,000 on furniture in one fiscal year; and

• Leasing 33 vehicles, including 21 sport utility vehicles, which the audit said it could not justify. The fleet has since been downsized.

Most of the problems occurred under then-director Dan Hartman, who has been reassigned to another division within the department.

Lawmakers sitting on the Legislative Audit Committee were appalled by the findings.

“I am speechless,” said committee chairwoman Rep. Angela Williams, D-Denver. “It appears there was a shopping spree.”

Those concerns spilled into the Amendment 64 implementation committee, which unanimously backed a motion to reconsider a recommendation to transition the Medical Marijuana Enforcement Division to the Marijuana Enforcement Division, which would be in charge of all cannabis enforcement.

“I’m struggling today to vote on any of these recommendations in light of the audit report,” Rep. Brian DelGrosso, R-Loveland, said at the start of the meeting. “I think this industry was duped by the State of Colorado, the Department of Revenue, specifically the Medical Marijuana Enforcement Division.

“Gross negligence, total lack of fiscal regard,” he continued. “It is tough for me to vote to give them one ounce of further regulatory authority, one penny more to trust them with any more fiscal responsibility. I think we need to have some serious talks with the Department of Revenue on how they’re going to clean that up.”

DelGrosso’s comments jarred the committee into disarray. Pabon abruptly called a recess, and the lawmakers huddled to discuss their next steps. When the committee reconvened, it heard from Barbara Brohl, executive director of the Department of Revenue.

“I will take full responsibility for the actions of my department,” she told the committee.

“I will tell you this is not a pleasant conversation today, it hasn’t been over the last two days,” Brohl continued. “But we stand before you ready to do whatever is necessary to not only ensure you, but to ensure the State of Colorado.”

Brohl is expected to meet with the implementation committee again on April 4 to further discuss the recommendation to transition the Medical Marijuana Enforcement Division to the Marijuana Enforcement Division.

In the meantime, the committee delayed voting on any recommendations that address a regulatory framework for legalization. That means the most controversial issues, including how to tax the industry and whether tourists should be included under Amendment 64, have yet to be answered by the committee.

Legislative leaders convened the 10-member bipartisan “joint” committee of members from both the House and Senate in order to navigate a maze of recommendations set forth by the governor’s Amendment 64 Implementation Task Force. The task force has suggested 58 policy recommendations, which the legislature could turn into law.

Colorado could become a model for the rest of the nation, as no other state has implemented comprehensive rules around marijuana legalization. Only one other state, Washington, has legalized cannabis.

The Department of Revenue must adopt regulations passed by the legislature by July 1. If the legislature can’t pass the rules by the end of the regular session — May 8 — then Gov. John Hickenlooper could call a special session.

Before it met on Thursday, the committee had already backed draft legislation to:

• Memorialize not to establish a state-run regulatory model;

• Issue licenses conditionally and with the permission of local governments;

• Develop rules to ensure the safe transport of marijuana between businesses and labs;

• Develop a mechanism to track, measure and properly destroy marijuana and ensure that private citizens can legally dispose of it; and

• Authorize the Department of Revenue to establish a voluntary Responsible Marijuana Retailers program, and to establish an advisory group of retailers, which would be responsible for bylaws and a code of ethics.

On Thursday, the committee made its greatest progress yet, voting to recommend several of the proposals for legislation. Those include:

• Residency requirements for licensees. It passed 6-3;

• Allowing current medical marijuana centers to transition to recreational, or both. It passed unanimously;

• Regulating packaging so that it conforms to poison protection and product safety rules. That could include sealed, non-transparent packaging. The proposal passed 8-1, with Sen. Vicki Marble, R-Fort Collins, the dissenting vote;

• Requiring that marijuana products be labeled to indicate potency. That passed unanimously;

• Prohibiting the sale of any marijuana products that contain nicotine. That passed 8-1, with Marble again the lone dissenting vote;

• Banning the sale of products that combine marijuana and alcohol. That passed unanimously;

• Three proposals creating a list of substances banned for use in cultivation or processing and requiring labeling of all pesticides, herbicides, fungicides and solvents that were used in the process. The proposals would also create advisory groups. They passed unanimously;

• Four recommendations addressing education for professionals and studies on health effects and law enforcement activity. They passed unanimously;

• Unanimously not recommending draft legislation to enact a separate criminal statute for driving under the influence of marijuana because House Bill 1114 is already moving through the legislature to do just that;

• Requiring training for law enforcement on roadside impaired driving enforcement. That passed unanimously; and

• Establishing consequences for minors who are in possession of small amounts of marijuana. That passed unanimously.

Peter@coloradostatesman.com