The Burden of State vs. Local Marijuana Licenses to Businesses

Marijuana licenses for cultivation, processing, and dispensing are required in every state where both medical marijuana and recreational marijuana are legal, but in some states, those state-issued licenses aren’t enough for a business to participate in the marijuana economy. Sometimes, businesses need a local license to operate, too.

Since marijuana is legalized at the state level, state governments aren’t always brave enough to say each city and town has to follow the same rules. In fact, local rules can get extremely varied making the process of tracking marijuana licenses tricky. The Cannabiz Media Database includes all of the most recent licensing information available through daily or weekly Cannabiz Alerts, but without access to those notifications, getting an accurate and timely picture of what’s happening in a specific state is challenging.

Let’s take a look at Colorado as an example. In Colorado, medical and recreational marijuana are both legal. Cultivators, processors, medical dispensaries, and recreational retailers all have to obtain specific state-issued licenses in order to do business within the state. Depending on where your business is located within Colorado, you might need a city or local license, too, and the fees for those differ significantly.

Consider Denver as an example. The Colorado Marijuana Enforcement Division (MED) licenses and regulates marijuana licenses for the state, but the Denver Department of Excise and Licenses (EXL) licenses and regulates licenses for the city. Denver has its own medical marijuana code and a separate retail marijuana code. That means the city’s marijuana laws don’t necessarily match the state’s laws. A city’s regulations could be stricter and its licensing requirements and fees are set by local government officials. And every city could be different!

Are you starting to see the picture? It’s confusing, right?

The Licensing Burden

State and local licensing is a significant burden to marijuana businesses. Again, let’s use Colorado as an example.

On July 1st of this year, medical marijuana dispensaries and growers will be required to start having their products tested before selling them (testing is already a requirement in the state for recreational marijuana). Mary Shinn of The Durango Herald reports that this new testing requirement could be a “boon for Durango testing facilities,” but only if local licenses are in place in time.

The problem for local testing labs in Durango isn’t that they’re not prepared for the growth that mandatory medical marijuana testing could bring to their current recreational marijuana testing businesses. They’re staffed up and ready to go. The problem is the city of Durango hasn’t created the city license that the testing labs will be required to obtain in order to test medical marijuana products.

Shin reports that the city expects to approve the new license for medical marijuana testing, “but city officials want to work on several changes to local marijuana regulations, including the new license, and pass them at the same time.” They don’t know how long that will take.

As anyone with a business background knows, being first to market is a very big deal. What do you think will happen when July 1st comes and the hundreds of medical marijuana cultivation facilities need to get their products tested? You can bet they won’t wait for the Durango facilities to get their local licenses. Instead, they’ll go to one of the other dozen testing facilities in the state. And once the growers have relationships established with those other testing facilities, getting them to switch to a Durango facility will be a lot more difficult.

Bottom-line, state and local licensing burdens have a negative effect on the marijuana economy. What’s happening in Durango, Colorado is just one example.

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