Legislators approve regs for legal marijuana use

But voters will have the final say in November
The Colorado Statesman

Lawmakers this week had their last dance with Mary Jane for the legislative session after passing three bills to tax and regulate the budding marijuana industry, ending a tumultuous and trying six-month process.

The two chambers sent to Gov. John Hickenlooper House Bill 1318, sponsored by Rep. Jonathan Singer, D-Longmont, and Sen. Cheri Jahn, D-Wheat Ridge, which asks voters to approve a 15 percent excise tax and a separate 10 percent special sales tax this November. Cannabis will also be subject to a 2.9 percent statewide sales tax and any local taxes that might be imposed.

The governor is also expected to sign House Bill 1317, sponsored by Rep. Dan Pabon, D-Denver, and Jahn and Sen. Randy Baumgardner, R-Cowdrey, as well as Senate Bill 283, sponsored by Jahn and Baumgardner, and Rep. Jenise May, D-Aurora, which together would pioneer rules and regulations for the new industry.

But before passing the historic measures, there was one last dramatic moment — as has been the case throughout the entire long, strange trip that is cannabis regulation. A bipartisan group of senators attempted a last-ditch effort to offer voters a chance to repeal the retail portion of Amendment 64, which voters passed in November to legalize recreational marijuana.

Led by Democratic Senate President John Morse and Republican Senate Minority Leader Bill Cadman — both from Colorado Springs — the Senate introduced the concurrent resolution with about 48 hours to go in the session.

The bill was introduced and immediately assigned to committee, before the language of the bill had even been posted online. The Senate Finance Committee quickly assembled and met within minutes, forcing lobbyists from both sides of the debate to make a mad dash for the third-floor committee room in the Capitol.

On Twitter, marijuana activists began mobilizing, calling the process antidemocratic and motivating supporters to contact lawmakers to urge them to reject the bill. They had little time to make it to the committee to testify on the measure.

Legislators in the House were also frustrated by the move, after having worked tirelessly to craft a tax question for voters.

“This is quite possibly the most significant piece of legislation that will be introduced this year, it is a concurrent constitutional amendment that is being introduced and we’re hearing it 48 hours before the last day. I think it raises serious questions and concerns about what the path forward is on this,” declared Pabon.

But despite the outcry, the Senate Finance Committee still backed the bill 4-1.

The proposal would have first asked voters to approve a 15 percent excise tax and a separate 15 percent special sales tax on retail purchases. The second question would have asked voters to repeal the retail portion of Amendment 64 if that tax question failed.

“I don’t see how this is anything more than an affront to our system of government, and how we do things here,” Christian Sederberg, who led the implementation lobbying effort for Amendment 64 proponents, said at the hearing.

From Finance, leadership needed to schedule the measure for a second reading debate on the same night, or the bill would not have had time to complete the legislative process, and it would have died. But it still had no House sponsor.

Rep. Frank McNulty, R-Highlands Ranch, said he would have carried the bill in the House if he were asked. But Senate leadership was out of step with House leadership. Pabon, the assistant majority leader, said the bill had no chance in the lower body, and would have been assigned to a kill committee, never even making it to the floor.

As public outrage grew and the bill’s uphill climb in the House became more apparent, some Senate Democrats became concerned. The bill had 24 sponsors — which was enough to garner the two-thirds needed to pass the resolution through the Senate — but opinions were shifting. The Democrats decided to caucus, and Cadman joined them.

Huddled in Morse’s office, some Democrats began to question their president’s direction.

“It’s our job to implement this and it’s our job to respect what the voters did,” opined Sen. Pat Steadman, D-Denver. “I think the voters understood what they voted for. I think they know that there’s a follow-up tax question coming… You must hold them in pretty low regard.”

Morse explained to his colleagues that he simply wanted to offer some assurance: “What we’re afraid of is that in Amendment 64 they promised $40 million in school funding and didn’t deliver a dime… That’s why we came up with this plan, because now they would have skin back in the game,” he said.

But as fears grew, Morse turned to his majority leader, Sen. Morgan Carroll, D-Aurora, and asked whether there was other work left to do that night.

“Oh, yea,” replied Carroll, who did not co-sponsor the resolution. “There’s House bills on thirds, there’s Senate amendments to House bills and there’s some time sensitive stuff there that would be nice to go ahead with.”

With that, Morse said he would take care of the time sensitive matters and then move to adjourn, effectively killing the proposal. When the Senate adjourned, he took to the well to explain why he had moved the effort in the first place.

“The industry can oppose it with their millions of dollars, most of which will come from out of state,” he said. “The voters wanted legalized marijuana and a tax that funded schools, but it’s a strong reality that that tax won’t pass. I’ve yet to meet an industry that supported increasing a tax on themselves.

“[The resolution] was an attempt to get the industry’s attention…” continued Morse. “I hope the representatives of the marijuana industry will stick to their commitment and support this tax and stop the shenanigans.”

Authors of Amendment 64 were baffled by Morse’s comments. They pointed out that they had always supported a tax in order to regulate the industry. Proponents had lobbied for a lower tax, but that was because they felt a high tax would defeat the purpose of Amendment 64 by encouraging the black market.

On Thursday, proponents held a news conference stating their support for the tax question, but stopped short of committing any campaign resources to passing the ballot question.

“We will gladly stand with the governor and state legislators at a press conference to voice support for this tax measure,” said Mason Tvert, co-author of Amendment 64.

He pointed out that polling suggests that the tax question will pass by as much as 77 percent.

Amendment 64 opponents, Smart Colorado, also would not commit resources to the tax question, but said it supports the initiative.

“Advocate? What does that involve?” asked Gina Carbone, with Smart Colorado. “If that’s money, we have no money… But we support a tax.”

Hickenlooper — who opposed Amendment 64 — also committed to supporting the tax, suggesting that proponents should pledge their own resources because failure of the tax question would be a nightmare for the campaign.

“I think they will commit resources… because if it doesn’t pass, their lives will become chaos,” stated the governor. “And I don’t even want to speculate what the federal government will do, I don’t want to speculate what the people of Colorado would do.

“Anyone connected with recreational marijuana has a huge vested interest in making sure we have an appropriate regulatory environment, and they can take it nonchalantly at their own risk,” Hickenlooper continued.

The tax bill passed the Senate by a vote of 25-10 and the House by a vote of 37-27. Republicans opposed it, connecting the issue to their philosophy of keeping taxes low, so as to not create a “slush fund,” they said.

Regulatory framework advances

Pabon was stunned by the GOP’s rejection of the tax bill, pointing out that without the revenue to fund regulation, the state is at risk of federal intervention. Federal officials have still not officially said how they plan on reacting to retail sales.

He also points out that in order to address concerns around keeping marijuana within the state and out of the hands of children, money is needed to empower the soon-to-be-created Marijuana Enforcement Division.

“When it comes to the House chamber, public safety suddenly becomes a partisan issue,” exclaimed Pabon. “That’s disappointing. It’s shocking, frankly, because I don’t think there’s a Democratic way to protect children, or a Republican way to protect public safety. But apparently that’s where it turned to.”

While not directly attached to the two regulatory bills, one of the key components to public safety has been curbing driving under the influence of marijuana. The legislature tried on six separate occasions to pass a DUID bill, but the proposals faced dramatic deaths.

In the last week of the legislature this year, Reps. Mark Waller, R-Colorado Springs, and Rhonda Fields, D-Aurora, and Sen. Steve King, R-Grand Junction, resurrected a DUID proposal that was killed earlier in the session.

The latest bill, House Bill 1325, would also set a 5-nanogram limit of tetrahydrocannabinol (THC), the psychoactive ingredient in marijuana, at the time of a suspected driving offense.

This year, at the urging of legislative leaders, lawmakers got behind the resurrected proposal. It passed the House by a vote of 54-11 and the Senate by a vote of 23-12. Hickenlooper is expected to sign the bill.

“After six attempts in the last three years, the victims and the families of those who were killed or injured by drivers impaired by marijuana can have some comfort that this law will serve as a significant deterrent to impaired drivers,” King said following the vote in the Senate.

“At a time when marijuana use in Colorado is on the rise, this bill is desperately needed,” he continued.

Attorney General John Suthers, who had adamantly opposed marijuana legalization, said he has a bit more comfort now knowing that the legislature passed a DUID component.

“I believe that Amendment 64 is bad public policy, and that as a practical matter, it is difficult to do a good job of implementing bad public policy…” he said. “I am particularly relieved that the General Assembly passed a marijuana-impaired driving statute.”

The two regulatory bills — HB 1317 and SB 283 — saw less drama than the other components of regulating the burgeoning industry. But there was still a divide, which crossed party lines.

HB 1317 passed the House by a vote of 35-29 and the Senate by a vote of 32-3. SB 283 passed the Senate by a vote of 32-2 and the House by a vote of 62-3.

There were some last-ditch amendments, including:

• Banning cities from growing, as had been proposed by Aurora;

• Outlawing marijuana coffee shops, similar to those in Amsterdam where people are allowed to use cannabis inside;

• Prohibiting retail marijuana trucks;

• Banning incorporated pot collectives;

• Prohibiting cannabis stores from selling non-related items;

• Restricting manufacturers of edibles from adulterating copyrighted foods with marijuana;

• Requiring marijuana mobile push notifications only be sent to those who are over 21 years old;

• Greater restrictions on marketing cannabis to kids; and

• Treating marijuana publications like pornography by requiring such magazines to be kept behind store counters.

Other key aspects to regulation include:

• Existing medical marijuana centers will have a nine-month head start on converting to retail. They will be allowed to apply for a license starting in October. Only Colorado residents can apply. The Department of Revenue expects applications to take about three months to process. The first retail stores will likely open in January 2014.

• Through Sept. 30, 2014, a system known as vertical integration will be in place, meaning the supply chain is required to be under common ownership and 70 percent of marijuana grown must come from such ownership. After Sept. 30, 2014, the industry will be open to a more free market approach, permitting growers to operate separately.

• Colorado residents will be able to buy up to an ounce of marijuana. The enforcement division plans on using seed-to-sale tracking in order to keep watch over cultivation and sales. But concerns continue as to whether residents will be able to scam the system by visiting multiple retail locations to buy much more than an ounce.
Similar fears apply to non-residents who will be limited to a quarter-ounce at a time.

• In an effort to keep marijuana away from children, products will be sold in child-resistant packages. Also, clear labeling will be required with potency levels, and edibles will be required to have serving-size limits. Another public health aspect is that marijuana will be added to the indoor smoking ban, meaning there will be no smoking pot inside public places.