Memo to Council re MJ RegulationsTo: HotlineFrom: Macon CowlesDate: August 29, 2015

I call on Council to fix the MJ regulations during this term. Consistent with the request, I have asked CAC, on behalf of George Karakehian and me, to rearrange Council schedule so that we can have a special meeting on MJ regs—as we did for VRBO’s—and then follow it up with First and Second Readings before the current Council term expires November 10.

Table of Contents

Unfettered Discretion.........................................................................................................1Broad categories in which Boulder MJ regulations are out of step with the State and other local jurisdictions.......................................................................................................2The Remedy......................................................................................................................3Procedure..........................................................................................................................4

Unfettered Discretion

Boulder MJ regulations are out of step with those of other jurisdictions and of the state. The “Zero Tolerance policy for violations” gives unfettered discretion to a City administrative department with no reasonable opportunity for licensees to challenge the exercise of that discretion.

As examples of how unfettered discretion with no right of review is being exercised, I cite the following:

Sale of Merchandise. Council loosened the regulations for the sale of merchandise on December 16, 2014 to permit the sale of items with a store’s name or logo. See, BRC 6-16-8(p)(1)(C). Council intended to expand the type of items that could be offered for sale. However, City Tax and Licensing has interpreted this to mean that stores could not sell any item that had anything other than the logo or name of the store.

For example, the City Tax and Licensing department required The Farm (Recreational MJ licensee) to remove from its store all of the following items which the Department concluded were “nonbranded merchandise” despite the fact that The Farm’s cow logo can be clearly seen on each item.

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The licensee of course complied immediately with the directive of Tax and Licensing. But there was no reasonable way for the licensee, had it wanted to, to challenge this interpretation of BRC 6-16-8(p)(1)(C).

Violations and Assessments of Fines. Terrapin (RMJ licenses) was jointly inspected by the State of Colorado and by Boulder Tax and Licensing April 9, 2015. The State notified the licensee during the inspection that the licensee was in compliance with all regulations. However, the next day, City Tax and Licensing returned to say that despite compliance with State regulations, Terrapin was in violation of Boulder’s MJ regulations. The licensee immediately addressed the violations including paying a private contractor $17,000 to construct a large “safe” to store product between business days, even though the product had been stored behind a steel roll down door which the State inspector found to be adequate security.1 Four months later, on August 14, 2015, Terrapin received a notice that the fine assessed for the April violations was $7,000.00. Terrapin had no reasonable way of appealing either the violations or the amount of the fine, which has already been paid.

The Denver Board of Health Inspectors, in the matters under their jurisidiction, provide written notices of violations at the time of the inspection. Our Tax and Licensing should do the same with marijuana inspections. And the fines are set, not by the inspectors, but by management personnel. And if the licensee challenges the violation or the fine, there is a speedy, inexpensive administrative hearing where neither side has to engage lawyers.

1 The State requires secure storage of MJ product between business days whereas the City requires the product be stored in a “safe”—a term that is not defined in the City Code. Terrapin thought that securing the product in a solid case with steel roll down locking doors met both requirements. Tax and Licensing did not agree.

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Broad categories in which Boulder MJ regulations are out of step with the State and other local jurisdictions

What follows is a short list of the ways in which the City of Boulder’s MJ regulations are out of step with regulations and permissions of the state and competing local jurisdictions.

The grandfather rule in other jurisdictions permits the sale of non-conforming businesses; ours forbids that. The grandfather rule in other jurisdictions also permits the sale of plants by conforming businesses to the purchaser of the business. Ours requires the plants be destroyed. Boulder is out of step.

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The Remedy

There is a hard way and an easy way to remedy to problem with Boulder’s MJ regs, both medical and recreational.

The hard way is to take the list of 40 items or more that have been identified as stress points where unfairness lies, and amend each section of Boulder’s ordinances, but also making sure to correct the mismatch that now exists between one regulatory framework—the State’s—and the other—the City’s. They simply must be aligned, as licensees are required to obey both.

The easy way is to repeal BRC 6-14 (medical marijuana regulations) and 6-16 (recreational marijuana regulations) and adopt a new ordinance that addresses only the processing of applications, the performance of inspections, a schedule of fines and provides a hearing officer type of administrative review that does not require lawyers for challenges to the exercise of authority by Tax and Licensing.

Procedure

I suggest we defer the items now scheduled for the September 17 study session (Resilience and Mobile Home Park Policy) and schedule, as we did for short term rentals, as special meeting on September 17 to discuss all aspects of MJ regulations and give direction to staff. Alternatively, let's add a special meeting to one of the Thursdays during September. Either way, we hope that this matter can be sheduld so that First and Second Readings occur in October.

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