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How to Open a Marijuana Dispensary in Colorado

Starting a marijuana dispensary business in Colorado is in some respects just like starting any other business. There are some important differences, however, because even though it is legal in Colorado marijuana is still illegal at the federal level. There is also a stigma attached to marijuana as something unsavory. This article will look at starting a marijuana dispensary in Colorado and the legal roadblocks and hurdles that must be overcome.

Choosing a Name for Your Marijuana Dispensary

One of the first considerations of any business is selecting a name. Typically, you would choose the name you would like to use and then go to the Colorado Secretary of State website to see if it is an available name. Most businesses want to protect the name they have chosen by seeking to register a trade name or trademark.

Colorado allows a marijuana business to register a trade name and a trademark at the state level. This will prevent competitors within Colorado from using the names you have chosen for your company and for your products. What you cannot do is register your trademark at the federal level. The federal law prohibits the U.S. Patent and Trademark Office from registering trademarks for marijuana businesses.

State and Federal Taxation Is Different

Generally paying state taxes for your Colorado marijuana business is not an issue. However, paying federal income tax is another matter. And yes, even though marijuana is illegal at the federal level, you must pay income taxes on profits from a marijuana business. The difference in paying federal income tax is that a marijuana business cannot claim several deductions and as a result, their effective tax rate can be quite high. The Internal Revenue Service specifies that no deduction or credit for any amount is allowed for a cannabis business.

Location of Your Marijuana Dispensary

In choosing where you would like to locate your marijuana business, you will have to comply with local county and city restrictions and requirements. Colorado allows local jurisdictions to impose restrictions on the time, place, manner, and number of marijuana businesses. Colorado maintains a list of jurisdictions that allow marijuana dispensaries.

Colorado Marijuana Dispensary Laws

A marijuana business is highly regulated. A number of permit and license requirements exist. A plain-language summary is below in a table format for easy reference.

What are the Relevant Statutes?

State Regulations

Federal Regulations

What Permits and Licenses are Required?

The licensing body in Colorado is the Department of Revenue Marijuana Enforcement Division (MED).

Local approval of licensing:

  • The MED submits all applications and renewals to local jurisdictions for approval. Local jurisdictions may impose separate local licensing requirements. (44-12-301)
  • After a state license is obtained, a licensee has one year to get a local license.

State licensing for a retail dispensary

  • Marijuana business applications submitted to Colorado's Department of Revenue. They have 45-90 days to respond to an application.
  • Application fee: $4,500 plus $2,500 to the local jurisdiction
  • Annual renewal fee $1,800

State licensing for medical dispensary

  • License and application fee: $7,000
  • Annual renewal fee: $1,800
Do I have to Allow the Inspection of Books and Records?

Inspection procedures

  • A complete set of all business transactions must be open at all times during business hours.
  • All areas of the licensed premises are subject to inspection during business hours.
  • Records must be kept for the prior three tax years.
Are There Special Location Rules?

Limited Access Area

  • A marijuana business is required to be within a limited access area that is an enclosed building, room or contiguous area. (CSR 44-12-105; R 233)
  • All customers or visitors must be escorted at all times in the retail marijuana establishment.
  • All persons in limited access areas must have an identification badge. 1 CCR 212-2 (R 301)
Who can own a Marijuana Dispensary in Colorado?
  • Persons who have paid the license fees.
  • Persons of good moral character. (CSR 24-5-101)
  • Persons over 21 years of age.
  • A resident of Colorado for at least one year or a U.S. citizen prior to the date of application.
  • Closely held business entity.
  • After November 2019: publicly traded corporations; controlling and passive owners; indirect investment (HB19-1090)
What Packaging and Labeling is Required?

In a retail marijuana store the following information must be on every container 1 CCR 212-2 (R1000 series):

  • Active THC information.
  • The license number of the facility where it was grown.
  • The license number of the retail establishment.
  • Identity statement and graphic symbol of the retail marijuana store.
  • Harvest batch number.
  • Date of sale to the consumer.
  • Net weight in grams.
  • The universal symbol that the container holds marijuana.
  • Required state warnings.
What Signs and Advertisement can I Use?

The rules for signage and advertising are contained in the Code of Colorado Regulations 1 CCR 212-2 (R1100 series).

  • Television or radio advertising allowed but must prove that 30% or less of the audience are minors.
  • Print ads are limited to media that is not distributed to persons under 21 years of age.
  • No mobile advertising is allowed.
  • No pop-up internet advertisements.
  • Online marijuana ad allowed but must prove that 30% or less of the audience are minors.
  • Cannot advertise out of state.
  • No external signs on sidewalks or public areas.
  • No billboards.
  • No signage on vehicles.
  • No handbills handed out or left on cars.
  • Can have a sign on the dispensary building but must not be attractive to minors.

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Related Resources

Get Legal Help With Your Marijuana Dispensary

It is exciting starting up a new business. It can also be exhausting with all of the rules and regulations that you have to understand. When that business is a marijuana dispensary with all of the special state regulations and the prohibitions by the federal government, you may need help. Contact a local Colorado cannabis business attorney for guidance.

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