How To Break Into the Colorado Cannabis World: The Licensing Process From A to Z

Photo by Kelly Sikkema on Unsplash

Colorado has become the Mecca for the marijuana and cannabis industry, with Denver leading the charge. It’s impacted everything from tourism to manufacturing to small businesses, and understandably so, as it’s an estimated $5.2 billion dollar industry – just in Colorado. 

As the first state to legalize recreational usage, almost 15 years after medical legalization, Colorado has seen first hand the incredible surge of tax revenue, which has been allocated to schools, community resources, and infrastructure.

It’s allowed big business to boom and small startups to grow fast!

With such tremendous growth, laws and regulations have had to change quickly to keep up – one major reason why the licensing process can be a confusing, time-consuming headache of a process. Consider this your A-Z guide:

Dual Licenses Required

First thing to know is Colorado is a dual license state. This means you’ll need a license from both the state and local governments in order to open your doors and operate. Depending on where exactly you’re based, some localities severely limit or simply do not offer licenses. This is why it’s imperative to do your research before you settle on a location or sign a lease.

Business Structure

In order to obtain necessary licenses, you’ll need to be a legally recognized entity. This is where you’ll need to decide how you are going to structure your business, including the liability and tax makeup. Since the Colorado Marijuana Enforcement Division does not provide legal counsel, I highly recommend contacting a licensed attorney, like myself, with experience in the cannabis industry.

Eligibility Requirements

Every equity holder in a business must meet Colorado’s eligibility requirements in order to invest in a cannabis company. If you want to be an owner of a legally licensed marijuana business, you’ll undergo background checks, finger printing, financial history investigation, and other eligibility requirements.

Financing Challenges

Financing marijuana businesses is gaining popularity as an investment strategy in the business world. Compared to other industries, however, marijuana regulations in Colorado are very strict. Without proper understanding of the unique regulations, your deal may be negatively impacted. Be sure to consult with an experienced cannabis business attorney before solidifying financing or agreeing to specific terms. You don’t want to revisit those agreements while the clock is ticking on your application for approval. Keep your ears perked for my upcoming course on investing in a Colorado cannabis company!

License Types

While you may have a single dispensary with both medical and recreational products, your one business will require more than one license. Because the regulations for different licenses widely differ, you’ll need to obtain a license for each sector of the industry your business participates in. There are multiple types of business licenses available (and required) depending on whether your business model is based on cultivating, manufacturing, testing, selling, or transporting marijuana in Colorado. 

Application Process

The process of applying is different for the various types of licenses available.  For example, recreational licenses require submission of an application for a state license first, then a local licenses, where the opposite is true for medical  licenses. You must also maintain an active lease in order to maintain or renew your licenses. Applications may require supporting documentation from your business, so you’ll need to coordinate time to collect your materials, and find a notary to validate your application signatures. Colorado regulations require that an initial business license application must be approved or denied within 90 days, which means getting it right the first time is imperative, so you don't lose out on your substantial, non-refundable application fees. In the middle of navigating your own licensing applications?Contact me for a consultation. I’ll help you get clear on the licenses your business needs, and how to handle the application process with ease.