Attention Colorado Cultivators!

Flexibility in the Designation of Medical Marijuana is Coming in 2023!

While legislation effective July 1, 2022 permits retail marijuana cultivators and manufacturers to convert retail marijuana to medical marijuana only, due to the recent passage of Senate Bill 22-178, Colorado cultivators will be able to change the designation of their products from medical marijuana to retail marijuana beginning January 1, 2023. This is great news for medical marijuana cultivators who have an excess of inventory due to the recent, rapid decline of Colorado’s medical marijuana market in response to HB21-1317 that severely limited access to medical marijuana for patients. With this change, instead of medical marijuana sitting in inventory and approaching expiration, product designations can be converted (in certain circumstances) to recreational and supply a broader, more profitable adult-use market. Here’s what cultivators need to know:

• The medical marijuana being transferred must pass all required testing;

• The medical cultivation facility and the retail facility must be:

  1. Co-located and have at least one identical Controlling Beneficial Owner (CBO) ; or

  2. Not co-located but:

     1. have at least one identical CBO; and

     2. not be co-located because the local jurisdiction prohibits the operation of either a medical marijuana cultivation facility or a retail marijuana cultivation facility;

• The retail cultivation facility must receive the transfer and designate the inventory as retail marijuana in METRC on the same day;

• The retail cultivation facility must assign and attach an RFID tag indicating the retail marijuana cultivator’s license number to the newly designated retail marijuana following the transfer in METRC;

• After the designation change, the retail marijuana cannot be transferred to the originating or any other medical marijuana business, have its designation changed from retail marijuana back to medical marijuana, or otherwise be treated as medical marijuana thenceforth;

• Both the medical and retail facilities must remain at, or under, their respective inventory limits before and after the transfer is conducted; and

• The retail marijuana cultivation facility shall pay any retail marijuana excise tax and notify the local licensing authority in the local jurisdiction where the transferor and transferee operate and pay any applicable excise tax on the transferred retail marijuana.

A medical marijuana cultivation facility may make a “virtual” transfer of marijuana that is reflected in METRC even if the marijuana is not physically moved or transferred at the co-located facility.

Still have questions about changing your product designations? RZA can walk you through the process and provide you with comprehensive SOPs to ensure you stay compliant at all times.

Schedule a consultation with us! We can’t wait to work with you.

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