Marijuana Laws Make Business Difficult

Date: April 16, 2015

Some Colorado Businesses Impacted By

Federal, State Conflicts

Small business owners seeking to take advantage of Colorado’s liberalized laws on both recreational and medical marijuana face a complex web of local, state, and Federal laws. Colorado’s legalization law does nothing to change the Federal government’s steadfast opposition to recreational marijuana use, so businesses regulated from Washington DC are hesitant to work with marijuana-focused businesses. Most notably, Colorado businesses involved with marijuana have a hard time working with banks and other financial institutions. For example, the Fourth Corner Credit Union, created to serve the marijuana industry, has been stuck in bureaucratic red tape since applying for Federal Reserve approval in November, when it received the go-ahead from state regulators. Additionally, the Internal Revenue Service treats marijuana businesses differently from other enterprises, making their operations more expensive and complicated.

In addition to hostile Federal laws, Colorado’s legalization program is in its infancy and subject to change. Lawmakers are currently considering a proposal that would tighten the state’s regulation of medical marijuana in order to limit abuse. Senate Bill 14, which yesterday won approval from the state Senate, would require caregivers growing marijuana for medical use to register with the state. The bill also calls for the creation of a Colorado Medical Board within the Department of Regulatory Agencies (DORA), which would create standards for lab-testing the quality of medical marijuana and promulgate regulations for disclosing information about contaminants and potency. The Colorado Cannabis Chamber of Commerce supports the bill, saying the current medical marijuana system “is being abused across Colorado as a means of avoiding proper licenses or abiding by the same regulations as the rest of the cannabis industry.” The bill’s sponsor, Sen. Irene Aguilar (D-Denver), a physician, described the measure as achieving the proper balance between ensuring access for sick patients and preventing illegal activity. The bill contains this declaration to Federal regulators, though its practical implications are unclear: “If Colorado creates a robust regulatory environment that is strongly enforced, the federal government will not interfere except in those individual cases where the department of justice’s enforcement priorities are at risk.”

What This Means For Small Business

Small business represents the vast majority of Colorado’s marijuana industry. Law-abiding business owners are having a hard time figuring out how to deal with the conflicting mandates and prohibitions coming from numerous agencies at all levels of government.

Additional Reading

Other news media outlets with recent coverage of the challenges of running a marijuana-focused small business include the Denver Post, Inc. Magazine, McClatchy, and CNN Money.

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