Sample Compliance Manual

SA
M
PL
E
This manual is not a legal document and is not a substitute for the advice of an attorney. This
manual is not intended to create an attorney-client relationship, and by using its contents, no
attorney-client relationship is created. This manual is intended to give a general
understanding of the applicable laws and regulations and sample documents to individuals who
choose to prepare their own legal documents. While every reasonable effort was made to keep
information up-to-date and legally sufficient, the legal information in this manual is not legal
advice and is not guaranteed to be correct, complete or up-to-date. Because the law changes
rapidly, is different from jurisdiction to jurisdiction, and is also subject to varying
interpretations by different courts and certain government and administrative bodies, it
cannot be guaranteed that all the information in the manual is current. Following the
E
guidance contained within this manual cannot guarantee compliance with all applicable law or
rule.
Colorado
PL Medical
Marijuana Code
STATE & DENVER EDITION
M
Colorado Revised Statutes, Title 12,
Article 43.3 Medical Marijuana
CDS Management Co. - Release 1.2 – May 10, 2011

SA
Complied by CDS Management Company, LLC
©2011 - All Rights Reserved.
Editors: Betty Aldworth, Jake Browne, Kevin Byrne, Barbara Carnahan, Don Grede, Josh Kappel, Jill
Lamoureux, Shannon Lamoureux, Ryan Vincent
1
TABLE OF CONTENTS
TABLE OF CONTENTS ________________________________________________________________________ 2
SECTION 1 - INTRODUCTION__________________________________________________________________ 9
SECTION 2 - DEFINITIONS/ACRONYMS ________________________________________________________ 12
SECTION 3 - LICENSING _____________________________________________________________________ 13
OWNERSHIP AND FINANCING ______________________________________________________________ 13
OVERVIEW ____________________________________________________________________________ 13
COMPLIANCE REQUIREMENTS____________________________________________________________ 14
E
RECORDKEEPING & REPORTING _________________________________________________________ 14
REFERENCES___________________________________________________________________________ 14
BUSINESS LICENSING _____________________________________________________________________ 16
OVERVIEW ____________________________________________________________________________ 16
PL
REFERENCES___________________________________________________________________________ 18
OCCUPATIONAL LICENSES _________________________________________________________________ 20
OVERVIEW ____________________________________________________________________________ 20
M
REFERENCES___________________________________________________________________________ 22
TRANSFER OF LICENSE LOCATION OR OWNERSHIP & ENTITY CHANGES ________________________ 23
OVERVIEW ____________________________________________________________________________ 23
SECTION 4 - DECLARATORY ORDERS & JUDICIAL REVIEW _______________________________________ 25
SA
OVERVIEW ____________________________________________________________________________ 25
REFERENCES___________________________________________________________________________ 26
SECTION 5 - SECURITY ______________________________________________________________________ 27
ALARM SYSTEM & LOCKS __________________________________________________________________ 27
OVERVIEW ____________________________________________________________________________ 27
REFERENCES___________________________________________________________________________ 27
2
VIDEO SURVEILLANCE ____________________________________________________________________ 28
OVERVIEW ____________________________________________________________________________ 28
REFERENCES___________________________________________________________________________ 29
SECTION 6 - MMC OPERATIONS ______________________________________________________________ 30
GENERAL OPERATIONS ___________________________________________________________________ 30
OVERVIEW ____________________________________________________________________________ 30
E
REFERENCES___________________________________________________________________________ 30
SIGNANGE & ADVERTISING ________________________________________________________________ 32
PL
OVERVIEW ____________________________________________________________________________ 32
REFERENCES___________________________________________________________________________ 32
LIMITED ACCESS AREAS & PREMISES MODIFICATIONS_________________________________________ 33
OVERVIEW ____________________________________________________________________________ 33
M
REFERENCES___________________________________________________________________________ 33
SANITATION _____________________________________________________________________________ 35
OVERVIEW ____________________________________________________________________________ 35
SA
REFERENCES___________________________________________________________________________ 36
PATIENT MANAGEMENT ___________________________________________________________________ 37
OVERVIEW ____________________________________________________________________________ 37
REFERENCES___________________________________________________________________________ 37
MEDICAL MARIJUANA INVENTORY __________________________________________________________ 39
OVERVIEW ____________________________________________________________________________ 39
3
REFERENCES___________________________________________________________________________ 40
MANUFACTURED INFUSED PRODUCTS INVENTORY ___________________________________________ 41
OVERVIEW ____________________________________________________________________________ 41
REFERENCES___________________________________________________________________________ 41
MEDICAL MARIJUANA PRODUCTS SALES ____________________________________________________ 42
E
OVERVIEW ____________________________________________________________________________ 42
REFERENCES___________________________________________________________________________ 43
PL
SALES TAX_______________________________________________________________________________ 44
OVERVIEW ____________________________________________________________________________ 44
REFERENCES___________________________________________________________________________ 44
SECTION 7 - OPC OPERATIONS_______________________________________________________________ 45
LIMTED ACCESS AREAS & PREMISES MODIFICATIONS _________________________________________ 45
OVERVIEW ____________________________________________________________________________ 45
M
REFERENCES___________________________________________________________________________ 46
SANITATION _____________________________________________________________________________ 47
OVERVIEW ____________________________________________________________________________ 47
SA
REFERENCES___________________________________________________________________________ 48
PLANT INVENTORY _______________________________________________________________________ 49
OVERVIEW ____________________________________________________________________________ 49
REFERENCES. __________________________________________________________________________ 49
MANUFACTURING PROCESS _______________________________________________________________ 50
4
OVERVIEW ____________________________________________________________________________ 50
REFERENCES___________________________________________________________________________ 51
WASTE DISPOSAL_________________________________________________________________________ 52
OVERVIEW ____________________________________________________________________________ 52
E
REFERENCES___________________________________________________________________________ 52
SECTION 8 - TRANSPORTATION & STORAGE ___________________________________________________ 53
TRANSPORTATION _______________________________________________________________________ 53
OVERVIEW ____________________________________________________________________________ 53
PL
REFERENCES___________________________________________________________________________ 54
WAREHOUSE STORAGE ___________________________________________________________________ 55
OVERVIEW ____________________________________________________________________________ 55
REFERENCES___________________________________________________________________________ 55
M
SECTION 9 - AUDIT & ENFORCEMENT _________________________________________________________ 56
LAW ENFORCEMENT & MMED INTERACTIONS ________________________________________________ 56
OVERVIEW ____________________________________________________________________________ 56
SA
REFERENCES___________________________________________________________________________ 57
INSPECTION OF BOOKS AND RECORDS ______________________________________________________ 58
OVERVIEW ____________________________________________________________________________ 58
REFERENCES___________________________________________________________________________ 58
COMPLAINTS AND HEARINGS ______________________________________________________________ 59
OVERVIEW ____________________________________________________________________________ 59
5
REFERENCES___________________________________________________________________________ 59
LICENSE SUSPENSION _____________________________________________________________________ 60
OVERVIEW ____________________________________________________________________________ 60
REFERENCES___________________________________________________________________________ 61
SECTION 10 - FORMS _______________________________________________________________________ 62
E
Petition for a Statement of Position or Declaratory Order ___________________________________ 63
MMC Patient Disclosure and Cultivation Authorization ______________________________________ 64
HIPAA Release Form _____________________________________________________________________ 66
Badge Issuance Log ______________________________________________________________________ 67
PL
VISITOR LOG – COPY ALL VISITOR‟S IDENTIFICATION ________________________________________ 68
ALARM EVENT LOG _______________________________________________________________________ 69
DAILY BATCH LOG (Batch by Date or Strain) ________________________________________________ 70
WASTE DISPOSAL LOG (ATTACH TO EACH WASTE CONTAINER) ________________________________ 71
SECTION 11 - COLORADO MEDICAL MARIJUANA ENFORCEMENT DIVSION RULES ___________________ 72
CHAPTER 1 --- GENERAL RULES & REGULATIONS --- _________________________________________ 75
100‟s --- Compliance ___________________________________________________________________ 75
200‟s --- Enforcement __________________________________________________________________ 76
M
300‟s --- Violations_____________________________________________________________________ 78
CHAPTER 2 --- DUTIES OF OFFICERS & EMPLOYEES OF THE MMED --- __________________________ 83
100‟s --- Inspectors and Medical Marijuana Supervisors____________________________________ 83
CHAPTER 3 --- INST. FOR LOCAL LICENSING AUTHORITIES & LAW ENFORCEMENT --- ___________ 84
---Reserved--- _________________________________________________________________________ 84
SA
CHAPTER 4 --- INSPECTIONS, INVESTIGATIONS, & SEARCHES & SEIZURES --- ___________________ 85
100‟s --- Inspections (Reserved) _________________________________________________________ 85
200‟s --- Investigations (Reserved) ______________________________________________________ 85
300‟s --- Searches and Seizures (RESERVED) ______________________________________________ 85
CHAPTER 5 --- RANGE OF PENALTIES --- ____________________________________________________ 86
100‟s --- General Provisions ____________________________________________________________ 86
CHAPTER 6 --- UNFAIR & PROHIBITED PRACTICES --- ________________________________________ 90
100‟s --- Advertising Practices __________________________________________________________ 90
CHAPTER 7 --- INFORMATIONAL & PRODUCT DISPLAYS --- ____________________________________ 91
6
--- Reserved --- ________________________________________________________________________ 91
CHAPTER 8 --- IDENITIFCATION CARD & BACKGROUND CHECKS --- ____________________________ 92
100‟s --- Occupational Licenses Required ________________________________________________ 92
CHAPTER 9 --- STATE LICENSEES --- _______________________________________________________ 94
100‟s --- General Disclosure Requirements _______________________________________________ 94
CHAPTER 10 --- SECURITY REQUIREMENTS --- _______________________________________________ 96
100‟s --- General Provisions ____________________________________________________________ 96
200‟s --- Alarm Systems ________________________________________________________________ 96
E
300‟s --- Lock Standards ________________________________________________________________ 99
400‟s --- Video Surveillance_____________________________________________________________ 99
CHAPTER 11 --- STORAGE & TRANSPORTATION --- _________________________________________ 107
100‟s --- General Provisions for Storage ________________________________________________ 107
PL
200‟s --- General Provisions for Transportation __________________________________________ 107
CHAPTER 12 --- SANITARY REQUIREMENTS --- ______________________________________________ 109
100‟s --- Physical Premises ____________________________________________________________ 109
200‟s --- Waste Disposal _______________________________________________________________ 110
CHAPTER 13 --- VERIFYING A SALE --- _____________________________________________________ 112
100‟s --- General Provisions ___________________________________________________________ 112
CHAPTER 14 --- LABELING STANDARDS --- _________________________________________________ 113
M
CHAPTER 15 --- RECORD RETENTION BY LICENSEE & ACCESS BY OTHERS --- __________________ 117
--- Reserved --- _______________________________________________________________________ 117
CHAPTER 16 --- STATE LICENSING PROCEDURES --- _________________________________________ 118
100‟s --- Initial Licenses _______________________________________________________________ 118
200‟s --- Renewals (Reserved) _________________________________________________________ 121
SA
300‟s --- Reinstatements (Reserved) ____________________________________________________ 121

400‟s --- Payment of Licensing Fees (Reserved) _________________________________________ 121
CHAPTER 17 --- SALES TAX --- ____________________________________________________________ 122
CHAPTER 18 --- ACCESS TO LICENSING INFORMATION BY DEPARTMENT OF REVENUE --- _______ 123
--- Reserved --- _______________________________________________________________________ 123
CHAPTER 19 ---ADMINISTRATIVE CITATIONS--- _____________________________________________ 124
100‟s --- Practice and procedure _______________________________________________________ 124
CHAPTER 20 ____________________________________________________________________________ 128
7
--- Reserved --- _______________________________________________________________________ 128
SECTION 13 - COLORADO MEDICAL MARIJUANA CODE _________________________________________ 129
ARTICLE 43.3 ___________________________________________________________________________ 129
PART 1 - COLORADO MEDICAL MARIJUANA CODE ___________________________________________ 129
PART 2 - STATE LICENSING AUTHORITY ___________________________________________________ 132
PART 3 - STATE & LOCAL LICENSING ______________________________________________________ 134
PART 4 - LICENSE TYPES _________________________________________________________________ 143
PART 5 - FEES __________________________________________________________________________ 145
E
PART 6 - DISCIPLINARY ACTIONS__________________________________________________________ 147
PART 7 - INSPECTION OF BOOKS & RECORDS_______________________________________________ 148
PART 8 - JUDICIAL REVIEW _______________________________________________________________ 148
PART 9 - UNLAWFUL ACTS - ENFORCEMENT _______________________________________________ 149
PL
PART 10 - SUNSET REVIEW _______________________________________________________________ 151
SECTION 14 - COLORADO REVISED STATUTES – Other References ______________________________ 162
M
SA
8
SECTION 1 - INTRODUCTION
CDS Management Company, LLC (CDS) formed in late 2009 as a management company for independent
cultivation businesses. In 2010, the company evolved to assist companies in fully complying with the
Colorado Medical Marijuana Code (Code) and its implementing regulations. The Code creates an extra-
constitutional right to operate a medical marijuana business. It also creates the State Licensing Authority
and the Medical Marijuana Enforcement Division (MMED) in the Department of Revenue with broad powers to
“Promulgate such rules and such special rulings and findings as necessary for the proper regulation and
control of the cultivation, manufacture, distribution, and sale of medical marijuana and for the enforcement
of “the Medical Marijuana Code.” The first set of regulations implementing the Code was approved by the
Colorado Attorney General in April 2011.
E
While offering operators clear guidance to follow, the Code also has stripped its licensees of
constitutional protections. No case history yet exists for challenges to the Code or any of its provisions.
Although many mandates may ultimately be found to be unenforceable by the courts or operational
constraints, compliance with all laws and rules is required to maintain a license to operate. License holders
are liable for all infractions of employees and agents. In addition to license risk, non-compliance of any
provision of the Code or the regulations promulgated by the MMED may be considered a criminal offense.
PL
Any violation during the application process or subsequent to licensing could be determined to be evidence of
“bad moral character,” reason for immediate license denial or revocation, and a bar from applying in the
future.
It is important to note that currently anyone involved in the medical marijuana industry could be
prosecuted for violating federal law, namely the Controlled Substance Act. Although the Federal
Government has not prosecuted any medical marijuana businesses in Colorado‟s ten year history and the U.S.
Department of Justice has published a memorandum saying that they will not prosecute those in
unambiguous compliance with state law, the US Attorney for the District of Colorado has stated that
prosecuting those who violate the Controlled Substances Act continues to be a “core priority.”
M
As for Colorado law, Part 9 of the Code outlines certain acts of licensees which constitute a Class 2
criminal misdemeanor in addition to possibly resulting in other potential criminal penalties. These unlawful
acts include:
1. Consumption or the allowance of consumption of medical marijuana on a licensed premises;

2. Permitting the fraudulent use of a medical marijuana registry card;
3. Operating a medical marijuana business without licensing;
4. Operating a medical marijuana center without producing 70% of inventory needed for operations;
SA
5. Accessing a limited access area without proper identification;

6. Failing to designate with a sign all limited access areas;
7. Failing to report a change in ownership prior to the change;
8. Failing to report a change in managers prior to the change;
9. Display of signage that does not comply with applicable local ordinance;
10. Use of misleading, deceptive, or false advertising;
11. Sale of medical marijuana to a person without proper documentation;
12. Employing a person under 21 years of age to cultivate or dispense medical marijuana
13. Possession of an amount of medical marijuana product or plants which exceeds the amount
allowed by patient registrations;
14. Sale or arranging a sale of medical marijuana in person off the licensed premises;
15. Possessing medical marijuana on a licensed premises which the licensee is not authorized to sell;
16. Purchasing medical marijuana from an unlicensed source;
9
17. Requiring another licensee to deliver medical marijuana products to a location other than the
MMC;
18. Selling medical marijuana outside the hours of 8:00 am and 7:00 pm;
19. Engaging in anti-competitive sales practices;
20. Selling medical marijuana products the licensee is not authorized to sell; or
21. Offering anything of value to a physician in exchange for referrals to the licensee.
Businesses must also remain compliant with all applicable local ordinances. Local jurisdictions may
adopt a medical marijuana business ordinance or opt-out and prohibit some or all state licensed medical
marijuana businesses. If a local jurisdiction does not adopt an ordinance either regulating or banning state
licensed medical marijuana businesses by July 1st, 2011, the local jurisdiction is deemed to opt in and the
provisions of the Code apply locally. Local ordinances and resolutions may impose more restrictive rules and
E
regulations for medical marijuana business than the Code. Only in cases regarding set back and other zoning
requirements may a local ordinance be less restrictive than the Code. Ultimately, localities may adopt rules
different than the Code. In other words, localities may adopt rules different than the Code in distance
restrictions from various types of locations (i.e. schools, parks, etc.), size of businesses, or “any other
requirements necessary to ensure the control of the premises and the ease of enforcement of the terms and
conditions of the license.”
PL
Currently there is a state moratorium on opening new medical marijuana businesses and only businesses
that applied to the State by August 1, 2010 may continue operations until a license is granted or denied. In
some cases with local and state approval these businesses may be sold or moved during the application
review. All other medical marijuana businesses seeking to operate after July 1, 2011 must be licensed by
both the State and the local jurisdiction prior to beginning operations.
Despite the 77 pages of regulations adopted to implement the Code, guidance is still needed from MMED
in several areas prior to the compliance deadline of July 1, 2011. The MMED will release information on the
following topics before compliance is required in those areas:
1. Minimum statutory requirements for infused products contracts;

M
2. Designated signage for propagation, vegetation, and flowering areas of an Optional Premises
Cultivation (OPC) licensed facility;
3. Designated signage for the limited access area of a licensed premises;
4. Approved secure transportation containers and tamper-proof tape;
5. Inventory control procedures and tag type;
6. MMED approved standards and approved DVR/NVR list;
7. Secure Facility Submission/Application Form;
SA
8. Surveillance equipment work approved log; and

9. An MMED approved transportation manifest and online submission process.
In addition to following any changes to medical marijuana laws and rules, licensees should regularly
check the following laws and rules for updates:
1. Local business, signage and zoning laws and rules;

2. Waste water and solid waste disposal laws and rules;
3. State and federal business laws and rules (human resources, safety, etc.);
4. IRS guidance to medical marijuana businesses and Federal Tax Law relating to the sale of controlled
substances (including IRS 280E);
5. Local and state sales tax laws and rules; and
6. Rotterdam Convention on the Prior Informed Consent (PIC) Procedure for Certain Hazardous
Chemicals and Pesticides in International Trade and other EPA banned chemicals (additions are not
automatically banned by rule – MMED must take action to add to the original list).
10
Please note that State and local medical marijuana laws and regulations are consistently updated and
revised and lobbying and direct political participation is necessary to ensure the success of this industry.
For example, The Colorado Medical Marijuana Code is set to repeal on July 1, 2015 after a review by the
Colorado Department of Regulatory Affairs.
E
PL
M
SA
11
SECTION 2 - DEFINITIONS/ACRONYMS
Associated person – owners, shareholders, partners, members, officers, lenders or others having a financial
interest in the business but not working in the business
Associated key – owners or others working on the licensed premise who have a financial interest in the
business
CDPHE - Colorado Department of Health and Public Environment
Center – See MMC
Code – the Colorado Medical Marijuana Code (Colorado Revised Statutes Title 12, Article 43.3)
E
HIPAA – Health Insurance Portability and Accountability Act
Licensed premises – the facilities occupied by a licensee that is authorized to cultivate, manufacture,
distribute, or sell medical marijuana
PL
Limited access area – any area where medical marijuana is grown, cultivated, stored, weighed, displayed,
packaged, sold, or possessed for sale
Licensee – a person or entity licensed under the Colorado Medical Marijuana Code
LLA – local licensing authority
Local licensing authority – the local government department responsible for medical marijuana licensing
within the municipality or county the licensed premises is located
MIP – Medical Marijuana-Infused Products Manufacturer
MMC – Medical Marijuana Center

M
MMED – the Medical Marijuana Enforcement Division of the Colorado Department of Revenue
Non-member – patient who is not assigned to the business through the Registry
OPC – Optional Premises Cultivation Premises– a facility occupied by a licensee approved for the cultivation
of medical marijuana
SA
POS – retail point of sale system
Registry – the Medical Marijuana Registry maintained by the Colorado Department of Health and Environment
Rules – regulations promulgated by the MMED or CDPHE
State licensing authority – the Executive Director of the Colorado Department of Revenue and its appointees
State – the State of Colorado
12
SECTION 3 - LICENSING
BEST PRACTICES
OWNERSHIP AND FINANCING
 Contact your legal
OVERVIEW advisor before
determining an
Each MMC license must be held by the owner(s) of the establishment. Owners ownership structure or
must meet all requirements of a licensee including Colorado residency (2 year). An entering into any
owner is a person or entity whose proprietary interest is such that they bear risk of agreements with
loss and have opportunity to gain profit from the operation or sale of the landlords, lenders,
establishment. Ownership is constituted by a limited or general partnership interest, equipment lessors or
joint venture interest, or ownership of a share or shares in a corporation or a limited service providers.
liability company which is licensed. Any person who guarantees production levels,
E
 Engage a private
yields, quantities produced or other obligations of the licensee or its operation is
investigator to perform
considered to have a financial interest and is deemed an owner. Insurers are not background checks on
considered owners. An owner is considered an associated key person by the MMED all investors prior to
when they are directly involved in the operation of the business. Elements of control submitting application
considered by the MMED in determining ownership include: to the MMED or the
LLA.





Possession;
Tax liabilities.
PL
Control of the license;
Guarantee of debt or production;
Insurance beneficiaries; and
A spouse of a licensee may hold a license in his or her own right as owner
regardless of tax return status. Having a secured interest in furniture, fixtures,
equipment or inventory constitutes ownership and a direct financial interest. A
complete disclosure of all persons having a direct financial interest, and the extent of
such interest, in each license is required by the MMED. A person shall not have an
 Include a change in law
and license denial
clause in all operating
and membership
agreements for the
business.
 Execute ownership
agreements with the
effective date
beginning upon
M
undisclosed interest in a licensee unless they have undergone a fingerprint-based approval from MMED
criminal history check. The requirement does not apply to banks and certain other and the LLA.
financial institutions.
 Engage a legal review
before executing any
An owner is considered an associated key person by the MMED when they are
corporate formation
directly involved in the operation of the business. An owner not directly involved in documents.
the operation of the business is considered an associated person. Lenders, landlords
and other persons may be required to submit applications if they are determined to
SA
have a financial interest in the business. If the applicant is unclear on the level of
interest of an associated person, submit a request to the MMED for a determination.
Any change of ownership, lending relationships, etc. must be report to the MMED and MULTIPLE FACILITIES
LLA and in most cases receive prior approval.
 Each facility operated
Many jurisdictions do not allow people to work on premises until passing the will require a separate
background investigation. After July 1, 2011, the MMED will not allow associated key application, separate
persons on-site until clearing a background investigation and receiving license license, and separate
approval. The licensing agencies must be notified of any changes in interest related reporting to the MMED
to associated persons within 10 days. It is unlawful to fail to report any change in and the LLA as required.
ownership thirty days prior to the MMED. The MMED must be notified in writing of any
arrest, summons, or conviction of an associated person subsequent to licensing.
13

Sample Compliance Manual

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sample Compliance Manual

Uploaded by

Copyright:

Available Formats

SA

CDS Management Co. - Release 1.2 – May 10, 2011

Complied by CDS Management Company, LLC

©2011 - All Rights Reserved.

300‟s --- Reinstatements (Reserved) ____________________________________________________ 121

1. Consumption or the allowance of consumption of medical marijuana on a licensed premises;

5. Accessing a limited access area without proper identification;

1. Minimum statutory requirements for infused products contracts;

8. Surveillance equipment work approved log; and

1. Local business, signage and zoning laws and rules;

CDPHE - Colorado Department of Health and Public Environment

Center – See MMC

LLA – local licensing authority

MIP – Medical Marijuana-Infused Products Manufacturer

MMC – Medical Marijuana Center

POS – retail point of sale system

Rules – regulations promulgated by the MMED or CDPHE

State – the State of Colorado

You might also like