[bouldercouncilhotline] Hotline: Staff MJ Response to Council

[cmosupport at bouldercolorado.gov]

Sender: Lewis, Alisa

City of Boulder
Finance Department
Tax and License Division
Sales and Use Tax · Community Information · Special Event Liquor

Liquor License · Miscellaneous License · Marijuana Business License
 
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To:       
City of Boulder City Council                                                                                                                           

 
From:  Mishawn Cook, License and Collection Manager
         303-441-3010 (cookm at bouldercolorado.gov)
 
Date:   December 15, 2014
 
Re:     Staff Response Regarding Marijuana 
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Several representations have been made to Council over the past few months that contain inaccuracies.  At the last Council meeting, staff was asked to correct any misrepresentations.  Following is additional information regarding some of the representations made to you.
 
Representation:  Stings across the state have netted ZERO age violations.
City Experience:  Limited compliance checks in the city have netted age violations of selling to minors by both the person checking IDs and the bud-tender.
 
Representation:  Boulder laws need to change to prevent marijuana businesses from closing.
City Experience:  Only three MMB licensed locations have closed since January 1, 2014, all based on loss of their leases from landlords and not based on competitive issues.
 
Representation:  Existing MMB need protection from competition by new marijuana businesses entering the market.
City Experience:  Three new applicants have properly filed new license applications since June 2, 2014.
 
Representation:  Changes to the city law are necessary to allow grandfathering of existing locations.
City Experience:  Grandfathering at existing locations exists now.  While no business licenses in the city are transferable to a different business, businesses can transfer stock, memberships in limited liability companies or partnership
 interests without it being considered a transfer of the license.  All of the marijuana businesses in the city are held by entities, not individuals.  A number of those entities are owned by different individuals than those that were approved for the original license.  The city has a process for change of ownership that has been used numerous
times by the marijuana businesses.
 
Representation:  It is a problem that violations go with the license so new owners do not get a “clean slate”.
City Experience:  The policy that violations go with the license is the policy established statewide for liquor licenses.  The only time city staff has received a complaint is when a licensee attempted to transfer ownership of its stock, with the understanding that this would avoid having a violation on his record.  In the case complained of, the business had sold marijuana to a minor that had shown his minor’s driver’s license.  Rather than revoking the license, the city assessed a $7500 fine.  Since there are several violations for which there are increasing fines for the same violation, if there is a “clean slate” every time ownership changes, there is not an opportunity to close a business that continually violates the marijuana law and the violator benefits by being able to sell his business rather than receive increasing fines for repeat violations. 

 
Representation:  By eliminating the hearing process for a violation a business has no recourse for an alleged violation.
City Experience:  In September, 2011, the council did amend the code to eliminate hearing officer review of the city manager’s decision.  Because the business was allowed to stay open during the hearing officer process, there was an incentive to appeal to a hearing officer.  The process had proven to be very expensive for the city with the extra time and expense of a hearing officer and the court was upholding the city manager’s rather than the hearing officer’s decisions.  The process used successfully since the fourth quarter of 2011 provides for the city to put forth its grounds for the license action in writing, and the business has two weeks to present its evidence disputing the city’s findings.  If the business cannot dispute the findings of the city within that time, the city manager’s decision is deemed final, subject to court review.  The business retains the opportunity to be advised of and dispute the charges, and pursue court action, if desired.  The law does not build in an arbitrary incentive for the business to request a hearing that costs the city money and staff time. 

 
Representation:  Rules by the City Manager make it difficult for marijuana businesses to function in the city. 
City Experience:  There are no rules in effect that have been adopted by the City Manager related to marijuana businesses. 

 
Representation:  The city’s fines are too high.
City Experience:  The most common violations for which fines have been levied to date are for not disclosing a new business manager for a background check or disposing of marijuana in a way that it can be recognized and used by others.  While both types of violations are blatant violations of the code, for a first offense, the average fine for an unreported manager is $2,000 and for failing to properly dispose of marijuana, $2,500.  This allows the business
 the opportunity to correct its practices before losing its license for violations of the code.
 
Representation:  Few businesses have filed for 100% RMB conversions or co-locations.
City Experience:  About 45% of the 66 issued MMB licensees and 13 pending applications from October 22, 2013 have filed for some manner of RMB change to date. When all 4 of pending co-locations have been processed, the percentage will increase to 50% (or 61% with MIP licenses included). Please see current MJ license numbers as of December 15, 2014.
 
Current marijuana businesses:
 
MMB Wellness Centers:*               15
RMB dispensaries:                        14
MIPs;                                           6
MMB Grows:                                22
RMB Grows:                                 22
                Total                          79
 
*4 of these dispensaries have pending applications for co-location of medical and recreational marijuana
 
Please let us know if you have questions.
 

Mishawn J. Cook
License and Collection Manager, CMC
City of Boulder, Finance Dept.
Main: 303-441-4192
Direct: 303-441-3010
Fax: 303-441-1919
Mail: PO Box 791, Boulder, CO 80306
Office: 1777 Broadway-1st Floor, Boulder, CO 80302
Web page:  www.bouldercolorado.gov/licensing