Despite marijuana licenses being available for much of the 2000s in Colorado – medical in 2000 and retail in 2014 – marijuana law and the associated license applications remain in constant flux.  For example, as of November 1, 2019, Colorado implemented significant changes to its marijuana laws and a new set of license applications came into play.  

Most marijuana licensed businesses understand the importance of engaging a firm well versed in marijuana regulatory laws, especially one that remains on the forefront of this every-changing legal landscape.  While this is entirely true, licensees should be cognizant that this remains as only one piece of the growing puzzle to operating a licensed marijuana business in Colorado, and the marijuana laws cannot be interpreted in isolation.  Licensees need attorneys that specialize not only in marijuana laws, but also business and real estate transactions – it is the interaction thereof that keeps a licensee efficient and malleable in an otherwise dynamic environment.  

The following is a list of potential concepts for you to consider as you commence and/or operate your marijuana business:

  1. Does your LLC operating agreement (or shareholders’ agreement) address marijuana licensing issues? For example, are 10% owners required to maintain their associated key licenses throughout ownership to ensure entity compliance with MED laws?  Does it contemplate that you are operating a business that is legal under state law but illegal under federal law?    
  2. Do you have the proper services agreements and restrictive covenants in place to cover employees and independent contractors? By example, all employment and independent contractor relationships should be documented through an employment or services agreement that outlines pay, duties, termination procedures, etc. These agreements may include certain conditions, e.g., employees are required to maintain the appropriate badges with the MED so that you, the licensee, are not engaged in an unauthorized business. 
  3. Are you protecting your IP through service provider non-disclosure and invention assignment agreements?
  4. Does your lease allow for the premises to be used by a marijuana business?
  5. Have you issued any profits interests that need to be disclosed to the MED? Or an agreement of any kind that results in sharing revenue or profits that may result in deemed ownership by the MED (and that may need to be approved in advance)? 
  6. Have you issued any convertible debt, options or warrants (or synthetic equity) that needs to be disclosed to the MED or approved in advance? 
  7. Have you adequately disclosed the licensure responsibilities and potential investigatory exposure to applicable investor groups, e.g., background checks, financial history, work history, etc.? 
  8. Are you a grower looking to purchase land?  If so, you will need someone well versed in real estate and water law to ensure the property can support your grow facility.
Back To The Blog