Ron Kammerzell Deputy Senior Director of Enforcement Colorado Department of Revenue 1

 Regulate the growth, manufacture, and sale of retail marijuana in a system of licensed establishments overseen by state and local governments;  Allow individuals who are 21 years old or older to possess, use, display, purchase, transport, and transfer (without remuneration), to individuals who are 21 years old or older—one ounce or less of marijuana; 2

 11/6/12 – Amendment 64 Election  7/1/13 –Promulgate State Rules  10/1/13 – Begin Accepting State Applications  10/1/13 – Develop Local Rules and Processes  1/1/14 – Begin Issuing Licenses 3

 Executive Order Issued in December 2012 ◦Established the Task Force ◦Identified the Members ◦Laid Out The Expectations 12/10/2012DRH Summit 4

 Create and Deliver a Report to the Governor, the General Assembly, and the Attorney General ◦Identify the legal, policy and procedural issues and offer suggestions and proposals for legislative, regulatory and executive actions to be taken. ◦Develop a comprehensive framework and timeline for legislation and regulations needed to implement Amendment 64. ◦Hold hearings and take testimony regarding the policy, legal and procedural issues related to the legalization and recreational use of marijuana. ◦Review related state laws and regulations, and make recommendations for changes to all applicable laws and regulations. 5

6  State Legislators  Public Health  Public Safety  Agriculture  Revenue  A64 Campaign  Marijuana Industry  Marijuana Consumers  Law Professor  Physician  Juvenile Justice  District Attorney  Attorney General  Public Defender  Municipal League  Counties  Business Community  Labor/Employees

7  Task Force Report was Delivered mid- March 2013  Joint Select Legislative Committee Convened mid-March 2013  Legislation was Passed and Signed into Law in May 2013  Temporary Rules Promulgated 7/1/13  Permanent Rules Promulgated 9/9/13  Ready to Accept Applications 10/1/13

8  5 separate working groups for permanent rulemaking: ◦Licensing, Transportation and Storage ◦Licensed Entities & Inventory Tracking ◦Recordkeeping, Enforcement & Discipline ◦Labeling, Packaging, Product Safety & Marketing ◦Medical Marijuana Differentiation

9  20 separate working group meetings  Working group member representation from a wide variety of stakeholder groups  Public Testimony  Additional working groups and rulemaking on interim productions caps, concentrate production, product safety and mandatory testing.

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 Centers: 493 Licensed, 36 Pending  Cultivations: 713 Licensed, 61 Pending  Infused Product Manufacturers: 129 Licensed, 19 Pending 12

 Stores: 157 Licensed, 31 Pending  Cultivations: 205 Licensed, 38 Pending  Product Manufacturers: 36 Licensed, 10 Pending  Testing Facilities: 3 Licensed, 1 Pending 13

 3 Critical Issues Outlined in August 2013 Memo from US DOJ: ◦Preventing distribution of marijuana to minors ◦Preventing the involvement of criminal enterprises, gangs and cartels in legal marijuana industry ◦Preventing the diversion of legalized marijuana to other states 14

 Packaging  Labeling  Advertising  Waste removal  Production limits  Enforcement

 Require Child-Resistant Packaging: ◦Compliance with the Poison Prevention Packaging Act of 1970 and ASTM D3475 ◦Opaque ◦Child resistant characteristics maintained after opening  Extensive labeling ◦Concentrates and products say contains marijuana ◦Universal Symbol ◦Traceability

 Require proof of identification  Must be 21 to even enter the sales floor  No sales outside the licensed premises: ◦No internet sales ◦No delivery  Video of entire Licensed Premises, including the sales counter  Advertising restrictions ◦Television ◦Radio ◦Print Media ◦Internet ◦No content targeting minors

 Seed-to-Sale Tracking System – MITS  Travel Manifest Requirements  Quantity limitations on tourists  Evidence of excise tax paid  Limited access areas and security requirements  Tamper-evident shipping containers  Labeling of containers prior to sale  Traceability  Unlawful Transaction Enforcement at Point of Sale

 Regulatory Comparison

Financial Interest Restrictions MEDICAL MARIJUANA Vertical Integration Retail Center Must Grow (Manufacture) Its Own Product in Its Own Cultivation Facility Retail Center Can Wholesale 30% of Product to Other Retail Centers Retail Center Can Buy 30% of Product from Other Cultivation Facilities LIQUOR Three-Tier System Manufacture Tier Wholesale Tier Retail Tier RETAIL MARIJUANA Vertical Integration Through Sept. 30, 2014, Only Existing Medical Marijuana Licensees Can Apply for Recreational Marijuana Licenses Same 30% Wholesale Restrictions as MMJ Hybrid Model After Sept. 30, Any CO Resident Can be licensed for either a Retail License or Mfg License or Both Wholesale Restrictions Lifted

Licensing Structure MEDICAL MARIJUANA State and Local Approval of 3 Types of Licenses Center Infused Products Mfg Cultivation Facility State Approval Conditioned Upon Local Approval LIQUOR State and Local Approval of 12 Types of Retail Licenses Local Approval Required Prior to State Approval State Approval of 7 Types of Manufacturing and Wholesale Licenses RETAIL MARIJUANA State and Local Approval of 3 Types of Licenses: State Required to Issue Approval Within Days If Not, Approval Reverts to Locals and State Has No Jurisdiction Over License Local Approval Required After State Approval State Approval of Testing Facilities

Production & Ownership Limits MEDICAL MARIJUANA Can Cultivate and Sell Only 6 Plants and 2 Ounces Per Registered Patient Retail Center and Optional Premises Cultivation Facility Must be Commonly Owned No restriction on the # of licenses LIQUOR Brew Pubs 60,000 barrels a year Limited Wineries 100,000 gallons a year Vintner’s Restaurant 250,000 gallons a year Manufacturers and Wholesalers Prohibited From Financial Interest in Retail License Interest in only 1 Retail Liquor Store License RETAIL MARIJUANA Through Rule, MED Can Limit Production Through: Limiting # of Licenses Limiting Production by License or License Class Statewide Production Cap MED interim production caps in place based on License class and # of plants at cultivations Can Have Financial Interest Across All License Types – no restriction on # of licenses

Age and Sales Restrictions & Penalties MEDICAL MARIJUANA Must Have Patient Registry Card to Purchase Can be Under 21 Years Transaction Limit 6 Plants or 2 Ounces, Unless Patient Has Authorization For More LIQUOR Must Be 21 to Purchase Compliance Check or Underage Sales Violation Suspension Time or Fine in Lieu of Suspension $200-$5,000 No Transaction Limits RETAIL MARIJUANA Must Be 21 to Purchase Compliance Check or Underage Sales Violation License Suspension Fine Per Violation Fine in Lieu of Suspension Up to $100,000 License Revocation Transaction Limit 1 Ounce Limit for Colorado Residents ¼ Ounce Limit for Non- Residents

Taxes MEDICAL MARIJUANA Retail Sales Tax Regular State (2.9%) & Local Sales Tax Rates Wholesale Excise Tax None LIQUOR Retail Sales Tax Regular State (2.9%) & Local Sales Tax Rates Wholesale Excise Tax 8¢ per gallon for beer and hard cider (apple & pear) 7.33¢ per liter for wine 60.26¢ per liter for spirits RETAIL MARIJUANA Retail Sales Tax* Special 10% Sales Tax Wholesale Excise Tax* 15% on Average Whole- sale Price of Ounce of Marijuana *Approval of Proposition AA Occurred in November 2013