New MED Rules Update


(as of November 2016)

***** Unless otherwise noted, all changes take effect January 1, 2017. This summary is provided as a convenience, is not legal advice, and should not be substituted for formal consultation with a licensed attorney.

Ownership (M/R 200 Series)

Out of State Ownership

Subject to certain limitations, non-Colorado residents may be either direct or indirect owners of marijuana businesses. To qualify as a nonresident owner, the person must be a U.S. citizen and must be pre-approved by MED before submitting an application for ownership.

There is no limit to the number of direct owners a business can have if all direct owners have been Colorado residents for at least one year.

There is a maximum of fifteen direct owners if even one of the direct owners is a nonresident. If there is a nonresident owner, then there must be an officer who has day-to-day operational control who has been a Colorado resident for at least one year.

Product Royalties

Subject to certain limitations, royalty payments for the use of product-specific intellectual property, as a percentage of gross revenue or profit from sales of a product, are permissible. The royalty payment must be commercially reasonable (as determined by MED based on a number of factors). Any holder of a royalty that is more than 30% must be pre-approved by MED.

Profit-Sharing Plans for Employees

Subject to certain limitations, licensed businesses may provide profit sharing plans to employees. Profits must be shared in cash, not in the form of stock or other equity interests.

Packaging and Labeling (M/R 1000 Series)

Liquid Edible Retail Marijuana Products that are larger than single serving (10mg THC) must use a single mechanism for child-resistance and accurate dosing (for example, a locking measuring cap).

Effective Oct. 1, 2017, the potency of CBD and THC must be labeled in BOLD font:

  • At least two sizes larger than the surrounding text
  • Not smaller than ten-point
  • Highlighted with a bright color.

Effective Oct. 1, 2017, potency for both THC and CBD must be labeled:

  • For each strain of flower, in a range of percentages showing the highest and lowest potency test results within the previous six months
  • For concentrates and edibles, in milligrams

Transporter Licenses (M/R 1600 Series)

Retail Transporter licenses will only be issued in jurisdictions that allow retail stores, and medical Transporter licenses will only be issued in jurisdictions that allow medical centers.

Transporters may:

  • Receive, transport, store, and deliver product on behalf of other licensed businesses.
  • Store product on its licensed premises or in off-premises storage facilities

Transporters must:

  • Have separate licenses for medical and retail, but both can be co-located.
  • Have a licensed premises.
  • Return damaged or refused product to the original provider.
  • Control sanitation and temperature to prevent spoilage or contamination.
  • Secure all product in a limited or restricted access area
  • Track all product in METRC.

Transporters may not:

  • Accept marijuana from a retail grow without evidence that the excise tax was paid.
  • Store product for longer than 7 days after receiving it.
  • Open or repackage any products.
  • Buy, sell, or give away product, receive complimentary product, or hold a lien or secured interest in any product.

Operator Licenses (M/R 1700 Series)

Operators are not required to have a licensed premises, but must maintain a place of business separate from the licensed premises of any business they operate. Separate licenses are required for medical and retail, though both can share a business location and can be used to operate a co-located medical and retail marijuana business. Both the Operator and the licensed business may be liable in an MED enforcement action. A licensed business cannot have more than one Operator at a time. MED must approve all contracts between Operators and licensed businesses, including any significant amendments. An Operator’s contract for services does not constitute ownership of the business it operates.

Operators may:

  • Operate one or more licensed businesses for direct payment from the business(es).
  • Exercise all privileges of the business operated, but must comply with all rules applicable to such business.
  • Receive a commercially reasonable percentage of profits, as long as it does not exceed the amount of profits kept by the business it operates.
  • Be business entities (corporations, limited liability companies, partnerships, and sole proprietorships)

An Operator may not:

  • Be a DBIO of any business it operates.
  • Hold a security interest in a licensed business or any of its assets.
  • Receive equity or a future right to equity in a licensed business.
  • Guarantee a business’s debts or production levels.
  • Have a contract with a business that does not allow the business to terminate the contact at any time, for any reason