Boulder Ordinance PowerPoint

Reconsideration of the Boulder City Marijuana

Ordinance1. Lack of Appeals / Zero Tolerance 2. Grandfathering Rule3. Limit on transitioning stores to Dual-Use

Medical & Recreational 4. 70/30 MIP Rule5. Classification of Seeds6. Confusion regarding “Branded Merchandise”7. Coupons8. Sunset Rule on Conversions

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IntroductionAs Boulder City Marijuana Business License Holders since 2010, we have been working with Boulder to create good Marijuana Business and City policies.

The current Boulder Marijuana laws create a confusing, and unduly burdensome regulatory framework that is inconsistent with the laws of the State and other local jurisdictions.

These laws are also incompatible with the best interests of businesses and enforcement, which is to have a clear and consistent regulatory system in line with state law that promotes an environment for businesses to thrive while having clear guidelines for enforcement.

The following is not a complete list of the issues we face on a daily basis, but rather a list of the ones we currently find most difficult to navigate.

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CITY OF

BOULDER

BOULDER

COUNTYDENVER MED / STATE

NO YES YES YES

NO YES YES YES

YES NO NO NO

YES NO NO NO

NO YES YES YES

YES NO NO NO

NO YES YES YES

YES NO NO NO

Zero

Tolerance /

Lack of

Appeals

Grandfathering

Issue:

Limit on

transitioning

stores to

Dual Use:

70/30 Rule: Sale of Seeds:

Confusion on

meaning of

"Branded

Merchandise"?

Coupons

Prohibited:

Sunset Rule on

Conversions:

6-16-1 (a) (7) 6-16-3 (e) 6-16-6 (a) (9) 6-16-5 (a) (16) 6-16-8 (p) (1) (c) 6-16-8 (p) (4)

6-16-4 (e) 6-16-5 (a) (9) 6-16-7 (h) 6-16-13 (a) (27)

6-16-7 (e) (1) 6-16-7 (i)

6-16-7 (e) (2) 6-16-7 (g) (2) 6-16-3 (f)

6-16-7 (e) (3) 6-16-8 (j) 6-16-3 (g)

6-16-13 (a) (24) 6-16-3 (h)

6-16-4 (h) (1)

6-16-4 (h) (2)

6-16-4 (h) (3)

6-16-4 (h) (4)

70/30 RULE EXISTS?

SALE OF SEEDS ALLOWED?

USE OF COUPONS ALLOWED?

6-16-2: Definition

of "Recreational

Marijuana Plant"

6-16-2: Definition

of "Co-Located

Marijuana

Business"

Reference Chart for Boulder City Ordinances

SUNSET RULE PREVENTS CONVERSIONS?

ALLOWS FOR APPEALS?

CONFUSION ON MEANING OF BRANDED

MERCHANDISE?

GRANDFATHERING SURVIVES SALE OF BUSINESS?

LIMIT ON TRANSITIONING STORES TO DUAL USE

MEDICAL & RECREATIONAL STORES?

Boulder City Ordinance Comparison Chart

Boulder City imposes a “Zero Tolerance” policy in regards to their Marijuana Ordinance, and currently does not offer a system for handling appeals regarding decisions about Marijuana Businesses.

With the uncertain and often confusing regulatory landscape in which we operate, an appeals process should be in place for authorities to work with Marijuana Businesses that have been striving to be compliant and successful members of the Boulder Business community.

4Boulder City Ordinance numbers: 6-16-1 (7) | 6-16-4 (e)

1. Lack of Appeals / Zero Tolerance

We recommend the City of Boulder remove the Zero Tolerance rule and allow for appeals, aligning with State law.

5Boulder City Ordinance numbers: 6-16-1 (7) | 6-16-4 (e)

1. Lack of Appeals / Zero Tolerance –Proposed Solutions

2. Grandfathering Rule –Problems for businesses

If a business would like to sell a grandfathered facility, & they are within 500 feet of two other facilities, they cannot sell their license without losing grandfathering.

Licenses are not transferable -restructuring a company for growth is impossible.

Lowers value of Boulder Marijuana businesses. Not able to realize invested assets.

6Boulder City Ordinance numbers: 6-16-3 (e) | 6-16-7 (e) (1) | 6-16-7 (e) (2) | 6-16-7 (e) (3) | 6-16-5 (9)

Forces existing businesses to keep licenses they would prefer to sell, while new businesses are creating more.

Forces new Marijuana Businesses to find new locations and build-out new facilities, when there could be existing facilities available for sale already.

No reason to invest in Boulder based companies, loss in tax revenue for Boulder.


2. Grandfathering Rule –Problems for businesses

Upon sale of a cultivation facility, plants must be removed or destroyed, per Boulder City regulations.

Plants are not being treated as business assets. Contradicts State law, where plants transfer with licenses and contradicts standard law, where these would be business assets.

All other jurisdictions (where legal to sell Cannabis), as well as the State of Colorado allow the sale of plants with the business, allowing for immediate commerce.


2. Grandfathering Rule –Plants and Sale of Business

Environmental Cost.Waste of energy & resources that went into growing the plants.

Sales and excise tax revenue lost.

Doesn't allow business to sell plants with location for fair market value, instead makes them worthless. Potential buyers want to purchase location with the plant genetics.



Boulder County

Boulder City

Denver Louisville Lafayette Nederland Aurora Lyons

Grandfatherof Use? Allowed

Not Allowed

Allowed Allowed Allowed Allowed Allowed Allowed

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At State level, as well as in the Cities listed, Grandfathering survives the sale of the business to the new business owner.

Boulder City Ordinance numbers: 6-16-3 (e) | 6-16-7 (e) (1) | 6-16-7 (e) (2) | 6-16-7 (e) (3) | 6-16-5 (9)


We recommend that the City of Boulder allow for the transfer of ownership of licenses through an asset sale.

We also recommend that, in accordance with State law, plants be treated as assets and transfer with the license when sold.


2. Grandfathering Rule –Proposed Solutions

12Boulder City Ordinance numbers: 6-16-6 (a) (9)

3. Limit on ability for those that own two stores to transition to Dual Use Medical & Recreational -Problems for Boulder Businesses

The current Boulder City Ordinance limits the number of dispensaries a licensee may own to one Medical Store and one Recreational Store.

The intent of this rule was to prevent proliferation of “Chain” Marijuana Businesses in the City of Boulder, and also to mimic State alcohol laws that prohibit alcohol licensees from owning more than one liquor store.

However, there is no state-wide limit on marijuana licensees owning multiple marijuana stores, there is only a Boulder City limit.

We have had two stores, The Farm since 2009, and Root since 2012.

Due to the Boulder Ordinance passed in 2013, we had to transition one of our stores. We transitioned The Farm to recreational, and Root stayed a Medical store.

There were only two companies in the City of Boulder that had more than one marijuana store – we were one of them.



These two companies were not allowed to convert their stores to Dual-Use because of their two-store status.

Due to this Boulder-centric regulation, and dwindling sales in our Medical store - Root, we have been forced to put Root on the market for sale because of lack of potential for growth and the inability to convert to Dual-Use.

There have been two types of interested buyers:The “Mom and Pop” type of owners that have shown

interest in purchasing Root are only interested in the purchase if they could hire The Farm / Root Management Team to run it for them. Unfortunately, Boulder Rule 6-16-6 (a) (9) prevents us from managing any other companies while owning & operating The Farm.

The “Mom and Pop” types don’t have much interest in running their own dispensary without some assistance from persons who have experience navigating the complex regulatory framework that exists in the Cannabis industry.



The other type of interested buyers, who will be much more likely to purchase Root, are the big “chain” stores from out of town.

They have the experience to run a dispensary with their own management team, and as new Boulder dispensary owners, have the ability to convert the store to dual-use in order to realize the dispensaries’ full potential.

They also will be running this dispensary from their Denver offices. Rather than keeping jobs in Boulder and employing Boulder residents, they will bring in their own people from Denver.

They also realize that we are under duress because of the “Sunset Rule”. That gives them the ability to pressure us to sell Root for much less than the value.



This is detrimental to our business. We have been operating in the City of Boulder for six years, and we are Boulder residents.

Our question is, “Would the City of Boulder prefer to support locally owned businesses, or would they rather see us sell our businesses to out-of-city chains?”

If this is the case, then it’s already happening. Several smaller Boulder Marijuana Businesses have already sold to big Denver chains.

This rule, that was created to limit chains in Boulder, is actually hurting us and inviting chains in.


3. Limit on ability for those that own two stores to transition to Dual Use Medical & Recreational -Proposed Solutions

We ask that the City of Boulder grant us grandfathering status since we owned two stores in Boulder before the 2013 regulations were drafted, and allow us to transition to Dual-Use.

Or completely eliminate this rule from the Boulder City Marijuana Ordinance, aligning with State Regulations.

2. 70/30 RuleIf you manufacture Infused Products in Boulder, you must also own a cultivation facility in Boulder that will provide at least 70% of the material to be used in your infused products.

17Boulder City Ordinance numbers: 6-16-5 (a) (16) | 6-16-7 (h) | 6-16-7 (i)

4. 70/30 MIP Rule

Square footage of a cultivation facility limited to <15,000 sq ft. in Boulder City.There are limits on the number of cultivation facilities a licensee may own in Boulder. Not able to source or produce enough product in Boulder to sustain a brand to be distributed state-wide.Can’t meet local or state demand - unable to grow business.Disables Boulder kitchens from sourcing quality products outside of Boulder.


4. 70/30 MIP Rule –Problems for Infused Product Manufacturers

Pricing disadvantage. Not a free market.

Many other options in Colorado without these severe restrictions.

Boulder customers forced to purchase infused products made outside of Boulder.Many locals prefer to buy & support local businesses.Disservice to Boulder residents.



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Boulder Infused Products Kitchen

sits largely unused due to

restrictions.

Boulder City Ordinance numbers: 6-16-5 (a) (16) | 6-16-7 (h) | 6-16-7 (i)


Can’t meet local or state demand

& unable to grow business.

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Only one – the in-house “Hummingbird” Brand of concentrates.

The Farm offers a wide variety of Marijuana products to many guests every day, and roughly 30% purchase infused products or concentrates.

Boulder consumers want to buy local.

Boulder City Ordinance numbers: 6-16-5 (a) (16) | 6-16-7 (h) | 6-16-7 (i)

4. 70/30 MIP Rule –Effects on our Community

How many Boulder-made infused products or concentrates are available at The Farm?

We ask that the 70/30 rule be eliminated from the Boulder City Marijuana Ordinance to be aligned with State laws.

Boulder Infused Products Manufacturers should be allowed to acquire quality cannabis material for processing from any compliant, MED registered facility in the state, as permitted by state law. Eliminating this rule would allow for Boulder to focus on Product and Consumer Safety.


4. 70/30 MIP Rule –Proposed Solutions

Cannabis seeds are allowed for sale on the Medical side of the industry, but prohibited for sale on the Recreational side, because of a difference of three words in the Boulder City definition of “Retail Marijuana Plant”.

“Medical marijuana plant” means a marijuana seed that is germinated, …"Recreational marijuana plant" means a marijuana seed and all parts of the growth therefrom…

Selling a recreational Marijuana Seed is prohibited in Boulder because they are technically defined as plants.

23Boulder City Ordinance numbers: 6-16-7 (g) (2) | 6-16-8 (j) | 6-16-13 (24) | 6-16-2 “Recreational Marijuana Plant”

5. Sale and Classification of Seeds

This rule puts Boulder Recreational Marijuana Businesses at a competitive disadvantage from other businesses across the State by prohibiting Boulder businesses from selling seeds.

There are currently licensed Boulder cultivation facilities breeding seeds that they can sell to dispensaries outside of Boulder, but cannot sell in their own stores.

Forces Boulder residents to leave the City to purchase their seeds, decreasing tax revenue for the City of Boulder.


5. Sale and Classification of Seeds Problems for Businesses & Consumers

We recommend that Boulder City allow for the sale of Seeds as permitted under State law.


5. Sale and Classification of Seeds Proposed Solutions

26Boulder City Ordinance numbers: 6-16-8 (p) (1) (c)

6. Confusion on the Meaning of “Branded Merchandise”Problems for businesses

These shirts were pulled from The Farms shelves by Boulder City

Police as “non-branded merchandise”.

While The Farms logo is identifiable, it was stated that since artistic designs and a different font

were used on these shirts, that they did not count as Farm-

branded merchandise.

27Boulder City Ordinance numbers: 6-16-8 (p) (1) (c)

6. Confusion on the Meaning of “Branded Merchandise”Proposed Solutions

We recommend that the City of Boulder align with State law and allow branded merchandise to be sold, and eliminate the confusion around the definition of Branded Merchandise and Logos.

Puts Boulder Businesses at a Competitive Disadvantage.

Dispensaries licensed outside Boulder are able to put coupons in Boulder publications.

City of Boulder coupon policies extend to showing Colorado Drivers Licenses and other forms of identification. This is inconsistent with the language of the regulation.

28Boulder City Ordinance numbers: 6-16-8 (p) (4) | 6-16-13 (a) (27)

7. Restrictions on CouponsNegative Effects on Boulder City

We recommend that Boulder remove restrictions on coupons and align with State law.

29Boulder City Ordinance numbers: 6-16-8 (p) (4) | 6-16-13 (a) (27)

7. Restrictions on CouponsProposed Solutions

The “Sunset Rule” on Conversions prohibits any existing Medical Marijuana Business from becoming a co-located Retail & Medical store after December 31st 2015.

30Boulder City Ordinance numbers: 6-16-3 (f), (g), & (h) | 6-16-4 (h) (1), (2), (3), & (4) | 6-16-2 “Co-Located Marijuana Business”

8. Sunset Rule on Conversions

Many centers do not have ability or finances currently to convert to co-located/physical separation.

This will likely create more marijuana facilities across the city, instead of reducing the number of facilities.

Limits ability of businesses to operate at their full potential, lowering the value of the business.


8. Sunset Rule on Conversions –Problems for Businesses

We recommend the City of Boulder remove the “Sunset Rule” on Conversions and allow Marijuana Businesses to apply for co-located licenses indefinitely, as permitted under State law.


8. Sunset Rule on Conversions –Proposed Solutions

We love Boulder.

We currently employ 96 people in our two stores, five grow facilities, and a kitchen. Most of them live in Boulder.

The Boulder City Marijuana Ordinance is incredibly restrictive & creates a severe business climate. Growing and/or restructuring our business under the current regulation is nearly impossible.

With the ever-changing regulations that exist, Boulder Marijuana Businesses are request the support of their City to survive and thrive.

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In Conclusion

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Thank you for your time and consideration!

Boulder Ordinance PowerPoint

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