August 2, 2010

Colorado Department of Revenue Holds Emergency Hearing on Monday

August 2, 2010
Medical Marijuana

The first rule-making hearing by the new Colorado Department of
Revenue Medical Marijuana Licensing Authority will take place on Monday at

“Emergency” Rule-making Hearing
Proposed Rule: Medical Marijuana State Licensing Authority Rule Regarding
Residency Requirements
Monday, August 2, 2010
10:00 am
Gaming Conference Room #110
1881 Pierce Street
Lakewood, CO 80214

Click here to read the proposed rule:

Public comment: This hearing is open to the public. However, the Department
of Revenue may try to deny the opportunity for the public to testify on
this new rule because it has declared the hearing an “emergency”.

*** What is the hearing about?
The hearing will address the issue of what constitutes a “resident” of the
state of Colorado. According to the new “Colorado Medical Marijuana Code”
(enacted as part of HB 10-1284), a person who applies for a dispensary
license must be a resident of Colorado for two years and all employees of a
dispensary must also be able to prove residency. HB 1284 neglected to give
a specific definition of what constitutes a resident, so the Department of
Revenue must now make a rule to clarify the issue.

The Department of Revenue wants the location of the person’s “primary home”
to determine their residency status.

*** Why is this an “Emergency” Hearing?
The rule-making hearing on Monday was called as an “emergency” hearing by
the Department of Revenue without any reason or explanation. By calling an
“emergency” hearing, the Department is able to bypass the standard
requirements for public comment and public notice on the proposed rules.

According to the State Administrative Procedure Act (APA), which governs
the rule-making process in Colorado, an agency is only allowed to call an
“emergency” hearing if the new rule is “imperatively necessary”. The APA
states that the agency must publish the reasons for calling the “emergency”
in the rule itself. Nothing in the rule published on the Department of
Revenue website gives a reason as to why normal public comment and notice
could not be accommodated. C.R.S. 24-4-103 (6)

*** Do dispensary employees have to be residents?
The Colorado Medical Marijuana Code 12-43.3-310 (6) requires all “owners,
officers, managers and employees” to be residents of the state of Colorado.
The proposed rule also states that employees must be residents. This is
contrary to what Senator Chris Romer (the main architect of the new law)
told reporter Michael Roberts of Westword recently. Senator Romer
reportedly said that people can work the front counter at a dispensary
without having to meet the residency requirements. Westword quotes Senator
Romer as saying, “I’ve talked to Representative Massey, and he and I are in
concurrence that it was the intent of the bill’s sponsors that the focus
would be on owners, or on managers and employees who have an equity
ownership stake — not on typical W-2 or 1099 employees.”

It looks like the Department of Revenue wants to ignore the legislative
intent, because the new rule contains no exemptions for any type of
employee. All employees must be residents.

*** What is exactly is “rule-making”?
Rule-making refers to the process that government agencies use to create, or
promulgate, regulations. In general, legislatures first set broad policy
mandates by passing statutes, then agencies create more detailed
regulations through rule-making. These “rules” or “regulations” must go
through a public comment period, including proper notice to the public.
Once they are promulgated, they have the same force as statutory law.

*** How will the Department of Revenue make rules to implement HB 10-1284?
Matt Cook, the head of the Colorado Department of Revenue’s Medical
Marijuana Enforcement Division (MMED), says the state plans to track
medical marijuana “from seed to sale”. As a former undercover drug agent
who was trained by the DEA, Cook has a good idea of what this will entail.
In a recent Washington Post article, he was quoted as saying, “We will use
a Web-based, 24-7 video surveillance system, and we will see virtually
everything from the time a seed goes into the ground to the time the plants
are harvested, cultivated, processed, packaged, stored.”

This means the Department of Revenue will likely have to promulgate
hundreds of pages of rules over the next year to enact HB 10-1284. Monday’s
hearing is the first in a long series of meetings. The fact that this first
hearing was called as an “emergency” with little public notice and with no
justification has medical cannabis activists worried that this is a
continuation of the pattern of state officials ignoring patient concerns.

The actions of a similar “emergency” public hearing called by the Colorado
Board of Health last November were overturned when a district court agreed
with an injunction filed by attorneys that this hearing did not meet the
requirements of the state’s Open Meetings Act and Administrative Procedures


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