Public Companies Can Now Own Cannabis Licenses in Colorado
By Charles Alovisetti, Jessica Scardina, Ben Leonard, Carl Werner, and Justin Johnson
Nov 18, 2019
On November 1, 2019, the law which changed the regulatory system and allowed public company investment into the Colorado cannabis industry, HB-1090 (here’s a summary of the statute), went live. Public companies are now permitted to own cannabis licenses in Colorado.
Here’s a brief list of what we’ve learned about this new system so far:
- Applications will be processed in the order they are received.
- Appointments for submission of applications is encouraged but not required. Appointments will likely be required for the submission of multiple applications.
- Closing large transactions with multiple licenses may be tricky (since a merger would require all licenses to change ownership at once, but approvals may not line up) and will require close work with the regulators. Considerations should also be made for the possibility that one or more licenses won’t be able to transfer at all due to various local restrictions.
- Forms for individuals and entities are now available online.
- It is possible to obtain a finding of suitability by the Marijuana Enforcement Division (MED) prior to submitting for a change of control of a license (note that these are two separate approvals needed to change ownership of a license). If a deal is being negotiated, it may be a good idea to submit for approval for suitability in advance. This will help reduce the time it takes to get regulatory approval to close a transaction. Any suitability application not submitted in advance must be submitted along with the change of control application.
- Most local jurisdictions (changes of ownership need to be approved by the MED and any applicable localities) have not yet updated their rules to conform to the new law. If a transaction involves licenses outside of Denver, it would be prudent to think through any local licensing issues in advance.
Please note that this is a brand-new system and it remains fluid. If you would like to schedule a meeting or telephone call to discuss these new regulations with an attorney in our office, please call 303-806-4501 or email firstname.lastname@example.org.