Colorado Marijuana Regulation: Ensuring Safety & Compliance

1. Colorado Department of RevenueIntroduction to Marijuana Regulation Colorado.gov/revenue

2. History • First in the nation to legalize retail marijuana • Amendment 20 (2000) legalized medical marijuana for personal use by constitutional amendment • Medical Marijuana Enforcement Division was created via HB10-1284 (2010), which also created the regulatory structure for commercial businesses • Amendment 64 (2012) legalized retail marijuana for personal and commercial via constitutional amendment • First retail sales began on January 1, 2014 Colorado.Gov/Revenue 2

3. Marijuana Landscape in Colorado Colorado.Gov/Revenue 3

4. Why is it so complicated? • Illegal substance under Federal law • Cole memo priorities • No Federal oversight (FDA or EPA) • Innovative, dynamic industry • Lack of available science and research • Dual licenses required, both state and local Colorado.Gov/Revenue 4

5. MED Structure Colorado.Gov/Revenue 5

6. MED Regions & Field Offices Longmont: Northern Colorado Lakewood: Denver & Headquarters Grand Junction: Western Slope Colorado Springs: Southern Colorado Colorado.Gov/Revenue 6

7. Protecting Public Health and Safety Protecting public health and safety is always the number one state-wide priority. We do this by keeping marijuana: OUT of the hands ofMINORS OUT of the hands of CRIMINALS OUT of other JURISDICTIONS Colorado.Gov/Revenue 7

8. MED’s Regulatory Focus • Regulations result in marijuana that is: TRACKED,TAXED & TESTED Colorado.Gov/Revenue 8

9. Regulations: People An MED Occupational License/Badge is required for anyone working within Colorado’s marijuana industry, and must be displayed at all times. Colorado.Gov/Revenue 9

10. Occupational Licenses As of May 1, 2019, there are 41,376 active occupational licenses in Colorado. Colorado.Gov/Revenue 10

11. Regulations: Place Colorado.Gov/Revenue 11

12. Marijuana License Types • Marijuana Center/Store: Centers sell to registered patients, primary caregivers; Stores sell to individuals 21 years old or older • Optional Premises Cultivation/Cultivation Facility: grows and cultivates marijuana • Marijuana-Infused Products Manufacturer: manufactures infused products, such as edibles, concentrates • Marijuana Testing Facility: performs testing and research for licensees • Transporter: transports from one licensed business to another licensed business and can temporarily store transported marijuana • Operator: provides professional operational services to one or more Marijuana Establishments for direct remuneration from the Marijuana Establishment • Research & Development (medical only): allows the processing of marijuana for research purposes • Research & Development Cultivation (medical only): allows the production and processing of marijuana for research purposes Colorado.Gov/Revenue 12

13. Number of Licenses As of May 1, 2019, there are 2,952 licenses approved across the state. Colorado.Gov/Revenue 13

14. Regulation: Places Colorado.Gov/Revenue 14

15. Tracking from Seed to Sale • All marijuana is tracked from seed-to-sale in state’s inventory tracking system (METRC™), supports Colorado’s closed loop system • Every mature plant in a licensed cultivation must have an individual METRC™ RFID plant tag attached and information provided on the tag is then entered into the system for tracking purposes • Prior to transfer, all marijuana is packaged and assigned a RFID package tag, which tracks the marijuana to the point of sale or to a product manufacturing facility Colorado.Gov/Revenue 15

16. METRC™ RFID Technology Colorado.Gov/Revenue 16

17. Regulations: Products Colorado.Gov/Revenue 17

18. Packaging Requirements Colorado.Gov/Revenue 18

19. Universal Symbol Colorado.Gov/Revenue 19

20. Labeling Requirements • Putting only the most critical pieces of information on a label to prevent “white noise” effect. For example • Warning statements • Potency statement • Harvest/production batch numbers • Universal Symbol Colorado.Gov/Revenue 20

21. Testing – Plants AND Products • Marijuana testingincluding plants, concentrates and edibles: • Potency • Homogeneity • Pesticides • Contaminants • Residual Solvents • Microbial • Of note: • All marijuana testing labs must be ISO-accredited as of 1/1/19. • Labs may elect to go through process validation • MED aligns with Federal guidelines whenever possible Colorado.Gov/Revenue 21

22. Public Safety Priorities • Child-resistant packaging • Advertising • Enforcement / underage compliance checks • Edibles legislation • Production management/limits • Waste removal • Restrictions on purchase amounts (looping) • Restrictions on hours of operation • Consumption prohibited on anylicensed premises • 24 hour video surveillance requirements Colorado.Gov/Revenue 22

23. Sales, Revenue and Taxes Colorado.Gov/Revenue 23

24. Marijuana Sales (Calendar Year 2018) Colorado.Gov/Revenue 24

25. Marijuana Tax Revenue (Fiscal Year 2018) Colorado.Gov/Revenue 25

26. Marijuana Tax Structure Colorado.Gov/Revenue 26

27. What’s next for the marijuana industry? Colorado.Gov/Revenue 27

28. For more information… Department of Revenue’s 2018 annual report: www.colorado.gov/pacific/revenue/annual-report MED mid-year and annual updates: www.colorado.gov/pacific/enforcement/med-updates 2017 Market and Demand Study: www.colorado.gov/pacific/enforcement/marijuana-related-reports-studies Marijuana monthly sales reports: www.colorado.gov/pacific/revenue/colorado-marijuana-sales-reports Marijuana monthly tax revenue reports: www.colorado.gov/pacific/revenue/colorado-marijuana-tax-data Colorado.Gov/Revenue 28

29. Contact Us Visit the MED Contact Us page on our website: https://www.colorado.gov/pacific/enforcement/med-contact-us Colorado.Gov/Revenue 29

30. Thank you Colorado.Gov/Revenue 30