Medical Marijuana Enforcement Division cuts out middle man in legal cannabis sales

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Getting a commission for setting up a transaction is completely legal in any number of legitimate industries, including stock trading, real estate and auto sales. So why not for medical marijuana? Because if we've learned one thing over the past several years in Colorado, it's that medical marijuana doesn't work like any other industry, for no reason whatsoever. That's why.

An interesting back-and-forth was posted September 20 on the state Medical Marijuana Enforcement Division website's Laws and Regulations page.

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Sean McAllister.
It seems that back in June, attorney Sean McAllister petitioned MMED to clarify wholesale cannabis rules on behalf of his clients. His query focused on state regulations that require a medical marijuana business to disclose all direct and indirect financial assistance that it receives; McAllister argues that the law's language isn't clear regarding whether brokering a deal between two centers would be considered "financial assistance."

In fact, he says, it's not clear whether a person is allowed to broker a transaction between two MMJ businesses at all, much less whether he or she is entitled to a percentage of the sale -- and whether it has to be reported to the MMED.

MMED director Laura Harris finally responded to McAllister's petition on September 20. According to her, medical marijuana center owners are only allowed to make money from transactions related to the medical marijuana centers in which they have an ownership interest.

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Laura Harris.
"The [state law] not only mandates that the State Licensing Authority require a 'complete disclosure of all persons having a direct or indirect financial interest' in each license issued, but it also prohibits individuals from having an unreported financial interest in a license," Harris wrote. "The [MMED] believe a commission in this instance would constitute an indirect financial interest in another licensee's license, and such activity is not allowed."

This interpretation would also indicate that individuals without a direct-ownership interest in a medical marijuana center are not allowed to broker any transactions, because, according to Harris's reading of the law, you must be an owner to buy or sell wholesale cannabis in Colorado.

More from our Marijuana archive: "Marijuana: Vets group supporting Amendment 64 after health department's PTSD non-ruling."

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9 comments
Not-DonK
Not-DonK

Bend over and get ready to be screwed even more if A64 passes and the MMCED pot clowns get constitutional authority to screw with all cannabis users in the state.

 

Buck Dich!!!!

COlady
COlady

there is much more meat to this than the story would convey.... start applying the Directors own support of her position in her "Division Analysis" specifically: "Any activity not explicitly allowed by the code is not Authorized." ** to the MMED's current contradictory activities across the board...

in the commisions section MMED writes... "The Code clarifies that a licensee is granted privileges to sell, manufacture, or cultivate medical marijuana on its licensed premises. See CRS 12-43.3-310(8) (a). Privileges are Specific to the licensed location and entity holding the license, and it is specifically prohibited that any other person not holding the license exercise those privileges. Id " *

 * this passage and the MMED advisory panel discussions about it, has always been my foundation for my beliefs that transport services, brokers, and trim crews were illegal, (also Note Mr Cook and Mr Hartman did not sign off on such vendor Licenses, but Ms Harris, did in fact sign off on them, and she has later publicly admitted at an NCIA (recreational use oriented group) event that she is aware that she has no statutory basis to do so.** see above: division analysis re activity not specifically authorized in the code.) 

Yet the MMED's own website defines Vendor license thusly... "All businesses that work within the Medical Marijuana Industry providing services to industry members and whose employees commonly work within restricted areas of the MM business or take custody of Medical Marijuana products for transportation – example of such businesses would be trim crews that travel from facility to facility to harvest Medical Marijuana crops or couriers that transport Medical Marijuana from facility to facility. This application include the cost of one Key Occupational License for the individual that takes responsibility of the action of the registered business (this includes a background check on that individual). All employees of the vendor that will be working within the Medical Marijuana industry must also obtain an occupational license"This is per MMED, specifically not per 1284, 1043 etc... I see a direct conflict with the division's position statement here, and this needs to be fixed legislatively instead of interpretively.... 

The key sentence in the Division's position is: "Said Owner is not authorized to receive ANY(my emphasis) pecuniary gain, Such as Monetary commission, from transactions related to operations in which he or she does not hold and ownership interest, the disclosure of which is otherwise required pursuant to article 43.3 of title 12. "

#1. How does this apply to licensed Vendors who transport medicine? they get paid a fee to deliver meds they have no statutory authority to handle, and have no ownership or employment with the company they deliver for...

 #2. How does this apply to the slew of "vendor licensed" edibles wholesale brokerage groups, which again have neither statutory authority nor legal ownership over the companies they distribute products on behalf of? 

#3 How does this one sentence apply to Vendors in general, since they are not "Said Owners"? ( I feel this goes back to what I have repeatedly said that  Vendors cannot be middlemen on any transactions where they gain by being party to any sale or handling of Meds. Vendors are intended to be complimentary businesses who are paid by the MMJ business owner for services rendered on the property or equipment of a legal MMJ business, period.)  ** again please see above division analysis re activity not specifically authorized in the code. 

Ms Harris continues... " The Code not only mandates that the State Licensing Authority require a "complete disclosure of all persons having a direct or indirect financial interest" in each licensed(sic) issued, but it also prohibits individuals from having an unreported financial interest in a license.* CRS.... Assuming for the sake of this analysis, a licensee could broker a wholesale transaction outside the confines of Section 12-43.3-402(4) the code does not explicitly allow said licensee to receive a commission for brokering such a transaction. The division believes a commission in this instance would constitute an indirect financial interest in another licensee's license, and such activity is not allowed.*Thus even a licensed medical marijuana center owner is PROHIBITED from receiving a commission. ie, holding an unreported financial interest, in another licensee's license* The division believes neither wholesale transactions nor commissions from brokering activity between two other Licensees is Authorized pursuant to the Code."    

* What the fuck? So does all this apply to Vendors and Wholesale Brokerage services too, per the above statement about privileges, or not.... the MMED cant issue licenses for one type of entity (which it has already done) in direct conflict with the division's own analysis against that type of transaction on this issue** again please see above division analysis re activity not specifically authorized in the code. 

coloradommjpatient
coloradommjpatient

What a mess.  This will all be moot if Romney gets in office...

cannapages
cannapages

Whether or not they say it, brokering happens every day behind closed doors. The more legitimate brokers claim their operations are about 'relationships' and 'connections' rather than a 'service' and sell memberships to clubs, etc. The others are typically hustlers who have connections in both the medical sphere and the underground. A lot of dispensaries used to sign their transportation manifests in blood. Now it's obvious that the system still hasn't been built to accommodate such a massive amount of constant data. The brokers know there are loopholes.

   Were this any other sort of agricultural operation, each stage of production would have a separate entity/authority governing its standards and procedures. Cannabis is a young industry, and brokers/dealers/crooks will eventually be put out of business. Perhaps legalization is the fastest way to accomplish that.

RobertChase
RobertChase topcommenter

The State system is a travesty, and between the General Assembly and the courts, the need to go beyond Amendment 20 to protect caregivers and patients' rights (as opposed to entrepeneurs) is clear.  While Amendment 64 does not pertain to medical cannabis and would not address the problem identified here either, it affirms that every adult may legally grow up to six plants, carry an ounce, and transfer it without remuneration, which should help protect caregivers and patients by swelling the number of people entitled to grow some cannabis more than tenfold.  We need to pass Amendment 64 and immediately set to work rescinding criminal penalties associated with cannabis -- there is no point to continuing to obsess about the State's unconstitutional de-medicalization of medical cannabis, and Harris' interpretation of HB10-1284 is consistent with not further commoditizing an enterprise which in permitting profit at all is explicitly deemed (by the Feds) to be not in compliance with state medical cannabis laws, according to the Ogden Memorandum.

 

It is good that dispensaries continue to do business in Colorado, and the sooner we are able to free the retail sale of cannabis to patients from the ridiculous encumbrances of Romer and his cronies, the better, but the focus of our efforts must clearly be elsewhere than on the morass created by the Establishment in its counterrevolution against Article XVIII, Section 14 of the Constitution, if we expect to make forward progress.  That counterrevolution and our continued political prostration and disorganization means that the General Assembly will likely continue to be dominated by prohibitionist fascists, so our only hope lies is the intitative process.  If the few proponents of stronger challenges to Prohibition than Amendment 64 who oppose it were to find common ground with somebody with money, (or, for a start, anyone outside their tiny band), and were we all to organize within the state together, we could run a successful initiative soon, possibly by 2014, but getting a petition proof approved by the Secretary of State is a very long way indeed from making it onto the ballot, and getting onto the ballot will not itself commend such a measure to the 80%+ of the electorate that does not use cannabis or guarantee victory.  When half the people you meet on the streets of Denver think that cannabis already is legal in Colorado, and most of the rest want to keep it as illegal as possible, we have an uphill battle to effect change.  Voting for Amendment 64 is what we can do in the near term, and one thing I share with its pro-cannabis opponents is the understanding that the fight to end Prohibition even in Colorado will not be over with its passage.

WaywardBill
WaywardBill

Regulate, Regulate, Dance To The Music...Don't you just love HB 1284 and MMED's interpetation of it and their rules. Yeah right!

Peace, Pot, Politics,

Wayward Bill Chengelis

Chairman, US Marijuana Party

common_sense
common_sense

Every time a lawyer asks for "clarification" a new response comes out knocking down the original petition item, and incidentally many things not related to it, that end up screwing workers over.. ie clones counting against plant numbers. Getting tired of these lawyers asking for clarification and in result finding we are screwed in 5 other areas that need immediate attention.

michael.roberts
michael.roberts moderator editortopcommenter

 @COlady A huge amount of information, COlady. Thanks for sharing it with us.

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