How to Get a Cannabis License in Colorado?

Among other US states, Colorado has been at the forefront of rapid Cannabis legalization and has the second-largest Cannabis industry in the country.

This offers several job opportunities to the residents of the state and business prospects for entrepreneurs and business owners. However, the real challenge is obtaining a cannabis license, which is both a complex and demanding process.

This article offers a comprehensive guide to help you understand the requirements and procedures to successfully acquire a Colorado cannabis license. So, let’s get going!

Cannabis License Regulations in Colorado

Colorado first legalized cannabis for medical use in December 2000 and later amended it to legalize adult use in December 2012. Since then, the industry has witnessed perpetual growth, with the introduction of new laws and regulations to facilitate the consumption and distribution of marijuana throughout the state.

In 2020, the state’s sales surged past $2 billion for both medical and adult-use cannabis, which resulted in a total of $9.8 billion since January 2014. Despite the rapid sales, the medical and retail marijuana industries in Colorado are intensively regulated by the Marijuana Enforcement Division.

Cannabis businesses in Colorado must seek the appropriate licenses granted by MED to begin operating within the industry. In addition, they must be licensed by both state and their respective local jurisdiction before commencing operations. Moreover, a separate license is needed for different geographical locations.

As of 2023, there are over 2,700 cannabis licenses in Colorado, and the state does not cap the number of licenses granted. The different types of these licenses include:

• Cultivation
• Manufacturing
• Testing
• Research and Development
• Retail/Dispensary
• Hospitality
• Transporter
• Delivery
• Operator

How to Obtain a Cannabis License in Colorado?

Obtaining a cannabis license in Colorado comes with its fair share of challenges, but following the right steps makes the process hassle-free. Here are the necessary steps involved in the process:

Note: These steps may vary depending on your license type, so make sure to check with the MED beforehand. 

Research and Prepare

When obtaining your cannabis license, the first, most crucial step is to prepare yourself. Do thorough research and understand each step and the requirements of the application process. Remember to have a thorough understanding of eligibility requirements and regulations.

Then, check whether your local jurisdiction allows the operation of medical and/or retail cannabis businesses within its premises.

MED does not proceed with your license application until your local authority permits it.

Hence, before moving ahead, ensure that you comply with the specific requirements of the local jurisdiction and meet the eligibility criteria from Colorado Cannabis’s official site.

Note: local regulations for retail marijuana licenses may be stricter than state-level regulations.

Develop a Solid Business Plan

The next step after understanding the requirements of your cannabis business is to craft a comprehensive business plan. A solid business plan includes:

• Purpose and description of your business
• Thorough market analysis
• A well-designed market strategy
• Operating Agreement
• Organizational Structure
• Financial Plan
• Security measures

Note: If you are new to the industry, it is highly recommended to seek professional assistance to curate a business plan that complies with the specific requirements. 

Assemble the Necessary Documentation

Once you have developed a rigid business plan, the following step is to gather the documents needed to acquire your license. Keep in mind that your documentation requirement may vary depending on the type of license.

Here’s a list of the general documents you need for a Colorado Cannabis License Application:

• Proof of compliance with local zoning regulations
• An organizational chart
• Certificate of good standing from the jurisdiction
• Identity and ownership percentage of all chief business officers
• Facility Diagrams
• Tax Documents
• Local jurisdiction permits
• Proof of Possession of Licensed Property
• Copy of any contracts
• Management Agreements

For a full list of documents required to obtain your license, check out the official application checklist.

Submitting the Application

After gathering all the necessary documents, you can go ahead with filling out and submitting your application for a Colorado Cannabis License.

You have multiple options to submit your application: digital, mail, or in-person. Select the method that suits you best. Additionally, the MED offers three licensing systems, so ensure you go for the one that corresponds to your specific license type.

If you wish to mail your application, check out the MED website for the mailing address. For an in-person submission, schedule an appointment beforehand. In case you wish to submit your applications electronically, sign up with the Colorado Department of Revenue to proceed.

Since the application process is long, ensure you complete each part of your application and double-check whether the information is accurate.

Note: the MED does not complete its intake of your application unless you have cleared the application fee. 

Application Fee

Once you have filled in the necessary details and uploaded the documents, it’s time to pay your application fee.

There are two types of application fees for obtaining your cannabis license.

1. Medical Marijuana Business Fee
2. Retail Marijuana Business Fee 

The specific fee you need to pay depends on the type of license you are applying for. Here’s a list of different types of licenses and their fees:

1. Marijuana Store

• Medical: $5,000.00
• Retail: $5,000.00

2. Marijuana Products Manufacturer

• Medical: $1,000.00
• Retail: $5,000.00

3. Marijuana Cultivation Facility

• Medical: $1,000.00 [Class 1 (1-500 plants)]
• Retail: $5,000.00 [Tier 1 (1-1,800 plants)]

4. Marijuana Testing Facility

• Medical: $1,000.00
• Retail: $1,000.00

5. Marijuana Transporter

• Medical: $1,000.00
• Retail: $1,000.00

6. Marijuana Business Operator

• Medical: $1,000.00
• Retail: $1,000.00

7. Marijuana Research and Development Facility

• Medical: $1,000.00 (for medical marijuana businesses only)

8. Marijuana Hospitality Business

• Retail: $1,000.00 (for retail marijuana businesses only)

9. Retail Marijuana Hospitality and Sales Business

• Retail: $5,000.00 (for retail marijuana businesses only)

Application Review and Compliance Inspection

Once your application is submitted, the MED thoroughly checks your application to ensure it complies with Colorado Revised Statutes and MED rules before approving your license request. During this phase, you might have to submit some additional supporting documents or information about your application.

Typically, the MED takes about 45-90 days to respond to your application. During the approval stage, they conduct rigorous background checks, including reviewing criminal records, financial history, and any violations of regulations in the past.

Colorado does not accept the licenses of applicants with criminal backgrounds or fraud. Moreover, the state disqualifies individuals who have been subject to or discharged from felony convictions within three years prior to submitting the application.

It’s essential to note that the MED does not proceed with incomplete applications. In such cases, the applicants need to collect the application (and the fee) before the subsequent business day and refile it.

To successfully pass through the compliance inspections, make sure you have a thorough understanding of the state and county’s cannabis regulations and that your business strictly adheres to them.

Expert Tip: To pass the inspections, conduct regular compliance audits to rectify all the mistakes or non-compliance areas within your application. Try to establish continuous communication with the licensing authorities to save yourself from future inconveniences. 

Receiving the Final Application

Once your application is properly evaluated, the MED makes its final decision to issue or deny your cannabis license. If your application is approved, you’ll receive your long-awaited cannabis license.

However, before the license is granted, it is required to pay the annual license fee. Once all the due fees are paid, you can start off your business operations smoothly!

Remaining Compliant with Colorado Regulations

Remaining compliant with state regulations and license requirements is extremely important, even after your license is approved. If you fail to adhere to these regulations, it may result in non-renewal, suspension, or revocation of your license.

While these regulations may change over time, here are the general compliance measures to keep in mind while operating your cannabis business in Colorado:

• Fraud, misinformation, or a false statement in your license application may result in revocation of your license.
• Compliance with city, state, and federal law or regulations and strict conformity to Amendment 20 during the sale and distribution of Marijuana.
• Violation of terms and conditions may result in revocation or suspension of your license.
• Timely correct any violation of laws, and comply with any order to correct the violation of any law within the given time frame in the notice.

Note: Keep track of any regulatory changes or updates in state’s cannabis regulations by referring to section 5.44.200 of Medical Marijuana Establishment Regulations and Licensing.

Final Thoughts

Obtaining a cannabis license in Colorado is not an evening stroll, and requires diligent groundwork, strict compliance with laws, and a comprehensive understanding of the licensing procedure.

By following the steps discussed in this article, you can easily navigate the intricacies and be well on your way to acquire a cannabis license in no time!