Jan 14, 2014 3:42 PM by David Randall

Marijuana loophole in Colorado under scrutiny

Now that anyone who qualifies can open a retail pot shop in Colorado, state lawmakers will consider whether they should put limits on certain medical marijuana providers to close a potentially expensive legal loophole.

Colorado's chief medical officer and the head of the agency that regulates marijuana businesses asked a panel of legislators Tuesday to take a new look at laws that regulate licensed caregivers who provide pot to people on the medical registry.

Caregivers can sell pot to medical patients at the 2.9 percent tax rate, while recreational pot has a 25 percent state tax, in addition to local taxes.

Opponents of the current law say some caregivers have large operations and are essentially retailers skirting proper oversight.

Medical marijuana advocates, however, say that a change in the law would be premature and could cause already shrinking supplies of the drug to dwindle further.

There are about 5,000 registered caregivers in the state who don't face the extensive background checks or fees required of those who grow or sell pot commercially.

Caregivers are required only to be 18 or older and have "significant responsibility for managing the well-being of a patient who has a debilitating medical condition."

The model was part of Colorado's 2000 adoption of a medical marijuana system. The 2012 expansion of marijuana access to all adults 21 and older - not just sick people - left the medical marijuana registry and the caregiver model in place.

There are no limits on caregivers' profits. The state currently sets a five-patient cap, but caregivers can seek waivers for more. And because some patients have authorization for high numbers of pot plants, a handful of caregivers have significant growing operations.

Colorado lawmakers now will consider giving caregivers a hard limit of five patients, plus themselves, and a maximum of 30 plants.

The state's top medical officer, Dr. Larry Wolk, said high-volume marijuana caregivers are violating the spirit of the law.

"I am fairly certain that doesn't meet the definition of a caregiver," Wolk said.

The head of the Department of Revenue, which regulates marijuana businesses, sided with Wolk.

Barbara Brohl asked lawmakers to step in and require high-volume marijuana caregivers to submit to the same scrutiny required of commercial growers. That includes background checks, daily tracking of marijuana inventory and 15 percent state excise taxes.

"They should then apply to the Department and go through the same process that any other marijuana business would do," Brohl said.

The Legislative Audit Committee, a bipartisan panel of lawmakers, voted 6-1 to have a bill drafted to limit marijuana caregivers. The full Legislature would consider the idea later this year.

Wolk said it's too soon to know whether Coloradans are fleeing to the medical marijuana registry, as some predicted.

It also is unclear what chances the bill would have of passing.

In addition to the higher tax rate on retail marijuana, high permitting and licensing fees have further driven up the price of Colorado pot.

Some Colorado marijuana shops are selling high-end marijuana for as much as $400 an ounce before taxes - about double what it cost before recreational retail sales opened Jan. 1.

Patient advocates have complained about the marijuana price spike and supply problems.

Colorado's recreational pot inventory has come entirely from the state's pre-existing medical marijuana inventory, leaving some patients who don't grow pot at home paying higher prices until new plants mature.

"I'm in tears over the whole thing. People can't get their medicine and others are making millions of dollars," said Laura Kriho of the Cannabis Therapy Institute.

Kriho said there's no problem with high-volume caregivers and that Colorado officials are more worried about tax evasion than the sick people on the medical marijuana registry.

"The state of Colorado's interest is not in the health of the patients, it's in the money. And that's disgusting," she said.

The Audit Committee had little to say about the performance of the state's Marijuana Enforcement Division, which has been excoriated in previous audits for sloppy accounting and administrative backlogs.

The division says it has corrected the problems, which included long permitting delays. Colorado's 2012 ballot measure on marijuana required retail shops to open Jan. 1, 2014, and several dozen did open without serious problems.

"We are on the right track" clearing permitting backlogs and getting shops open, Brohl said.


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