This email is being issued to inform licensees and other interested parties that the State Licensing Authority adopted emergency rules which amend license fees by 22% in order to restore them to pre-2017 levels. The adopted rules take effect July 1, 2021.
Background:
The Marijuana Enforcement Division’s operations are primarily fee funded and fees collected by the State Licensing Authority are transmitted to the Marijuana Cash Fund established in Section 44-10-801(1)(a), C.R.S. Further, Section 44-10-801, C.R.S., requires that the amount of fees collected reflect the actual direct and indirect costs of the State Licensing Authority in the administration of the Colorado Marijuana Code, 44-10-101, C.R.S., et seq. and that the State Licensing Authority review fees at least annually, and if necessary, adjust fees to reflect the direct and indirect costs.
In 2016, the State Licensing Authority initiated a rulemaking to reduce license fees by 22% to provide temporary relief to licensees and reduce uncommitted reserves pursuant to Section 44-10-801, C.R.S. These reduced fees have been in place since January 1, 2017.
The Division is currently facing a cash flow shortfall in the 2021-2022 fiscal year and is projecting a $3M – 3.5M negative cash fund balance by the end of FY 21-22. Current fees do not reflect the direct and indirect costs to administer the Colorado Marijuana Code. Further, the 22% reinstatement will not result in fees reflecting the actual direct and indirect costs. However, as one component to a larger financial management plan and as part of a necessary incremental measure, the State Licensing Authority adopted this emergency rule to reinstate the 22% reduction that became effective in 2017.
Further, on April 30, 2021, the State Licensing Authority initiated a permanent rulemaking pursuant to the Colorado Administrative Procedure Act, Section 24-4-103, C.R.S. The Division facilitated two virtual public meetings to present proposed rules and provide opportunities for public comment by interested parties, followed by a virtual public rule hearing held on June 4, 2021. The State Licensing Authority issued a Statement of Adoption on June 10, 2021 to implement this 22% fee reinstatement on a permanent basis, with an effective date of August 1, 2021. The adoption of this emergency rule is necessary to implement the reinstated fees effective July 1, 2021. The Division also completed a Cost-Benefit Analysis, which provides additional information regarding the Marijuana Cash Fund, anticipated impacts, and describes alternatives to this 22% restoration of license fees that were considered prior to the adoption of this emergency rule.
To highlight the critical nature of this emergency rulemaking, the Division informed stakeholders in public work group meetings and during its final rule hearing on June 4, 2021 of the expected necessity to adopt emergency rules on or before July 1, 2021.
Recognizing impacts on applicants and licensees, the Division values opportunities for stakeholder engagement, collaboration, and feedback. The Division is proud of and remains dedicated to collaborative approaches to its rulemaking and other initiatives. And as the Division prepares for its annual summer rulemaking session, we look forward to offering many opportunities for engagement to ensure permanent rule recommendations and process updates are informed by stakeholder feedback and dialogue.
Additional information regarding this rulemaking session and the Division’s rulemaking process can be found on the Division’s website.
Sincerely,
The Marijuana Enforcement Division
