Colorado Medical and Recreational Marijuana Laws and Licensing Procedures

Updated on November 11, 2020

Colorado has one of the most mature and established legal cannabis markets in the world. With the passing of Colorado Amendment 64 in 2014, Colorado became only the second state to ever establish an adult-use marijuana market — and in 2020, a handful of new laws are set to expand the industry even more.

As of January 1, 2020, the state is issuing licenses for marijuana hospitality establishments, which include dispensary tasting rooms, cannabis cafes, and designated consumption areas in hotels. Additionally, as of January 2, permits for medical marijuana delivery services are available, with retail (recreational) delivery permits slated to begin in 2021. Colorado cannabis companies are also benefiting from a new law that allows out-of-state capital investments.

In 2019, recreational sales in Colorado topped $1.4 billion — a 16% increase from 2018. Much of this growth has been attributed to new customers entering the market. Still, with more than 1,000 licensed retailers across the state, the competition in Colorado’s cannabis market is tough. In order to compete, retailers need to operate efficiently to reduce costs and differentiate their store from the rest of the pack. In addition to utilizing the right technology, dispensary owners need to provide a top-notch customer experience, sophisticated marketing and excellence in operations.

Cova is proud to provide state-of-the-art compliance solutions for cannabis businesses in Colorado so you can focus on growing your business. Our system is fully integrated with Metrc, the state’s seed-to-sale tracking system, and includes ID scanners, hardware integration with barcode scanners, purchase limit alerting, compliance labeling and tax recording.

While cannabis dispensary laws in Colorado are relatively well-established, changes still occur. We’ll keep this page updated with any new developments as they arise. This page is informational only and should not be considered legal advice.

Colorado Medical & Retail Cannabis Law

Colorado offers both medical and retail cannabis options for qualifying people. Here are the basics.

Both residents and non-residents can purchase retail cannabis in Colorado so long as they are at least 21 years of age and can produce proper identification.

Colorado still has a medical marijuana program that allows residents 18 years of age and older with a qualifying condition to apply for a medical marijuana card. Minors (under the age of 18) with a qualifying condition(s) can apply for a medical marijuana card with the approval of a parent or guardian (must be a Colorado resident) and a certification from two separate physicians.

Colorado residents 18 years or older, and minors with parents that are Colorado residents, may apply for a medical marijuana card. Minor patients must have two separate physician certifications to apply.

Applicants must have one of the following qualifying conditions:

  • Cancer
  • Glaucoma
  • HIV or AIDS
  • Cachexia
  • Persistent muscle spasms
  • Seizures
  • Severe nausea
  • Severe pain
  • PTSD

People 21 years of age or older can possess up to one ounce of marijuana or six plants (with only 3 mature or flowering). This one ounce possession limit for flower translates into eight grams of cannabis concentrate and 800 mg of cannabis edibles.

Retail Cannabis Licensing

Are you considering applying for a cannabis license in Colorado? Here’s what you need to know before you do.

The State Licensing Authority is in charge of the entire licensing process for all cannabis licenses. Once an operation is licensed and in business, the Marijuana Enforcement Division (MED) is responsible for overseeing compliance.

For a retail location, the license application cost is $4,500 plus $2,500 due to the local government (due at the time of application). Renewal of a retail dispensary license is $1,800 annually.

To apply for a medical-only dispensary, the combined application and licensing fee is $9,000 for up to 300 patients; $16,000 for 300-500 patients; or $22,000 for more than 500 patients.

All applications will include deep criminal and financial background checks. Each application must come with detailed and accurate floor plans of the potential retail operation. All owners, officers, managers and employees of a retail operation must be Colorado residents (owners must be residents for at least two years prior to application).

The State Licensing authority has 45-90 days to respond to an application after submission. Once the state licenses an entity, the licensee has one year to obtain approval and licensing from their local jurisdiction.

Because of the federal illegality of cannabis, many large banks refuse to do business with state-legal cannabis companies. The state of Colorado allows cannabis credit co-ops to exist to provide financial services to licensed cannabis companies in the state. These co-ops are only allowed to do business with licensed marijuana or industrial hemp operators. Cannabis credit co-ops are regulated by the State Commissioner of Financial Services, just like a regular credit union.

Retail Dispensary Laws

Retail dispensaries are heavily regulated. Here are the basics on dispensary requirements in Colorado.

Dispensaries in Colorado have a wide range of products they can sell, including flower, seeds, edibles, concentrates, tinctures and topicals. They cannot sell any product that contains nicotine or alcohol.

Both tourists and residents can now purchase up to 28 grams of cannabis flower (one ounce) in a single transaction. As mentioned above, new “marijuana equivalency” guidelines have been put into place listing eight grams of concentrates as equivalent to one ounce of flower and 800 mg of edibles equivalent to one ounce as well.

The “single transaction” language of the law is being updated after a major scandal that brought down one of the largest dispensary chains in Colorado. To avoid “looping” (multiple one ounce purchases by the same customer in a day), most dispensaries only sell one ounce per day, per customer cumulatively.

State law allows dispensaries to be open from 8:00 a.m. to midnight, but local jurisdictions can further limit those operating hours. For example, the city of Denver only allows dispensaries to be open until 10:00 p.m.

All retail cannabis locations must meet certain requirements regarding security and location. Generally speaking, no dispensary can exist within 1,000 feet of a school (but there are allowances for local governments to shrink that distance or allow exemptions for long-time dispensaries).

Every dispensary must also adhere to strict security and surveillance requirements. All stores must have a security alarm system and locks on all entry points and windows. These systems must be continually on and monitored. Any disturbance in the continuity must be reported to the MED. All video surveillance equipment and recordings must be kept safely stored in a limited access area (an area where only MED-badged employees can access).

There is a 10% sales tax and 15% excise tax on the sale of retail cannabis in Colorado. Plus, a 2.9% state sales tax and local government sales tax. These taxes do not apply to medical marijuana.

Yes, Colorado dispensaries can now offer cannabis delivery. For more information on rules and regulations, and how start your own delivery program, read our Cannabis Home Delivery blog.

Seed-to-Sale Tracking & Reporting Requirements

In order to keep the state’s system funded and safe from product diversion into the black market or underage sales, there are certain tracking and reporting requirements.

Yes, Colorado uses METRC for their seed-to-sale tracking system. All inventory reporting must ultimately come through this system, but third party solutions can integrate with METRC to make compliance easier.

All licensed dispensaries must have a valid METRC account and an assigned METRC administrator. This administrator will be responsible for all reporting and must attend and successfully complete METRC training.

From the time cannabis seeds are planted at a cultivation site to when they are ultimately sold to the final customer, they must be tracked using RFID (Radio Frequency Identification). RFID tags are like barcodes generated by the METRC system that must be attached to each plant as it makes its way through processing and sale. These RFID tags will be scanned whenever a plant or product is transported, damaged, destroyed or sold.

At the close of business each day, dispensaries must submit inventory reconciliation reports to METRC that account for any products sold, destroyed or in-transit and all taxes collected.

Records and books must be kept on site for six months after recording. After six months, these records can be stored securely off-site but must be kept for three calendar years after recording. Any loss of data is considered the fault of the licensee.

These records include:

  • Current employee lists
  • Secure facility information like video surveillance, security alarms, etc.
  • Advertising records, including audience composition data (more on this later)
  • Floor plans and diagrams of licensed premises
  • Visitor logs that keep track of any visitors accessing limited or restricted access areas

Yes, the state can require an audit by an independent accountant if records are not made available, the MED has reason to believe records are not accurate or if the dispensary in question has a prior compliance violation. All on-site records requested must be produced during normal business hours on demand. Off site records must be produced within three days.

The concept of looping gained infamy among Colorado cannabis retailers in December of 2017, when one of the largest dispensary chains in the state was shut down for engaging in this practice. Essentially, looping is an illegal practice used to get around Colorado’s transaction limits. A buyer will buy the transaction-maximum of one ounce, then loop around the block and come back in to buy another.

The easiest way to ensure you stay compliant at all times with cannabis sales limit regulations is by selection a POS system for your dispensary that automatically tracks purchases along with customer IDs. With Cova, budtenders are alerted whenever a repeat customer attempts to make a purchase, warning staff if they are about to make a sale that would put them out of compliance with sales limits -- quite literally blocking anyone from being able to loop through your dispensary.

Colorado Cannabis Packaging, Advertising & Marketing Laws

Learn about the strict packaging, advertising and marketing laws cannabis companies must follow in Colorado.

Each item sold must be packaged in a sealed, non-transparent container at the point of sale. So while flower can be bulk stored on the shelf and individually weighed, it must ultimately be placed in a non-transparent and sealed package.

All products must include the “! THC” label in clear view. All fonts on the labeling must be no smaller than 1/16th of an inch. Words like “candy” or “candies” are not allowed because they can be appealing to minors.

All labels must include serving size and total active THC information, a complete list of non-organic pesticides, fungicides and herbicides as well as lab testing information. Edibles must also have a list of ingredients and nutritional values, plus all required state warnings.

When a dispensary sells a product, they must include the product date and expiration date; harvest number and batch number; and the date of sale to the consumer.

The State Licensing Authority is responsible for monitoring and enforcing marijuana advertisement law.

No cannabis products, including those sold at medical marijuana-only dispensaries, can make any claims about curing or treating any illness or disorder. They cannot claim to be “safe” or organic. No language included can promote underage use or include visuals that would be appealing to minors (like a cartoon character).

Yes, but it is very limited. Whether it is print, television or radio, cannabis companies must be able to prove that 30% or less of the audience are minors and all content must be approved first. Marijuana advertisements in print are limited to media that is not distributed to an audience under 21 years of age or distributed in places where there are likely to be a minors.

No pop-up advertisements are allowed online for marijuana companies. And like traditional advertising sources, online marijuana advertisements must have an audience of no more than 30% minors.

No mobile advertising is allowed. The only way for a dispensary to advertise on mobile is to have their own native app that is restricted by age and location, where they can list specials and sales.

The state has loosened up restrictions on cannabis businesses and sponsored events. Cannabis companies are now able to sponsor events (like a charity golf tournament or sporting event). But that sponsorship cannot be advertised to underage people.

There is absolutely no allowance for Colorado cannabis companies to advertise out of state. That even includes cannabis-adjacent services like marijuana-friendly lodgings or tours.