04.14.16 MAP Summary1
MARIJUANA ADVISORY PANEL
Thursday, April 14, 2016
Meeting Summary - Final
Attendance
Panelists: Jim Burack, Leisha Conners Bauer, Katie Friend, Heath Harmon, Bob Hoban, Travis Howard,
Alana Malone, Elizabeth Patterson, Bill Rigler, Teri Robnett, Jane Theodore, Kate Thomson
City Staff: Beverley Bookout, Mishawn Cook, Kathy Haddock, Kristen Huber, Sandra Llanes
Facilitation: Heather Bergman and Katie Waller
Next Steps
City Staff
Get internal criteria regarding key badge background checks from the State.
Provide licensees with the business manager background check criteria checklist
on the City website.
Limit on Number of Cultivation Facilities
At the last meeting, staff presented on this topic and the Panel discussed proposals. However, there were
no decisions made since the meeting was over WebEx due to inclement weather. Below is a summary of
the highlights of the secondary discussion.
There should not be limits because it encourages companies with larger operations to come in
and take over a larger portion of the marker.
Any changes to the square foot limitations will have to be approved by the Planning Board since it
is a zoning issue.
This is not an issue that greatly impacts public health or youth.
This conversation is hard to separate from square footage limitations.
This issue must be treated separately from square footage limitations because square footage is a
land use issue and must be dealt with through different processes.
It is beneficial for industry if the cap on the number of licenses is removed.
There are not many locations that can accommodate a larger grow facility, but this issue could
come up during annexation.
If annexation opens up more space, it is likely that those locations are already being used as
cultivation facilities.
Density is a more important issue than the number of cultivation facilities.
It could be detrimental to Boulder-based businesses to remove the cap on licenses because it
could allow larger chains to open many facilities.
Limits on licenses artificially increase the value of locations; lifting the cap on licenses will make
the market more realistic and lower the barriers to entry.
It would be more impactful to remove a cap on licenses than square footage because it is not
reliant on changes to the planning code.
The State links the number of cultivation licenses to the number of retail or medical sales
locations for which the facility is providing.
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Agreement
After discussing the above points, the Panel agreed to recommend to City Council that there should be no
caps on the number of cultivation facilities. This decision may be revisited if there are changes in density
regulations.
Square Footage Limitations on All types of MJ Businesses (Sales, Grows, & MIPs)
At the last meeting, staff presented on this topic and the Panel discussed proposals. However, there were
no decisions since the meeting was over WebEx due to inclement weather. Below is a summary of the
highlights of the secondary discussion.
It is unclear if the planning code would allow for the deconstruction of existing buildings to create
a singular, larger location.
This conversation is linked to the cap of cultivation and other facilities.
This problem impacts industry more than it does the community.
This must be dealt with separately from license limitations because it will have to go through the
Planning Board.
Removing square footage limitations would better accommodate industry.
Perhaps it would make sense to link license caps and square footage limitations.
It would make the most sense for businesses to be able to have one large location, rather than
multiple, smaller locations.
The Panel can decide at a later date what is the most efficient and impactful avenue to request a
change to the Planning Board.
The City can easily track business square footage of business locations through regular regulation.
Agreement
After discussing the above points, the Panel agreed to recommend to City Council that there should be no
limits on the square footage of cultivation facilities. This decision may be revisited if there are changes in
density regulations.
Transfer of Product or Plants
At the last meeting, staff presented on this topic and the Panel discussed proposals. However, there were
no decisions made since the meeting was over WebEx due to inclement weather. Below is a summary of
the highlights of the secondary discussion.
During the last discussion, everyone seemed to be in agreement that it would make the most
sense to remove all subsections from Boulder City Code 6-16-8.
All subsections should be removed in both the medical and recreational City codes.
This change would only apply to City licensees.
Removing the subsections will accommodate the transfer of product within Boulder, as well as
people transporting through Boulder.
Agreement
After discussing the above points, the Panel agreed to recommend to City Council to remove restrictions
related transfer of product or plants (that all subsections of City Code 6-16-8 should be removed) and the
same change should be applied to the medical regulations. This decision may be revisited if there are
changes in density regulations.
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Limits on MIP Ownership
Marijuana-infused products (MIP) ownership is currently limited to one facility, no larger than 15,000 ft2.
There are currently six licensed MIP facilities within the City, and they are all fairly small. Below are the
highlights of the Panel discussion regarding MIP ownership.
MIP owners are generally not concerned about the cap on ownership unless there is a change in
zoning or density regulations.
Some businesses could benefit from removing the cap, so they can have smaller processing
equipment attached to an existing facility without needing an entirely new MIP location.
All MIP licenses are issued for both medical and recreational production and cultivation.
Removing the cap would not pose a problem to public health or youth, as long as density remains
the same.
MIPs are not allowed in the same zoning areas as retail or medical stores.
MIPs and cultivation facilities are allowed in the same location, but each operation must have an
individual license.
MIPs have currently reached the density cap.
It is unnecessary to remove the square footage regulations attached to MIP licenses, as it does not
make fiscal sense to be using a building over 15,000 ft2 as a MIP facility.
Agreement
After discussing the above points, the Panel agreed to recommend to City Council that the existing cap on
the number of MIP ownership licenses should be removed. This decision may be revisited if there are
changes in density regulations.
Criteria for Backgrounds of Boulder Manager’s and Appeals Process
The State requires that all employees in the marijuana industry pass a background check. The City of
Boulder requires background checks for potential employees who will create or influence a culture of
compliance, including licensees, persons in charge, and financiers providing unsecured loans. Below is a
summary of the City’s presentation.
Someone who has been subjected to background checks must be on-site at all times at any
marijuana business location.
The City has had success with these background checks in identifying improper employees.
If any issues are brought to light through the background check or by the applicant themselves,
they are allowed to submit evidence of rehabilitation to show a positive pattern of behavior.
Evidence of rehabilitation is very broad and can include holding another professional license,
getting married, purchasing a house, and other impactful life events.
To complete City background checks, the City has created a checklist of criteria that is used to
assess all applicants.
The checklist of criteria is currently only used internally and is not available to the public,
although staff has no issue with posting it on the City website.
The City will ask for court documentation to prove resolution of court cases.
The City is not allowed to tell anyone other than the applicant why their application was not
approved; this confidentiality applies to the appeals process as well.
Crimes or moral turpitude are typically large offenses such as rape or murder.
Applicants who have been arrested but not convicted of a crime can show evidence that they
were not convicted or that they were released.
The City is mainly concerned about applicants who show a pattern of unlawful behavior or legal
issues associated with controlled substances.
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The City is also concerned about issues with law enforcement that indicate problems with
authority, such as interfering with an arrest.
Application denials are typically related to arrests and convictions associated with controlled
substances.
Staff will take into consideration whether or not the applicant self-disclosed any legal issues or if
the issues were brought to light through the background check.
The City is no longer concerned with misdemeanors after five years unless it is indicative of a
pattern of behavior.
No business manager on probation has ever been approved.
Individual business managers do not have the right to appeal a decision, but a licensee can appeal
the decision on behalf of a potential business manager.
If business managers are not approved, they can continue to work at the location, but they must
remain under the supervision of an approved business manager at all times; potential business
managers are also allowed to reapply.
The City does not reject applications based on records that are not available to them at the time of
the background check, such as juvenile records.
The background check is a Federal Bureau of Investigation (FBI) background check and looks at
criminal records nationwide.
The City and the State complete the same background checks for managers and key holders, but
the State does not review the results as thoroughly as the City.
Panel Discussion
Panelists discussed the issues associated with business manager’s background checks; below is a
summary of this discussion.
Making this checklist available to the public would be useful and would allow business to better
vet their potential employees before investing time and money into their background checks.
The City should thoroughly examine criminal records that include offenses that are now legal,
including selling a controlled substance.
Legal issues regarding controlled substances disproportionately impact minorities, especially as
it relates to convictions; the current background checks discourage minorities from advancing
into management positions.
Although the recent legalization of marijuana complicates previously illegal actions, business
managers approved by the City should have followed the law before marijuana was legal.
If potential business managers did not follow the law before legalization, it is possible that they
will not follow the proper laws after legalization.
The position title should be changed to no longer be called a manager, as this can create issues for
licensees.
While the standards are tougher than the State’s standards for a background check, they make
sense.
It does not make sense for someone who was exercising their First Amendment right and was
arrested to be denied the business manager status.
This issue tends to be a problem for business owners because the criteria seem to be ambiguous;
most issues surrounding background checks would no longer be relevant if the City were more
clear about the criteria for approval.
The criteria for passing the background check should be included in the City Code or regulation
language.
Including the criteria in the regulation language would not leave room for staff discretion.
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It is duplicative to have potential business managers have to pass the state’s manager background
check as well as a similar check from the City.
The definition of crimes of moral turpitude is always evolving and is hard to quantify.
Liquor store managers have a similar background check criteria.
It is important that youth are not denied an opportunity to learn and grow from their mistakes
and eventually take on managerial positions.
The issue of past offenses that are now legal will go away with time and is indicative of necessary
growing pains.
Committing a crime in the past does not make someone a bad person and does not mean that they
are not able to properly function as a business manager for a marijuana operation.
Boulder is a predominantly white community and the current background check criteria
disproportionately impact minorities.
City and State regulations should try to address the racial and class inequalities of drug-related
arrests and convictions.
Denial or approval of a business manager’s status is typically not based on one conviction or run-
in with law enforcement, but rather the totality of the criminal record.
Licensee legal liability regarding violations does not change regardless of if the employee has
committed a crime in the past or not.
If someone has passed the State’s key holder background check, that should be good enough for
the City of Boulder, and any checks above that standard are duplicative of City resources and do
not add additional value.
The State finds additional background checks on top of its own to be beneficial, as it allows local
governments to weigh community values.
The State weighs legal convictions as well as character; the character portion of the background
check allows for more subjectivity but is not invoked often.
It makes sense to get rid of all misdemeanors from the criteria list to lessen disparity and increase
equity.
Paraphernalia and minor possession charges should not be significantly considered in a
background check.
The City should have some flexibility in analyzing cannabis-related misdemeanors so that
applicants are not unfairly judged but do not show a negative pattern of behavior.
Removing misdemeanors from the criteria list could remove some disparity but could also cause
problems from a hiring perspective.
If the City is looking for patterns of behavior, it makes more sense to remove all misdemeanors
from the criteria list to be in line with the idea that people can change.
The City initially had to create strict rules because they were farther ahead in the process than the
State.
The State background checks for owners does not consider anything further back than five years
unless it is a drug-related felony, which goes back ten years.
It is unreasonable for felonies to keep potential employees out of management position for a long
time.
The State requires that applicants disclose all misdemeanors, but does not factor them into the
application approval.
To better understand this issue, it is important to understand what exactly the State uses to
complete and evaluate their background checks. (Staff will work to get internal criteria from the
State.)
Employees should not be denied the ability to advance based on past misdemeanors.
There are some misdemeanors that must be considered when evaluating the background checks.
Misdemeanors can range from a ticket to up to eight months in jail.
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Agreement
Given the above discussion points, panelists considered the following proposals:
Change the name of the position from “business manager” to “key holder.”
Remove all misdemeanors from the criteria list.
Remove all cannabis-related misdemeanors from the criteria list.
Move to state standard for background checks.
After discussing the above points, the Panel agreed to recommend to City Council to change the name of
the position from “business manager” to “key holder.” At the next meeting, the group will consider the
other three proposals regarding business managers background checks, but expressed that there was not
enough available information regarding the State’s process and criteria to make an informed decision.
30-Day Waiting Period for Manager’s Authority
The City requires a 30-day waiting period from when a business manager application is completed to
when a business manager can begin acting as a manager. Below are the highlights of the City’s
presentation regarding this topic.
This rule was created when there was a backlog of background checks to be completed.
Business managers are allowed to begin acting as managers on the 31st day after their application
was submitted.
This rule allows the City to have a head start regarding the background check process.
It is easier to prohibit managers from being hired in the first place rather than removing them
from the position later.
The City does not consider if the applicant has a state badge during the background check.
Since the City does not consider state badges in the business manager’s background check, there
is no available data showing how many people are not approved as business managers who
already possess a state badge.
Employees have a responsibility to self-report any indiscretions after their background check or
whenever they leave a business.
Panel Discussion
Panelists discussed the issues associated with the 30-day waiting period for business manager approval;
below is a summary of this discussion.
This rule makes it hard for licensees to manage multiple locations and has led to owners investing
significant time and resources into having more employees than necessary approved to be
business managers.
This rule costs business owners a significant amount of time and money and unnecessarily
increases the workload for city staff.
Almost all prospective business managers have already passed the State’s key holder background
check.
Most businesses would not hire someone who does not already have a state badge.
It would make more sense if business managers could temporarily serve as managers before their
entire background check is completed if they had their state key badge.
When a business manager quits, business operations become exponentially harder, especially for
licensees who have multiple locations.
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Agreements
The Panel agreed to wait for additional information from the State regarding their internal criteria and
background check process before making a decision regarding 30-day waiting period for manager
approval.
Prohibition on Transfer and Sale of Licenses
Currently, no city licenses are transferable except for liquor licenses. Liquor licenses are transferable due
to an overriding state law. Below are the highlights of the City’s presentation regarding this topic.
Licenses are not associated with property rights and have a limited ability for transfer.
Medical licenses can transfer between a buyer and a seller who are both licensed.
Grandfathered rules expire when there is a transfer in a residential or mixed-use zoning area.
MIPs are allowed a one-time transfer, a provision that was allowed when vertical integration was
ended.
Due to the restricted nature of license transfer, many licensees sell memberships or stocks in
their business; this is how most people come into an existing license.
Background checks are completed on any new licensee after transfer.
It is possible for the City to use the same process for recreational marijuana transfers as is already
used for medical marijuana transfers.
The City allows all product to be transferred along with licenses when it comes to medical
marijuana businesses; however, the State does assess this issue differently.
The State allows transfer of licenses and the purchase of inventory, but the City regulations only
allow for a transfer, not sale or purchase, of inventory.
License transfers do not impact density since the same zoning regulations still apply.
The City would be more exposed to litigation if it were to allow licenses to be associated with
property rights.
Liquor licenses are transferable, but the transfer includes all assets and liabilities associated with
that license.
Panel Discussion
Panelists discussed the issues associated with the prohibition on transfer and sale of licenses; below is a
summary of this discussion.
This issue greatly impacts business owners and licensees financially and could add significant
value to smaller businesses.
This prohibition has limited businesses from growing in a logical manner.
This prohibition has increased the number of cultivation facilities in the City, as many licensees
choose to build a new location rather than purchasing an existing operation.
Transfers of stock are not a feasible option for many licensees because adding more business
partners in such a regulated industry can be difficult and detrimental to operations.
Stock transfers have led to many marijuana-based businesses holding multiple companies to
protect assets from the liability associated with having many partners.
Business owners would like to be able to purchase assets associated with a license, including the
inventory.
No transfer within the City is official until it has been approved by the State.
Denver has extended their moratorium regarding this issue, while Boulder County allows
transfers, and Lafayette and Louisville defer to the State’s regulations.
The City could make a significant amount of money on the sales tax associated the purchase of a
license and its assets.
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Licenses should not be tied to one physical location so that the new licensee can move the
business at their discretion.
It is unclear how grandfathering would be impacted by the sale or transfer of licenses.
Grandfathering is currently only an issue with locations that are in violation of density or zoning
requirements.
Cultivation and MIP facility density was not regulated until after zoning regulations were in place.
Licensees should be able to purchase or sell physical inventory.
Grandfathering should remain the same regardless of the licensee associated with the license.
More data should be provided regarding this issue before the Panel recommends such a large
change to City licensing.
Allowing portable licenses and product would allow a more even and creative playing field for
Boulder-based business, and could even offer a competitive advantage over the rest of Colorado.
Agreements
After discussing the above points, the Panel agreed to recommend to City Council the following:
Allow sales of licenses, inventory, assets and infrastructure that are portable to other locations.
Allow transfers of licenses, inventory, assets and infrastructure that are portable to other
locations.
Allow licenses to retain grandfathered provision, but only if the license remains in the same
physical location.
Panelists are encouraged to think of additional innovative ideas regarding the transfer and sale of
marijuana licenses and products and present them to the Panel in the future. City staff committed to
exploring how these agreements could be implemented and coming back to the group for further
discussion if they anticipate any challenges or problems with implementation.
Public Comment
Shawn Coleman, a marijuana industry lobbyist, stated that most areas that would be considered for
annexation in Boulder County are already full of cultivation facilities. Regarding approval of business
managers, Boulder has the opportunity to serve as the rule maker of rationality in regards to social
justice. When people think of drug users, they think that they are inherently bad people. Mr. Coleman
explained that the discussed background check requirements are inherently stacked against those who
are disproportionately impacted by drug arrests and conviction – particularly black people. This panel
has an opportunity to change things and allow advancement opportunities for those who are typically
kept down. Being caught in possession of marijuana before it was legalized should never be compared to
crimes of moral turpitude, such as murder or rape. Mr. Coleman stated that the Panel needs to have a
better understanding of the State regulations, and it is making the decision-making process inefficient
and ineffective to have ill-informed citizen discussion. This Panel will not truly solve the core issues
unless the discussions are more informed.
Next Meeting
Panelists revised the work plan and will be discussing the following topics at the next meeting on April
28, 2016:
Zoning, separation, and density restrictions
Revisit criteria for background checks for Boulder Managers list
Discussion of the panel’s approach to its charge
Hours of operation
Sale of non-marijuana merchandise staff.
Additional planning issues (This discussion is dependent on the availability of Planning)