Given all the excitement and anticipation regarding the implementation of HB-1090, the Marijuana Enforcement Division (the “MED”) recently posted a rough timeline on the subject in an attempt to manage expectations for stakeholders and prospective investors.
Many people are excited by the new framework for ownership and investment that HB19-1090 represents, however it is important to note that it also presents a new (and likely arduous) framework for disclosure, reporting, and background vetting of marijuana businesses and their investors. The MED cautioned excited industry participants by stating that “HB19-1090’s passage was only the first of many steps necessary to implement this new framework. In addition to approval by the legislature and Governor, there are numerous additional steps necessary to fully implement the changes in HB19-1090. Such steps include emergency and permanent rulemaking and updates to the Division’s processes, programing, forms, budget, and staff.”
The MED went on to lay out how things would progress and to provide guidance for Licensees in the interim. Rulemaking groups will meet in early August to begin promulgating the emergency rules. The emergency rules will repeal the existing rules that cannot be reconciled with HB-1090.
While the division is conducting their emergency rulemaking, the MED has warned Licenses that they are prohibited from entering into a transaction that requires an application or mandatory disclosure under HB19-1090 (this is really important everyone!). They also cannot enter into a transaction that requires findings of suitability or any transaction involving a publicly traded company. If any of the before-mentioned transactions require an application, they can be submitted starting November 1, 2019.
Licensees are permitted to complete transactions with Indirect Financial Interest Holders and Passive Beneficial Owners that do not involve Publicly Traded Corporations or require disclosure, a finding of suitability, or an application.
The Indirect Financial Interest Holders and Passive Beneficial Owners that are subject to mandatory disclosures include: a person holding two or more indirect financial interests, an Indirect Financial Interest Holder contributing 50% to the license’s operating capital or a person that is both an Indirect Financial Interest Holder and a Passive Beneficial holder. Anyone who fits that criteria should disclose that by email to DOR_MEDInformation@state.co.us and use the headline “HB19-1090”. In the email you must disclose the person’s name, date of birth, copies of agreements and any other documents that describe the transaction with indirect Financial Interests and/or Passive Beneficial Owners. If it is an entity that needs to be disclosed, the email must describe the name, address and date of birth of its managers and 10% and greater Beneficial Owners.