Colorado Launches New Social Equity Marijuana Business Licenses

Colorado Launches New Social Equity Marijuana Business Licenses

Colorado is on track to unveil new social equity cannabis business licenses in 2020 — the issue is who to award them to. The special license category was mandated by Senate Bill 224, and is reserved for use by low-income demographics only, providing an opportunity to potential business owners who may be unable to secure traditional funding or training opportunities.

According to Westword, the new licenses are intended to diversify Colorado’s cannabis market. When SB224 legislation was signed into law, it overhauled the state’s medical and adult-use marketplace rules and regulations. The unique program’s signature feature is that it will allow low-income entrepreneurs from specific low-income areas to partner with established cannabis businesses to research and produce their own products. Dispensary operations are off the table, but licensees under the program can participate in other industry opportunities, including cultivation, extraction and infused product manufacturing.

But that’s not to say there aren’t detractors. It remains to be seen what the relationship between new licensees and the endorsing business would look like. That includes things like privacy and liability agreements, consideration of any potential equity share and royalties — even equipment use — that’s still being discussed. Concerns about protecting intellectual property is another topic, especially in an industry where securing copyrights or patents is difficult.

Liability is another worry for cannabis business owners considering being hosts to new entrepreneurs under the new social equity program. Who is on the hook, liability-wise, if there’s mold on shared equipment that affects a canna-preneur?

State regulators and industry stakeholders met September 13 during a Marijuana Enforcement Division (MED) meeting and, according to Westword, discussed issues including how the state should vet potential host companies, how new license applicants should be scored and qualified, and how long the agreements between the host company and the new licensee should be. The final rulemaking hearing took place on September 20, and further legislation to update the licensing program and work through other relevant issues is anticipated.

About Brian Ellis

With 6 years' experience in business journalism, Brian is the person we turn to for anything related to the business of cannabis. His news coverage spans topics including marijuana business and finance. Brian's work features on, and