Pubdate: Wed, 04 Dec 2013
Source: Denver Post (CO)
Copyright: 2013 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Authors: John Ingold and Eric Gorski
Page: 1A

PAPER JAM IN STATE'S PIPE

A Red-Tape Backlog Finds Stores Running Minus a Final License.

Nearly 100 Colorado medical marijuana businesses are operating without
a finalized state license, the remnants of a bureaucratic backlog now
stretching back more than three years.

In the language of the state Marijuana Enforcement Division, these
businesses are "operational pending." What that means is the
businesses are allowed to remain open-growing and selling marijuana -
while the state conducts its investigation and decides whether to
approve or deny the applications the businesses submitted in 2010.

The state has made tremendous progress in clearing its backlog of
pending applications - there were more than 900 of them a year ago-
and hopes to eliminate the backlog this month.

But the issue has gained new attention after major Drug Enforcement
Administration raids last month on medical-marijuana businesses in
Colorado, including several operating under pending applications. Of
the 96 pending applications for medical-marijuana stores, cultivation
facilities and makers of products listed in state records, at least a
dozen are tied to addresses raided or people targeted in the raids.

Any number of issues could be holding up the application process for
the businesses, said Julie Postlethwait, spokeswoman for the Marijuana
Enforcement Division. Investigators could need to run a background
check on a new owner, or an owner could be delinquent in paying taxes.
A dispensary could have been caught staying open past state-mandated
hours or could be under investigation for more significant
non-compliance with state rules.

Postlethwait said she could not confirm how many of the pending
applications are being scrutinized for serious problems, nor could she
confirm whether any businesses connected to the raids are among that
group.

"I would guess, if it's been this long since they have been licensed,
there is probably some issue that needs to be resolved," she said.
"What that issue was, I can't speak to."

Mike Elliott, executive director of the Medical Marijuana Industry
Group, said "operational pending" businesses still must obey the same
rules and submit to the same checks as fully licensed stores.

But the raid on several such businesses is a concern for law
enforcement officials, one of whom said state officials aren't doing a
good enough job of clearing the backlog.

"The state has never been able to deal with this in an effective way,"
said Thornton police Sgt. Jim Gerhardt of the North Metro Task Force.
"I think it's just another example of some of the flaws in the
infrastructure around this issue."

Marijuana industry advocates and others say the state has worked hard
to eliminate the backlog, which was a point of criticism in a scathing
audit of the division released earlier this year.

"It's clear to me that the Department of Revenue is working
diligently," said state Rep. Angela Williams, a Denver Democrat who
chairs the legislature's audit committee. "They have made progress."

The issue dates back to 2009, when hundreds of medical-marijuana
businesses opened under uncertain legal authority. Lawmakers in 2010
passed regulations legitimizing the medical-marijuana businesses but
also requiring them to be licensed. Businesses that were already open
were allowed to stay open while their applications were pending.

In March, a state auditor knocked the division for failing to process
applications in a timely manner. At the time that auditors examined
the issue, in October 2012, 40 percent of the business license
applications filed by an Aug. 1, 2010, deadline were still pending.

Of those 960 pending applications, regulators categorized nearly 120
of them as "problem applications."

Postlethwait said a change in how licenses are processed is the
biggest reason the division was able to whittle down the backlog. The
state previously had to wait until it had received verification of
local governmental approval of a license before passing final judgment
on a license. Lawmakers this year approved a change in state law
eliminating that hurdle, although businesses still must obtain a local
license.

The result has been a quick drop-off in pending applications. From 960
in October 2012, the numbers dropped to 759 in February and 496 in
May, according to Denver Post tallies.

There are currently 517 medical-marijuana dispensaries in Colorado,
plus another 140 makers of marijuana-infused products and 745
cultivation facilities. The state has denied 226 license applications
since regulation of medical pot began, and another 965 licenses have
been withdrawn, Postlethwait said.

Dispensaries operating with pending applications are eligible to apply
for recreational pot-shop licenses as long as either they are "in good
standing" or their applications have not been flagged as problems,
Postlethwait said.

That concerns Kevin Merrill, assistant special agent in charge of the
Drug Enforcement Administration's Denver field division.

"How do you know if someone is in good standing if you haven't given
them a license and done frequent audits to determine whether they are
in good standing?" he said.

Elliott said a number of his group's members have received their
licenses in recent months and credited increased resources at the
Marijuana Enforcement Division with making the licensing process run
much smoother. Those still stuck in the backlog, Elliott said, are
probably there for a reason.

"Those outstanding licenses, I imagine, are outstanding because some
issue has come up," he said.
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MAP posted-by: Matt