As cannabis businesses close in Colorado, licensing fees are likely to increase

Colorado's cannabis businesses could soon see higher licensing fees as state regulators deal with their first cannabis cash shortage.

Created to oversee and regulate the state's medical and recreational cannabis industries, the Colorado Marijuana Enforcement Division (MED) does receive some operational money from the state legislature, but the majority of its funding comes from licensing fees and fines on dispensaries, growing operations, and other legal cannabis businesses. As Colorado's cannabis industry suffers through a recession and more businesses shut down or leave the state, however, the MED is running out of money.

During the first two years of recreational cannabis regulation, the MED received $7.5 million in annual funding from state tax revenue and then another $10 million in 2018 from the state legislature; since then, it's collected anywhere from $11 million to $15 million per year in fines and licensing fees. With inflation and government salaries increasing over the past seven years, though, Colorado Department of Revenue Executive Director Mark Ferrandino believes it's time for cannabis businesses to pay more for licensing.

"We had a large fund balance, but now we're in a negative position, which is not sustainable for the division," Ferrandino told a meeting of cannabis business owners and industry stakeholders on June 5. "The two options are decreased expenses or increased revenue. The third option is to go to the legislature and ask for something different, and we did try that."

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