Colorado Legalizes Online Cannabis Sales

Colorado Gov. Jared Polis last week signed legislation to legalize online cannabis sales, ending the prohibition on internet shopping enacted following passage of the state’s landmark 2012 ballot measure that legalized adult-use cannabis. The measure, House Bill 1279, which was signed by the governor on June 1 after being passed by Colorado lawmakers last month, repeals a regulation that specifically prohibited online cannabis sales while establishing regulations for internet sales of licensed cannabis products.

Under the law, adults 21 and older will be able to shop for cannabis products and place orders online, although customers will be required to pick up their purchase in person. The legislation requires retailers to verify the name and age of online customers, who’ll be required to provide matching valid identification when the purchase is picked up. Cannabis retailers will also be required to furnish internet shoppers with “digital versions of all warning or educational materials that the retail marijuana store is required to post and provide on its licensed premises,” and consumers will have to “acknowledge receipt” of the materials before the transaction is completed online, according to a report.

Online Cannabis Sales Limit Cash Handling

While the bill was being considered by lawmakers in the Colorado legislature, Sen. Kevin Van Winkle (R-CO) said that the legislation would make cannabis retailers less reliant on cash to operate their businesses.

“What the bill mainly aims to do, from my perspective, is reduce cash in the marijuana space, which is something that’s exceedingly important to do because when there’s a tremendous amount of cash in any industry, it can lead to some troubling outcomes—specifically things such as robbery,” Van Winkle told his colleagues in the Colorado Senate last month. “It sets them up for a tremendous amount of potential theft and other things.”

Rep. Said Sharbini (D-CO), one of the sponsors of HB 1279, said that he hopes that the legislation will help advance Colorado’s legal cannabis industry.

“It’s to prevent a barrier for transactions; it’s to help businesses make sure that they can take these funds in so they’re not all cash businesses and that there are banks that are opening up to functions with them,” Sharbini said earlier this year. “Regulations are opening up across the country and we need to be competitive as well so this is a step in that direction to try and make sure that we can facilitate better business.”

Liz Zukowski, policy and public affairs manager for Native Roots, one of Colorado’s largest cannabis dispensary chains, notes that the state temporarily approved online shopping for cannabis products in 2020 as part of executive orders issued by Polis in response to the Covid-19 pandemic. The temporary authorization expired in 2021, and later that year, a bill that would have permanently authorized online cannabis sales failed to gain the approval of lawmakers, including some who were concerned that internet sales would increase access to cannabis by young people. However, the bill also contained provisions to allow telemedicine appointments for medical marijuana recommendations, which Zukowski believes made the legislation even less palatable to legislators.

“The online sales prohibition was put on hold, and we operated as a state with little to no incidents. That bill in 2021 was more than just online sales,” she told Westword as the bill was being considered in the Colorado state legislature. “It also had telemedicine as part of it, and I believe that was part of what got wrapped in the discussion. Telemedicine is not part of this bill.”

In addition to the safety issues surrounding cash sales at dispensaries, Zukowski also says that the bill permitting online cannabis sales will make shopping more convenient for consumers.

“The most obvious reason is that we’re in 2023, and customers want to be able to have access to e-commerce solutions. The cannabis industry has been held back from that,” she said. “And whatever we can do to lessen that reliance on cash would limit the risk of burglaries and robberies.”

Cannabis Industry Operates Largely In Cash

Supporters of the online sales bill note that the cash-dominant economy of the regulated cannabis industry continues because of the failure of Congress to pass the Secure and Fair Enforcement (SAFE) Banking Act or similar legislation that would allow banks to provide traditional business financial services to regulated cannabis companies. Under current federal regulations, providing cannabis businesses with financial products, including payroll and deposit accounts, credit card processing services and loans is subject to strict regulations. Because of the rules and onerous reporting requirements, most banking services are unavailable or costly for licensed businesses, and many financial institutions avoid serving the cannabis industry entirely.

In written testimony to the US Senate on the SAFE Banking Act, Paul Armentano, the deputy director of the National Organization for the Reform of Marijuana Laws (NORML), warned that the cash-only nature of the retail cannabis industry makes “businesses more susceptible to theft and more difficult to audit. It also places the safety and welfare of their customers at risk, as patrons must carry significant amounts of cash on their persons to make legal purchases at retail facilities. Similarly, it needlessly jeopardizes the safety of retail staffers, who are susceptible to robbery.”