1. Home
  2. Colorado Regulations
  3. R 103 – Definitions

R 103 – Definitions

A

Advertising

“Advertising” means the act of providing consideration for the publication, dissemination, solicitation, or circulation, of visual, oral, or written communication, to induce directly or indirectly any Person to patronize a particular Retail Marijuana Establishment, or to purchase particular Retail Marijuana, Retail Marijuana Concentrate, or a Retail Marijuana Product. “Advertising” includes marketing, but does not include packaging and labeling. “Advertising” proposes a commercial transaction or otherwise constitutes commercial speech.

Additive

“Additive” means any substance added to Retail Marijuana Product that is not a common baking or cooking item.

Affiliated Interest

“Affiliated Interest” means any Business Interest related to a Retail Marijuana Establishment that does not rise to the level of a Financial Interest in a Retail Marijuana Establishment license. An Affiliated Interest may include, but shall not be limited to, an Indirect Beneficial Interest Owner that is not a Financial Interest, an indirect financial interest, a lease agreement, secured or unsecured loan, or security interest in fixtures or equipment with a direct nexus to the cultivation, manufacture, Transfer, transportation, or testing of Retail Marijuana, Retail Marijuana Concentrate, or Retail Marijuana Products. Except as otherwise provided by these rules, an Affiliated Interest holder shall neither exercise control of nor be positioned so as to enable the exercise of control over the Retail Marijuana Establishment or its operations. A Retail Marijuana Establishment shall report each of its Affiliated Interests to the Division with each application for initial licensure, renewal, change of ownership or change of corporate structure.

Agreement

“Agreement” means any unsecured convertible debt option, option agreement, warrant, or at the Division’s discretion, other document that establishes a right for a person to obtain a Permitted Economic Interest that might convert to an ownership interest in a Retail Marijuana Establishment or Medical Marijuana Business.

Alarm Installation Company

“Alarm Installation Company” means a Person engaged in the business of selling, providing, maintaining, servicing, repairing, altering, replacing, moving or installing a Security Alarm System in a Licensed Premises.

Alternative Use Designation

“Alternative Use Designation” means a designation approved by the State Licensing Authority, permitting a Retail Marijuana Products Manufacturing Facility to manufacture and Transfer Alternative Use Product.

Alternative Use Product

“Alternative Use Product” means Retail Marijuana Concentrate or Retail Marijuana Product that has at least one intended use that is not included in the list of intended uses in Rule R 1003-1(B). Alternative Use Product may raise public health concerns that outweigh approval of the Alternative Use Product, or that require additional safeguards and oversight. Alternative Use Product shall not be Transferred except as permitted by Rule R 607 after obtaining an Alternative Use Designation. Rule R 607 permits a Retail Marijuana Products Manufacturing Facility to Transfer Alternative Use Product to a Retail Marijuana Testing Facility prior to receiving an Alternative Use Designation. Except where the context otherwise clearly requires, rules applying to Retail Marijuana Concentrate or Retail Marijuana Product apply to Alternative Use Product.

Applicant

“Applicant” means a Person that has submitted an application for licensure or registration, or for renewal of licensure or registration, pursuant to these rules that was accepted by the Division for review but has not been approved or denied by the State Licensing Authority.

Approved Training Program

“Approved Training Program” means a responsible vendor program that received approval from the Division prior to being offered to a Licensee.

Associated Key License

“Associated Key License” means an Occupational License for an individual who is a Direct Beneficial Interest Owner of the Retail Marijuana Establishment, other than a Qualified Limited Passive Investor, and any Person who controls or is positioned so as to enable the exercise of control over a Retail Marijuana Establishment. Each shareholder, officer, director, member, or partner of a Closely Held Business Entity that is a Direct Beneficial Interest Owner and any Person who controls or is positioned so as to enable the exercise of control over a Retail Marijuana Establishment must hold an Associated Key License.

Audited Product

“Audited Product” means a Retail Marijuana Product with an intended use of: (1) metered dose nasal spray, (2) pressurized metered dose inhaler, (3) vaginal administration, or (4) rectal administration. Audited Product types may raise public health concerns requiring additional safeguards and oversight. These product types may only be manufactured and Transferred by a Retail Marijuana Products Manufacturing Facility in strict compliance with Rule R 607. Prior to the first Transfer of an Audited Product to a Retail Marijuana Store or Retail Marijuana Cultivation Facility that has obtained a Centralized Distribution Permit, the Retail Marijuana Products Manufacturing Facility shall submit to the Division and, if applicable, to the local jurisdiction an independent third-party audit verifying compliance with Rule R 607. All rules regarding Retail Marijuana Product apply to Audited Product except where Rules R 607, 712, 1002-1, and 1003-1 apply different requirements.

B

Batch Number

“Batch Number” means any distinct group of numbers, letters, or symbols, or any combination thereof, assigned by a Retail Marijuana Cultivation Facility or Retail Marijuana Products Manufacturer to a specific Harvest Batch or Production Batch of Retail Marijuana.

Business Interest

“Business Interest” means any Person that holds a Financial Interest or an Affiliated Interest in a Retail Marijuana Establishment.

C

Cannabinoid

“Cannabinoid” means any of the chemical compounds that are the active principles of marijuana.

Centralized Distribution Permit

“Centralized Distribution Permit” means a permit issued to a Retail Marijuana Cultivation Facility pursuant to section 44-12-403, C.R.S., authorizing temporary storage of Retail Marijuana Concentrate and Retail Marijuana Product received from a Retail Marijuana Products Manufacturing Facility for the sole purpose of Transfer to commonly owned Retail Marijuana Stores. For purposes of a Centralized Distribution Permit only, the term “commonly owned” means at least one natural person has a minimum of five percent ownership in both the Retail Marijuana Cultivation Facility possessing the Centralized Distribution Permit and the Retail Marijuana Store.

Child-Resistant

“Child-Resistant” means special packaging that is:

  1. Designed or constructed to be significantly difficult for children under five years of age to open and not difficult for normal adults to use properly as defined by 16 C.F.R. 1700.15 (1995) and 16 C.F.R. 1700.20 (1995). Note that this rule does not include any later amendments or editions to the Code of Federal Regulations. The Division has maintained a copy of the applicable federal regulations, which is available to the public;
  2. Opaque so that the packaging does not allow the product to be seen without opening the packaging material; and
  3. Resealable for any product intended for more than a single use or containing multiple servings.
  4. Closely Held Business Entity

    “Closely Held Business Entity” means an “entity” as defined in section 7-90-102, C.R.S., that has no more than fifteen shareholders, officers, directors, members, partners or owners, each of whom are natural persons, each of whom holds an Associated Key License, and each of whom is a United States citizen prior to the date of application. There must be no publicly traded market for interests in the entity. A Closely Held Business Entity and each of the natural persons who are its shareholders, officers, directors, members, partners or owners, are Direct Beneficial Interest Owners. A Closely Held Business Entity is an associated business of the Retail Marijuana Establishment for which it is a Direct Beneficial Interest Owner.

    Commercially Reasonable Royalty

    “Commercially Reasonable Royalty” means a right to compensation in the form of a royalty payment for the use of intellectual property with a direct nexus to the cultivation, manufacture, Transfer or testing of Retail Marijuana, Retail Marijuana Concentrate, or Retail Marijuana Product. A Commercially Reasonable Royalty must be limited to specific intellectual property the Commercially Reasonable Royalty Interest Holder owns or is otherwise authorized to license or to a product or line of products. A Commercially Reasonable Royalty that could cause reasonable consumer confusion or violate any federal copyright, trademark or patent law or regulation will not be approved. The Commercially Reasonable Royalty shall provide for compensation to the Commercially Reasonable Royalty Holder as a percentage of gross revenue or gross profit. The royalty payment must be at a reasonable percentage rate. To determine whether the percentage rate is reasonable, the Division will consider the totality of the circumstances, including but not limited to the following factors:

    1. The percentage of royalties received by the recipient for the licensing of the intellectual property.
    2. The rates paid by the Licensee for the use of other intellectual property.
    3. The nature and scope of the license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the product may be sold.
    4. The licensor’s established policy and marketing program to maintain his intellectual property monopoly by not licensing others or by granting licenses under special conditions designed to preserve that monopoly.
    5. The commercial relationship between the recipient and Licensee, such as, whether they are competitors in the same territory in the same line of business.
    6. The effect of selling the intellectual property in promoting sales of other products of the Licensee; the existing value of the intellectual property to the recipient as a generator of sales of his non-intellectual property items; and the extent of such derivative sales.
    7. The duration of the term of the license for use of the intellectual property. 
    8. The established or projected profitability of the product made using the intellectual property; its commercial success; and its current popularity.
    9. The utility and advantages of the intellectual property over products or businesses without the intellectual property.
    10. The nature of the intellectual property; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the intellectual property.
    11. The portion of the profit or of the selling price that may be customary in the
      particular business or in comparable businesses to allow for the use of the
      intellectual property.
    12. The portion of the realizable profit that should be credited to the intellectual
      property as distinguished from non-intellectual property elements, the
      manufacturing process, business risks, or significant features or improvements
      added by the Licensee.
    Commercially Reasonable Royalty Interest Holder

    “Commercially Reasonable Royalty Interest Holder” means a Person that receives a Commercially Reasonable Royalty in exchange for a Licensee’s use of the Commercially Reasonable Royalty Interest Holder’s intellectual property. A Commercially Reasonable Royalty Interest Holder is an Indirect Beneficial Interest Owner.

    Container

    “Container” means the receptacle directly containing Retail Marijuana, Retail Marijuana Concentrate, or Retail Marijuana Product that is labeled according to the requirements in Rules R 1001-1 et seq.

    Court Appointee

    “Court Appointee” means a Person appointed by a court as a receiver, personal representative, executor, administrator, guardian, conservator, trustee, or similarly situated Person; acting in accordance with section 44-12-401(1.5), C.R.S., and these rules; and authorized by court order to take possession of, operate, manage, or control a licensed Retail Marijuana Establishment.

    D

    Denied Applicant

    “Denied Applicant” means any Person whose application for licensure pursuant to the Retail Code has been denied, any Person whose application for a responsible vendor program has been denied, or any Licensee whose application for any of the following non-exhaustive list has been denied: a change or transfer of ownership pursuant to Rule R 205; a change of location of the Licensed Premises pursuant to Rule R 206; a change, alteration, or modification of the Licensed Premises pursuant to Rule R 303; or a production management tier increase request pursuant to Rule R 506..

    Department

    “Department” means the Colorado Department of Revenue.

    Direct Beneficial Interest Owner

    “Direct Beneficial Interest Owner” means a natural person or a Closely Held Business entity that owns a share or shares of stock in a licensed Retail Marijuana Establishment, including the officers, directors, members, or partners of the licensed Retail Marijuana Establishment or Closely Held Business Entity, or a Qualified Limited Passive Investor. Each natural person that is a Direct Beneficial Interest Owner must hold an Associated Key License. Except that a Qualified Limited Passive Investor need not hold an Associated Key License and shall not engage in activities for which an Occupational License is required.

    Director

    “Director” means the Director of the Marijuana Enforcement Division. “Division” means the Marijuana Enforcement Division.

    E

    Edible Retail Marijuana Product

    “Edible Retail Marijuana Product” means any Retail Marijuana Product for which the intended use is oral consumption, including but not limited to, any type of food, drink, or pill.

    Executive Director

    “Executive Director” means the Executive Director of the Department of Revenue.

    Exit Package

    “Exit Package” means an Opaque bag or other similar Opaque covering provided at the retail point of sale, in which Retail Marijuana, Retail Marijuana Concentrate, or Retail Marijuana Product already in a Container is placed. If Retail Marijuana flower, trim or seeds are placed into a Container that is not Child-Resistant, then the Exit Package must be Child-Resistant. The Exit Package is not required to be labeled in accordance with Rules R 1001 et seq. or Rules R 1001-1 et seq.

    F

    Fibrous Waste

    “Fibrous Waste” means any roots, stalks, and stems from a Retail Marijuana plant.

    Final Agency Order

    “Final Agency Order” means an Order of the State Licensing Authority issued in accordance with the Retail Code and the State Administrative Procedure Act. The State Licensing Authority will issue a Final Agency Order following review of the Initial Decision and any exceptions filed thereto or at the conclusion of the declaratory order process. A Final Agency Order is subject to judicial review.

    Financial Interest

    “Financial Interest” means any Direct Beneficial Interest Owner, a Commercially Reasonable Royalty Interest Holder who receives more than 30 percent of the gross revenue or gross profit, a Permitted Economic Interest holder, and any other Person who controls or is positioned so as to enable the exercise of control over the Retail Marijuana Establishment.

    Flammable Solvent

    “Flammable Solvent” means a liquid that has a flash point below 100 degrees Fahrenheit. “Flowering” means the reproductive state of the cannabis plant in which there are physical signs of flower budding out of the nodes of the stem.

    Food-Based Retail Marijuana Concentrate

    “Food-Based Retail Marijuana Concentrate” means a Retail Marijuana Concentrate that was produced by extracting Cannabinoids from Retail Marijuana through the use of propylene glycol, glycerin, butter, olive oil or other typical cooking fats.

    G

    Good Cause

    “Good Cause” for purposes of denial of an initial, renewal, or reinstatement of a license application, means:

    1. The Licensee or Applicant has violated, does not meet, or has failed to comply with any of the terms, conditions, or provisions of the Retail Code, any rules promulgated pursuant to it, or any supplemental relevant state or local law, rule, or regulation;
    2. The Licensee or Applicant has failed to comply with any special terms or conditions that were placed upon the license pursuant to an order of the State Licensing Authority or the relevant local jurisdiction; or
    3. The Licensee’s Licensed Premises have been operated in a manner that adversely affects the public health or welfare or the safety of the immediate neighborhood in which the establishment is located.
    Good Moral Character

    “Good Moral Character” means having a criminal history that demonstrates honesty, fairness, and respect for the rights of others and for the law.

    H

    Harvest Batch

    “Harvest Batch” means a specifically identified quantity of processed Retail Marijuana that is uniform in strain, cultivated utilizing the same Pesticide and other agricultural chemicals and harvested at the same time.

    Harvested Marijuana

    “Harvested Marijuana” means post-Flowering Retail Marijuana not including trim, concentrate or waste that remains on the premises of the Retail Marijuana Cultivation Facility or its off-premises storage location beyond 60 days from harvest.

    Heat/Pressure-Based Retail Marijuana Concentrate

    “Heat/Pressure-Based Retail Marijuana Concentrate” means Retail Marijuana Concentrate that was produced by extracting Cannabinoids from Retail Marijuana through the use of heat and/or pressure. This method of extraction may be used by only a Retail Marijuana Products Manufacturing Facility and can be used alone or on a Production Batch that also includes WaterBased Retail Marijuana Concentrate or Solvent-Based Retail Marijuana Concentrate.

    I

    Identity Statement

    “Identity Statement” means the name of the business as it is commonly known and used in any Advertising.

    Immature Plant

    “Immature plant” means a nonflowering Retail Marijuana plant that is no taller than eight inches and no wider than eight inches produced from a cutting, clipping or seedling and is in a cultivating container. Plants meeting these requirements are not attributable to a Licensee’s maximum allowable plant count, but must be fully accounted for in the Inventory Tracking System.

    Indirect Beneficial Interest Owner

    “Indirect Beneficial Interest Owner” means a holder of a Permitted Economic Interest, a recipient of a Commercially Reasonable Royalty associated with the use of intellectual property by a Licensee, a Profit-Sharing Plan Employee, a Qualified Institutional Investor, or another similarly situated Person as determined by the State Licensing Authority. An Indirect Beneficial Interest Owner is not a Licensee. The Licensee must obtain Division approval for an Indirect Beneficial Interest Owner that constitutes a Financial Interest before such Indirect Beneficial Interest Owner may exercise any of the privileges of the ownership or interest with respect to the Licensee.

    Industrial Fiber Products

    “Industrial Fiber Products” means intermediate or finished products made from Fibrous Waste that are not intended for human or animal consumption and are not usable or recognizable as Retail Marijuana. Industrial Fiber Products include, but are not limited to, cordage, paper, fuel, textiles, bedding, insulation, construction materials, compost materials, and industrial materials. “Industrial Fiber Products Producer” means a Person who produces Industrial Fiber Products using Fibrous Waste.

    Industrial Hemp

    “Industrial Hemp” means a plant of the genus Cannabis and any part of the plant, whether growing or not, containing a delta-9 tetrahydrocannabinol (THC) concentration of no more than three-tenths of one percent (0.3%) on a dry weight basis.

Updated on July 22, 2019

Was this article helpful?

Related Articles