On January 22, lawmakers in Colorado introduced SB25-076, (the act) which aims to address concerns surrounding the availability of intoxicating products (including regulated cannabis products) within the state, especially to children and young adults. To address these concerns, the act would impose new requirements on licensed businesses related to serving sizes and labeling requirements and would restrict sales of certain products to adults under 26 years old. While the intent behind the act is to mitigate potential risks associated with high-potency cannabis, the approach taken is arguably too extreme and places excessive burdens on the industry. A more nuanced strategy is needed to balance public health concerns with the operational realities of licensed cannabis businesses.
Understanding the implications of SB25-076 is crucial for stakeholders within the state-legal cannabis industry. The act’s provisions could lead to substantial economic and operational challenges for businesses, potentially stifling growth and innovation in a sector that already faces significant regulatory hurdles. This article aims to provide an analysis of the act’s key cannabis-focused provisions, explore the potential impacts on the licensed cannabis industry, and argue for a more measured approach to cannabis regulation that supports both public health and industry sustainability.
I. SB25-076: Intoxicating Substances and Social Equity Business
While SB25-076 also imposes requirements related to natural medicines (e.g., psilocybin mushrooms), this article focuses on three key requirements and limitations applicable to licensed cannabis businesses under the act: 1) restrictions on sales of high-potency and certain inhaled products to adults under 26 years old; 2) new serving size limitations for inhalable products; and 3) new labeling requirements for high-potency products.
Restrictions for Adults Under 26. SB25-076 would prohibit retail cannabis stores, transporters, hospitality businesses, and accelerator stores from selling or distributing retail cannabis with a tetrahydrocannabinol (THC) potency higher than 10% to adults under the age of 26. Additionally, the bill bans the sale of inhaled retail cannabis products that contain added flavor ingredients to this age group. These measures are intended to mitigate the potential risks associated with high-potency cannabis and flavored products, which may appeal to younger consumers and affect brain development.
Serving Size Limitations. The act also proposes new serving size limitations for inhaled cannabis products, extending the existing 10-milligram serving size limit for edible cannabis to inhaled products. Additionally, it introduces a package weight limit of 500 milligrams for inhaled cannabis. These measures are designed to standardize consumption limits across different forms of products to prevent overconsumption and its associated risks.
Labeling Requirements. Finally, SB25-076 would introduce comprehensive labeling requirements aimed at enhancing consumer awareness and safety. All regulated cannabis products would need to include a color-coded strip on the packaging to indicate THC potency: blue for less than 5%, yellow for 5% to 15%, orange for 15% to 50%, and red for more than 50%. Additionally, inhaled cannabis products must detail the amount of THC per serving, the total THC per package, the number of servings per package, and provide clear directions for consumption. Retail cannabis stores would also be required to display signage explaining the color-coded system at every point of sale.
II. Analysis of Potential Impact on the Licensed Cannabis Industry
While SB25-076’s requirements are intended to enhance public safety and promote informed consumer choices and responsible consumption, they impose significant compliance burdens on businesses and consumers alike.
Consumer Behavior and Market Dynamics. The proposed restrictions on high-potency and flavored cannabis products for individuals under 26 are likely to significantly alter consumer behavior and market dynamics and could negatively impact public health and safety. Younger consumers, who may prefer higher-potency or flavored products, could be driven to seek these products in the unregulated market, where such restrictions do not apply. This shift could undermine the legal market and its associated public health and safety goals by increasing the prevalence of untested and potentially unsafe products.
Additionally, these limitations could present significant challenges for consumers, particularly those with higher tolerances. For these consumers, the act’s restrictions on serving size may necessitate purchasing larger quantities of smaller-dose products, leading to increased costs and inconvenience.
Furthermore, the act’s focus on age-based potency restrictions does not address the broader need for comprehensive education and harm reduction strategies that could more effectively promote responsible consumption across all age groups. A more balanced approach that combines regulation with education and support services would better serve public health objectives without imposing excessive burdens on the legal cannabis industry.
Operational Challenges. Enforcing the act’s age-specific restrictions on high-potency and flavored products will require significant adjustments in sales protocols, inventory management, and staff training. Additionally, the stringent labeling and packaging requirements will necessitate changes in production processes and supply chain logistics. These operational adjustments are likely to increase the complexity and cost of doing business, particularly for smaller operators who may lack the resources to adapt quickly to the new regulatory landscape. A more balanced regulatory approach, that considers the operational realities of the industry while still addressing public health concerns, would be more conducive to fostering a sustainable and thriving legal cannabis market in Colorado.
Economic Impact. Finally, the act’s age-based restrictions on high-potency products and flavored inhaled cannabis products could lead to a substantial reduction in sales for licensed businesses, particularly among consumers aged 21-25, who represent a considerable portion of the market. Additionally, the new labeling and packaging requirements would increase compliance costs for businesses, which may be particularly burdensome for small and medium-sized operations. These increased operational costs, coupled with potential revenue losses, could strain the financial viability of many licensed operators, ultimately impacting the overall economic health of the state’s cannabis industry.
III. Why It Matters
SB25-076 would introduce a range of stringent regulations that could negatively impact the state’s legal cannabis industry. While the act aims to address public health concerns related to high-potency and flavored cannabis products, its approach may be too extreme, imposing substantial economic and operational burdens on licensed businesses. The restrictions on sales to individuals under 26, serving size limitations, and color-coded labeling requirements collectively introduce new challenges that could stifle industry growth and innovation.
A more nuanced approach to addressing high-potency products is needed, one that balances public health objectives with the operational realities of the industry. Stakeholders are encouraged to engage in dialogue and advocacy to ensure that any new regulations support both public health and the sustainability of the legal cannabis market. Stay tuned to Troutman Pepper Locke’s Cannabis Communications Newsletter for updates on cannabis laws and regulations in Colorado and across the U.S.
