HB 1077 — Average Market Rate of Unprocessed Retail Marijuana

SecondNOTE: Regular Session Seventy-fifth General Assembly STATE OF COLORADO REREVISED This Version Includes All Amendments Adopted in the Second House LLS NO.

26-0325.01This Stephaniebill Schrabhas x4330been HOUSEprepared BILLfor 26-1077the HOUSEsignatures SPONSORSHIPof Gonzalezthe R.appropriate legislative officers and the Governor.

andTo Willford,determine Phillips,whether Ricks,the TitoneGovernor SENATEhas SPONSORSHIPsigned Lindstedtthe andbill Marchman,or Snyder,taken Gonzalesother J.action on it, please consult the legislative status sheet, the legislative history, or the Session Laws.

gHOUSE i a 2 E R 2 A r , E 3 1 S e a House Committees Senate Committees n M Finance Finance e Appropriations A A BILL FOR26-1077 ANBY ACTREPRESENTATIVE(S) iGonzalez aR. C ONCERNING THE AVERAGE MARKET RATE OF UNPROCESSED RETAIL e 2 T d 20 N 2 8 MARIJUANA .

Eand dWillford, yPhillips, SRicks, dTitone, MCarter; e Bill Summary m A (Note:

Thisalso summarySENATOR(S) appliesLindstedt to this bill as introduced and doesMarchman, notreflectanyamendmentsthatmaybesubsequentlyadopted.IfthisbillSnyder, dGonzales dJ. passes third reading in the house of introduction, a bill summary that e 2 applies to the reengrossed version of this bill will be available at E a 0 S U , http://leg.colorado.gov.) O n 3 H a r e A Current law imposes a tax on the first sale or transfer of r unprocessed retail marijuana at a rate of 15% of the average market rate 3 of the unprocessed retail marijuana.

TheC "averageONCERNING marketTHE rate"AVERAGE isMARKET currentlyRATE definedOF asUNPROCESSED theRETAIL averageMARIJUANA price,. as determined by the department g of revenue, of all unprocessed retail marijuana that is sold or transferred i 6 from retail marijuana cultivation facilities in the state to retail marijuana a 0 S R , U d 2 H 2 r Shading denotes HOUSE amendment.

Double underlining denotes SENATE amendment.

e Ap Capital letters or bold & italic numbers indicate new material to be added to existing law.n Dashes through the words or numbers indicate deletions from existing law.

e A product manufacturing facilities or retail marijuana stores.

Effective July1, 2026, the bill defines "indoor unprocessed retail marijuana" and "outdoor unprocessed retail marijuana." The bill also amends the existing definition of "average market rate" to require separate rates for indoor unprocessed retail marijuana and outdoor unprocessed retail marijuana, which must be lower than the rates for indoor unprocessed retail marijuana.

In addition, the existing definition of "average market rate" requires that unprocessed retail marijuana for extractionshaveaseparateaveragemarketratethatislowerthanthe rate for unprocessed retail marijuana for direct sale to consumers.

The bill clarifies that this requirement applies to both outdoor and indoor unprocessed retail marijuana.

SECTION1.SECTION 1.

InColoradoRevisedStatutes,39-28.8-101,amendIn Colorado Revised Statutes, 39-28.8-101, amend (1.5);

and add (4.5), (6.5) and (6.as(6.7) as follows:

Unlessthecontextotherwiserequires,anytermsnotdefinedinthisUnless articlethe 28.8context haveotherwise therequires, meaningsanyterms setnot forthdefined in articlethis 26article28.8havethemeaningssetforthinarticle26of ofthistitle39.Asused in this titlearticle 39.28.8, unless the context otherwise requires:

As(1.5) used"Averagemarketrate"meanstheaverageprice,asdetermined by the department on a quarterly basis, of all unprocessed retail marijuana that is sold or transferred from retail marijuana cultivation facilities in thisthe articlestatetoretailmarijuanaproductmanufacturingfacilitiesorretailmarijuana 28.8,stores, unlessless taxes paid on the contextsales otherwiseor requires:transfers.

(1.5)An "Average"average market rate" meansCapital theletters average price, as determined by the department on a quarterly basis, of all unprocessed retail marijuana that is sold or transferredbold from& retailitalic marijuananumbers cultivationfacilitiesinthestatetoretailmarijuanaproductmanufacturingindicate facilitiesnew ormaterial retailadded marijuanato stores,existing lesslaw; taxes paid on the sales or transfers.

Andashes "averagethrough marketwords rate"or maynumbers beindicate baseddeletions onfrom theexisting purchaserlaw orand transfereesuch ofmaterial unprocessedis retailnot marijuanapart or on the nature of the unprocessedact. retail marijuana that is sold or transferred.

Themaybebasedonthepurchaserortransfereeofunprocessedretailmarijuana "average market rate" must include one or moreon rates that cover unprocessed marijuana that is allocated to extractions, and the initialnature ratesof for these product types must be lower than the rate for unprocessed retail marijuana that is allocatedsold foror directtransferred. sale to consumers.

INCLUDINGThe FRESH"average FROZENmarket -2-rate" 1077must INDOORinclude UNPROCESSEDone RETAILor MARIJUANAmore ANDrates FRESHthat FROZENcover OUTDOORunprocessed UNPROCESSEDRETAILMARIJUANAmarijuana .THEINITIALRATESFORUNPROCESSEDthat MARIJUANAis THATallocated AREto ALLOCATEDextractions, TOand EXTRACTIONSthe MUSTinitial BErates LOWERfor THANthese THEproduct RATEtypes FORmust be lower than the rate for unprocessed marijuana that is allocated for direct sale to coINCLUDING FRESH FROZEN INDOOR UNPROCESSED RETAIL MARIJUANA THATAND ISFRESH ALLOCATEDFROZEN FOROUTDOOR DIRECTUNPROCESSED SALERETAIL TOMARIJUANA CONSUMERS..

THE DEPARTMENTINITIAL SHALLRATES ADOPTFOR RULESUNPROCESSEDMARIJUANATHATAREALLOCATEDTOEXTRACTIONSMUSTBE TOLOWERTHANTHERATEFORUNPROCESSEDMARIJUANATHATISALLOCATED FORDIRECTSALETOCONSUMERS .THEDEPARTMENTSHALLADOPTRULESTO ESTABLISH THE RATES FOR FRESH FROZEN INDOOR UNPROCESSED RETAIL MARIJUANAMARIJUANAANDFRESHFROZENOUTDOORUNPROCESSEDRETAILMARIJUANA AND FRESH FROZEN OUTDOOR UNPROCESSED RETAIL MARIJUANA ON OR BEFORE JULY 1, 2027.

(4.5) "INDOOR UNPROCESSED RETAIL MARIJUANA " MEANS UNPROCESSED RETAIL MARIJUANA CULTIVATED IN ANY MANNER OTHERTHANOUTDOORUNPROCESSEDRETAILMARIJUANAOTHER ,ASDEFINEDINTHAN OUTDOOR UNPROCESSED RETAIL MARIJUANA , AS DEFINED IN SUBSECTION (6.7)OF THIS SECTIO.

(6.5) "N ATURAL WEATHER CONDITIONS " MEANS AMBIENT TEMPERATURE PRECIPITATION,AND,PRECIPITATION,AND HUMIDITY .

(6.7) (a) "OTDOOR"OUTDOOR UNPROCESSED RETAIL MARIJUANA "MEANS" MEANS UNPROCESSED RETAIL MARIJUANA THAT , EXCEPT AS PROVIDED IN SUBSECTION (6.7)(bOFTHISSECTION,WASCULTIVATEDUNDERNATURAL(6.7)(b)OF SUNLIGHTTHIS WITHOUTSECTIO,WAS ARTIFICIALCULTIVATED LIGHTUNDER OR LIGHT DEPRIVATION ,WITH DIRECT EXPOSURE TO NATURAL WEATHERSUNLIGHTWITHOUTARTIFICIALLIGHTORLIGHTDEPRIVATION CONDITIONS,WITHDIRECT ,ANDEXPOSURETONATURALWEATHERCONDITIONS NOT,ANDNOTWITHINANINDOOR WITHINFACILITY,GREENHOUSE AN,OR INDOOR FACILITY , GREENHOUSE , OR OTHER STRUCTURE THAT PREVENTS EXPOSURE TO NATURAL SUNLIGHT AND NATURAL WEATHER CONDITIONS .

(I) CULTIVATEDCULTIVATEDUSINGARTIFICIALLIGHTTOMAINTAINVEGETATIVE USINGPLANTSUNDERTWENTY ARTIFICIALFOURINCHESINHEIGHTANDTOMAINTAINMOTHER LIGHT TO MAINTAIN VEGETATIVE PLANTS UNDER TWENTY -FOUR INCHES IN HEIGHT AND TO MAINTAIN MOTHER PLANTS ;

(II) CULTIVATEDC ULTIVATED USING IRRIGATION,FERTIGATION,ORIRRIGATION SIMILAR,FERTIGATION -3-,OR 1077SIMILAR AGRICULTURAL PRACTICES;ANDPRACTICES ;AND PAGE 2-HOUSE BILL 26-1077 (III) POTECTEDROTECTEDFROMANADVERSE FROMWEATHEREVENTPURSUANTTO ANA ADVERSECONTINGENCY WEATHERPLAN EVENTAPPROVED PURSUANTBY TOACONTINGENCYPLANAPPROVEDBYTHESTATELICENSINGAUTHORITYTHE STATE LICENSING AUTHORITY PURSUANT TO SECTION 44-10-602 (14).

FOR EACH AVERAGE MARKET RATE CATEGORY OF UNPROCESSED RETAIL MARIJUANA THAT THE DEPARTMENT ESTABLISHES PURSUANT TO SECTION 39-28.8-101(1.5THEDEPARTMENTSHALLPUBLISHAGENERAL39-28.8-101 (1.5)THE DEPARTMENT SHALL PUBLISH A GENERAL DESCRIPTION OF THE METHODOLOGY AND DATA SOURCES USED TO CALCULATETHERATECALCULATE ,WHILEPROTECTINGCONFIDENTIALTHE RATE ,WHILE PROTECTING CONFIDENTIAL ,PROPRIETARY , AND IDENTIFYING INFORMATION.INFORMATION .

The general assembly finds, determines, and declares that this act is necessary for the immediate preservationofthepublicpeace,health,orsafetyorforappropriationsforpreservation of the public peace, health, or safety or for appropriations for PAGE 3-HOUSE BILL 26-1077 the support and maintenance of the departments of the state and state institutions.

-4-____________________________ 1077____________________________ Julie McCluskie James Rashad Coleman, Sr.

SPEAKER OF THE HOUSE PRESIDENT OF OF REPRESENTATIVES THE SENATE ____________________________ ____________________________ Vanessa Reilly Esther van Mourik CHIEF CLERK OF THE HOUSE SECRETARY OF OF REPRESENTATIVES THE SENATE APPROVED________________________________________ (Date and Time) _________________________________________ Jared S.

Polis GOVERNOR OF THE STATE OF COLORADO PAGE 4-HOUSE BILL 26-1077