Court's Receiver Appointment Authority Does Not Trump State Licensing Requirements

Updated: Mar 25, 2020

Yates v. Hartman 2018 COA 31 (AKA Frosted Leaf)

Owning and operating a regulated marijuana business is a privilege conferred through a state license. Where there is a moratorium, a state and local license is a highly valuable asset. Frosted Leaf is about which branch of government, the judicial or executive, has the authority to designate a person in control of a regulated marijuana business.

Colorado law requires that any person seeking to exercise control over an RMB must first obtain approval by the State Licensing Authority. Here, during a divorce proceeding, the district court judge appointed a receiver, who was not licensed by the State Licensing Authority, to manage several RMBs held in the marital estate. Colorado’s State Licensing Authority intervened in the divorce proceeding, arguing that a court appointed receiver must be licensed to operate marijuana businesses under Colorado Law. The trial court denied the SLA’s motion, and the SLA appealed.

The Court of Appeals reversed and remanded, deciding that the trial court’s authority to appoint a receiver did not trump state licensing requirements, and that any court appointed receiver over licensed marijuana businesses must also be licensed under Colorado law. Following the Court of Appeals decision, the General Assembly created a new license type to provide court appointed receivers with an expedited path to licensure.

Click here for a complete briefing of the Court of Appeals opinion and the arguments on both sides.

Summary Written by Cole White

Legal Research Intern at the University of Wyoming College of Law

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