STATE OF COLORADODEPARTMENT OF REVENUEState Capitol Annex1375 Sherman Street, Room 409Denver, Colorado 80261Phone (303) 866-3091Fax (303) 866-2400April 3, 2014Green Meds, Inc.d/bra Highlands Cannabis Company3355 West 38"? AvenueDenver, Colorado 80212Green Meds, Inc.Highlands Cannabis Company2438 Larimer StreetDenver, Colorado 80205John Esmeral6936 West Virginia PlaceLakewood, Colorado 80226Luis Uribe3744 Bucknell DriveLittleton, Colorado 80129NOTICE OF DENIALRe: Business Application Numbers: 402-00014 and 403-00016Associated Key Application Number: M04995Dear Mr. Esmeral, Mr. Uribe, and Green Meds, Inc.: John HickenlooperGovernorBarbara BrohlExecutive DirectorThe Department of Revenue?s Executive Director (?State Licensing Authority?) hasreviewed your applications to operate a medical marijuana center (application number 402-00014), an optional premises cultivation facility (application number 403-00016), and yourapplication for an associated key license (application number M04995). The State LicensingAuthority has DENIED your license applications for good cause as de?ned in subsection 12- C.R.S., and/or section 12-43.3-307, C.R.S. The grounds for denial include, but arenot limited to?, the following:On October 23, 2013, at the time of a pre-license inspection of your medical marijuanacenter located at 3355 West 38"? Avenue, Denver, Colorado, you failed to identify by the postingof a sign all areas of ingress and egress to limited access areas in violation of Rule 30l(C), 1CCR 212-1 (2013); you failed to describe all limited access areas by the ?ling of a diagram ofyour premises in violation of Rule 1 CCR 212-] (2013); you failed to maintaincamera coverage for all limited access areas including all points of ingressfegress to the exteriorof the premises in violation of Rule 1 CCR 212-1 (2013); you failed to maintain alog of all activity for the surveillance room and a current list of employees and service personnelauthorized to access the surveillance room in violation of Rule 1 CCR 212-1(2013); you failed to track all marijuana inventory stored on premises in a limited access areaconsistently with the inventory tracking rules in violation of Rules and 1 CCR212-1 (2013); you failed to ?le necessary applications to alter or modify your premises with theMarijuana Enforcement Division (?Division?) pursuant to Rule CCR 212-1 (2013);you failed to identify as a restricted access area all areas where marijuana is sold, possessed forsale, and displayed or dispensed for sale in violation of Rule 1 CCR 212-1 (2013);you failed to complete, maintain, or make available records necessary to demonstrate businesstransactions for inspection by the Division including, but not limited to, secure facility form,accurate diagram of the premises, current inventory, patient list, and transportation manifests inviolation of section 12-43.3-701, C.R.S. and Rule 90l(A), 1 CCR 212-1 (2013); your centerindicated it had patients authorized for more than six medical marijuana plants and two ounces ofmedical marijuana, however, you failed to provide documentation from the patients? physiciansevidencing the patients needed more than six plants and two ounces of product in violation ofsubsection and you failed to properly label with a list of allingredients marijuana sold at your business in violation of Rule 1 CCR 212-](2013). In addition, you failed to have a MITS account activated and functional on or beforeDecember 31, 2013 in violation of Rules and 406, CCR 212-1, (2013).On October 23, 2013, at the time of a pre-license inspection of your optional premisescultivation facility located at 2438 Larimer Street, Denver, Colorado, you failed to describe alllimited access areas by the ?ling of a diagram of your premises in violation of Rule 1CCR 212-1 (2013); you failed to maintain a log of all activity for the surveillance room and acurrent list of employees and service personnel authorized to access the surveillance room inviolation of Rule 1 CCR 212-1 (2013); and you failed to complete, maintain, ormake available records necessary to demonstrate business transactions for inspection by theDivision including, but not limited to, secure facility form, accurate diagram of the premises, andcurrent inventory in violation of section 12-43.3-701, C.R.S. and Rule 90l(A), 1 CCR 212-1(2013). In addition, you failed to have a MITS account activated and functional on or beforeDecember 31, 2013 in violation of Rules 309(4) and 406, 1 CCR 212-1 (2013).You have operated the licensed premises: in a manner that adversely affects the publichealth or welfare or the safety of the immediate neighborhood in which your establishments areIf a hearing is requested in this matter, the Notice of Grounds for Denial may include some or all of the allegationscontained herein, and may contain additional allegations if warranted after further review.located in violation of subsection C.R.S. Moreover, you have cultivated,manufactured, distributed, and sold medical marijuana in a manner not in compliance with article43.3 oftitle 12 in violation of subsection C.R.S.Based on the foregoing grounds for denial of your medical marijuana center application,your optional premises cultivation facility license, application number 403-00016, related to yourmedical marijuana center application cannot be issued pursuant to subsections and C.R.S, and your associated key license application cannot be issued withregard to business application numbers 402-00014 and 403-00016 pursuant to Rules 103 and204, 1 CCR 212-1 (2013), and subsection C.R.S.Pursuant to subsection C.R.S., you have the right to request a hearingregarding the denial of your applications. In order to exercise this right, you must deliver arequest for a hearing in writing to the Marijuana Enforcement Division, 455 Sherman Street,Suite 390, Denver, CO 80203 within sixty (60) days from the certi?ed date of service of thisletter. A request for a hearing received after that date, as determined by the date stamp by theMarijuana Enforcement Division, will not be considered. Additionally, verbal or email requestswill not be considered.If you request a hearing, you have the right to have an attorney represent you at thehearing at your expense, to present any relevant and admissible evidence on your behalf, rebutany evidence presented against you, and cross-examine any witnesses testifying against you. Ina hearing, you will bear the burden of proof to demonstrate by a preponderance of the evidencethat you are quali?ed to hold the licenses for which you have been denied.If you choose, you may ask to withdraw your applications. If you wish to request thatyour applications be withdrawn at this time, please inform the Marijuana Enforcement Divisionin writing as soon as possible but no later than thirg (30) days from the date of this letter.Asking to withdraw your application does not extend the time within which you must request ahearing; as stated above, any request for a hearing must be in writing and received by theMarijuana Enforcement Division within sixg (60) days of the certi?ed date of service of thisletter.The Division has placed all marijuana plants, marijuana, ?nished marijuanaproducts, marijuana-infused products or other marijuana inventory within your possessionand control related to business application numbers 402-00014 and 403-00016 onadministrative hold pursuant to Rule 1202, I CCR 212-1 (2013) and subsection 12-43.3-l03(2)(c), C.R.S. The Notice of Administrative Hold dated March 25, 2014 is enclosed.Please note that neither the State Licensing Authority nor the Marijuana EnforcementDivision is able to provide you with legal advice. If you have questions as to how to proceedlegally, please consult with an attorney.2 The term licensed premises is used as defined in Rule 103, CCR 212-1 (2013). See also C.R.S., regarding an operating applicant?s requirement to follow all rules promulgated pursuant to the MedicalMarijuana Code, sections 12-43.3-101 erseq, C.R.S.Should you have any other type of question regarding this letter or the State LicensingAuthority?s decision, you may contact the attorneys for the Marijuana Enforcement Division,Assistant Attorneys General John Viverito at or Kelly Rosenberg atkell .rosenber astate.co.us.Sincerely,bara J. BrohlExecutive DirectorDepartment of RevenueState Licensing AuthorityCERTIFICATE OF SERVICEI hereby certify that a true and accurate copy of the foregoing NOTICE OF DENIALwas duly placed in the United States Mail, first class postage pre-paid or via electronic mail onApril 8 2014, addressed as follows:Green Meds, Inc. Green Meds, Inc.d/b/a Highlands Cannabis Company d/b/a Highlands Cannabis Company3355 West 38"? Avenue 2438 Larimer StreetDenver, Colorado 80212 Denver, Colorado 80205John Esmeral Luis Uribe6936 West Virginia Place 3744 Bucknell DriveLakewood, Colorado 80226 Littleton, Colorado 80129By; ggamacuf/La. Qt?Samantha Quigley Compliance InvestigatorBEFORE THE EXECUTIVE DIRECTOR, DEPARTMENT OF REVENUESTATE LICENSING AUTHORITYSTATE OF COLORADONOTICE OF ADMINISTRATIVE HOLD PURSUANT TO RULE l202(B)IN THE MATTER OF:Green Meds, Inc.3355 West 38"? AvenueDenver, Colorado 80212Medical Marijuana Center License Application No. 402-00014Green Meds, Inc.2438 Larimer StreetDenver, Colorado 80205Optional Premises Cultivation License Application No. 403-00016Applicant.PLEASE TAKE NOTICE THAT following the inspection of the business known asGreen Meds, Inc. (?Applicant?), with a medical marijuana center (application number 402-00014) located at 3355 West 38" Avenue, Denver, Colorado and optional premises cultivationfacility (application number 403-00016) located at 2438 Larimer Street, Denver, Colorado, theDepartment of Revenue, State Licensing Authority, Marijuana Enforcement Division(?Division?) has developed reasonable grounds to believe that Applicant possesses certainmarijuana or marijuana-in?ised products that constitute evidence of acts in violation of theColorado Medical Marijuana Code, article 43.3 of title 12, and rules promulgated pursuant to it,or otherwise constitute a threat to the public safety.THEREFORE, to prevent the destruction of evidence, diversion, or other threats to thepublic safety, the Division hereby issues this Notice of Administrative Hold (?AdministrativeHold?) pursuant to Rule l202(B), I CCR 212-1 (2013). The Administrative I-Iold is effectiveimmediately and shall remain in effect until administratively lifted by the Division or modi?edby Final Agency Order.INVENTORY SUBJECT TO THE ADMINISTRATIVE HOLDThe attached Exhibit A sets forth the marijuana and marijuana?infused products subjectto this Administrative Hold (the ?Subject Inventory?).TERMS AND CONDITIONS OF ADMINISTRATIVE HOLD:Applicant is hereby ORDERED and required to adhere to the following terms andconditions ofthis Administrative Hold.1. This Administrative I-lold is effective immediately upon receipt of this AdministrativeI-lold by Applicant.2. Applicant shall retain the Subject Inventory during the pendency of thisAdministrative Hold.3. Applicant must comply with the inventory tracking requirements pursuant to theDivision's rules and regulations during the period of this Administrative Hold.4. Applicant shall completely and physically segregate the Subject Inventory in alimited access area of the premises where it shall be safeguarded by Applicant.5. This Administrative Hold shall not prevent Applicant from continued cultivation orharvesting of the Subject Inventory.6. If applicable, the Subject Inventory shall be put into separate Harvest Batches.7. Applicant during the pendency of this Administrative Hold is prohibited from selling,giving away, transferring, transporting, or destroying the Subject Inventory.8. Nothing herein shall prevent Applicant ?'om entering into a mutual agreement withthe Division to voluntarily surrender the Subject Inventory, upon a full and knowingwaiver of rights. Such voluntary surrender may require destruction of the SubjectInventory in the presence of a Division investigator or surrender of possession of theSubject Inventory to a Division investigator for Future destruction.CERTIFICATION BY THE DIVISIONI. Investigator for the Division certify thefollowing:? 1. An Investigation was conducted of the marijuana business(es) identified in theattached Egrhibit A.2. A description of the Subject Inventory is set forth in Exhibit A.3. Reasonable grounds exist to believe that the Subject Inventory constitutes evidence ofacts in violation of the Colorado Medical Marijuana Code and rules promulgatedpursuant to it, or otherwise constitute a threat to the public safety.4. A copy of the Administrative Hold was issued with a Notice of Denial sent to themarijuana business(es) identi?ed in Exhibit A.ov ORDERED this 2 {Tinyof ,2o|4.Investigator for the Division:DFPAR1 REVENUESTATE LICENSING AUTHORITYMARIJUANA ENFORCEM EN DIVISIONSTATIE. OF COLORADOTWEQEQ Green Meds, Inc.Highlands CannabisCompanyINVENTORY LIST-i Physical Address3355 West 33"? Avenue2438 Larimer StreetInvestigation NumberPage _of Z.-Denver, CO 80212Denver, CO 80205NameMailing AddressOreen Meds, Inc.3355 West 38'" AvenueDenver, CO 80212MED,lnvesti atorfNa;nc _?te"of I_n__spectio_I_)__ SECTION 1 MITS INVENTORYMITS inventory printout attached. Date printed402-00014 and 403-00016MITS inventory con?rmed via on?site inspection.SECTION 2 ON-SITE INVENTORY Inventory DescriptionNumberQuantityOtherAdditional Inventmy may follow the signature blockEXHIBITAAtlInmIs.IaIt1v:: '2 Initia|s?Marijuana Enforcement DivisionSTATE LICENSING AUTHORITYMARIJUANA ENFORCEMENT DIVISION Page nfSTATE OF COLORADODEPARTMENT OF REVENUE NumberEl THE INVENTORY LISTED IN SECTIONS I 2 IS SUBJECT TO ANADMINISTRATIVE HOLD.MARIJUANA AND MARIJUANA-PRODUCT INVENTORY RELATED TOt/I BUSINESS APPLICATION NUMBERS 402-00014 AND 403-00016 IS SUBJECTTO AN ADMINISTRATIVE HOLD.The Applicant or Licensee must comply with the inventory tracking requirements pursuant toState Licensing Authority rules during the period of administrative hold.3' For the Division: EXH I A Initials Marijuana Enforcement DivisionHold