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In re Marriage of Yates

Court of Appeals of Colorado, Seventh Division

March 8, 2018

In re the Marriage of Kelsey M. Yates, Petitioner-Appellee,
v.
Michael S. Hartman, in his official capacity as the Executive Director of the Colorado Department of Revenue and State Licensing Authority for the Marijuana Enforcement Division, Intervenor-Appellant. and Kiri A. Humphrey, Respondent, and Concerning Sterling Consulting Corporation, Receiver, Appellee,

         City and County of Denver District Court No. 16DR30252 Honorable Lael Montgomery, Judge

          Griffiths Law PC, Carolyn Witkus, Jon Eric Stuebner, Lone Tree, Colorado, for Petitioner-Appellee

          Fairfield and Woods PC, John M. Tanner, Denver, Colorado, for Appellee

          Cynthia H. Coffman, Attorney General, Claudia Brett Goldin, First Assistant Attorney General, J. Alan Call, Senior Assistant Attorney General, Denver, Colorado, for Intervenor-Appellant

          OPINION

          BERGER JUDGE.

          ¶ 1 The question before us is whether a court may appoint a receiver for a marijuana business if that receiver does not possess the licenses required by Colorado's marijuana licensing laws. We hold that, although courts have the equitable power to appoint receivers, they must make such appointments in compliance with the marijuana licensing laws enacted by the General Assembly.

         ¶ 2 Because the district court erroneously concluded that its power to appoint a receiver trumped the marijuana licensing laws, we reverse the receivership order.

         I. Relevant Facts and Procedural History

         ¶ 3 Petitioner-Appellee Kelsey M. Yates (Wife) filed a petition to dissolve her marriage to respondent-appellee Kiri A. Humphrey. She requested the appointment of a receiver over marital property, which included the "Frosted Leaf" group of businesses (the marijuana businesses). The marijuana businesses included a number of licensed medical and recreational marijuana entities.

         ¶ 4 The court granted Wife's request for a receiver and appointed appellee Sterling Consulting Corporation (Receiver). The Receiver's principal is Richard Block. The receivership order authorized the Receiver to "take immediate control of the [businesses] and operate the [businesses] on the Court's behalf in custodia legis." The Receiver had the "powers and duties" to "manage, operate, maintain, repair, and otherwise control the [businesses] as necessary to preserve [them]."

         ¶ 5 It is undisputed that when the court entered the receivership order, neither Mr. Block nor his employees held the licenses required by section 12-43.3-103(2)(e), C.R.S. 2017, of the Colorado Medical Marijuana Code, and section 12-43.4-104, C.R.S. 2017, of the Colorado Retail Marijuana Code, to own, operate, manage, control, or work in a licensed marijuana business.

         ¶ 6 After it learned of the receivership order, appellant, the Executive Director of the Colorado Department of Revenue, officially acting as the State Licensing Authority (SLA), moved to intervene under C.R.C.P. 24. The SLA moved to modify the receivership order by removing Sterling Consulting Corporation as the Receiver, at least until Block and his employees obtained the requisite licenses.[1]After a hearing, the court granted the SLA's motion to intervene, but denied the motion to modify the receivership order.[2] The SLA now appeals that order.[3]

         II. Analysis

         ¶ 7 We begin by distinguishing what is at issue in this case from what is not. The SLA does not challenge the district court's authority to appoint receivers for marijuana businesses. Instead, the SLA only challenges the court's authority ...


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