The Washington State Liquor and Cannabis Board this week introduced a rule that will allow investors from around the U.S. to help finance the state’s exploding legal marijuana industry. Oregon approved a similar practice last month, and Colorado is expected to follow suit, eliminating its two-year residency requirement for financiers.
Though the change comes with risks of Big Marijuana or criminal cartels entering the markets, the states are moving quickly to attract more investors in expectation that California, with a potentially vast recreational pot market, might enter the competition if voters legalize recreational marijuana sales this fall.
Liquor and Cannabis Board spokesman Brian Smith says the new Washington rule will take effect in June, eliminating a six-month residency requirement for out-of-state investors.
Financiers will still not be allowed to have an ownership stake in the businesses they back, he adds. But a bill before the Legislature, if approved, would permit nonresidents to own as much as 49% of a marijuana operation.
Some worry that “will lead to the big business takeover of the marijuana market in Washington,” said Bellingham, Wash., attorney Heather Wolf, who represents industry entrepreneurs. That was also the concern in 2013, when Washington prepared to launch legal sales of recreational marijuana approved a year earlier.
The state’s fledgling pot market, envisioned as a low-key, mom-and-pop industry, would be Wal-Marted, some felt. Shively, chief executive of a company called Diego Pellicer — named for a Filipino hero and major hemp farmer who was also Shively’s great-great-grandfather — predicted he would mint more millionaires than Microsoft, where he once worked as a corporate strategy manager.
Fox, not involved in Shively’s venture, said he supported the plan in the belief that legal marijuana was the solution to ending the costly drug war that plagues Mexico and the U.S.
But after Shively and Fox dropped out of the picture and the Big Marijuana threat subsided, the mom- and-pop-system went on to success.
So did Uncle Ike’s, a Seattle neighborhood pot store that in one recent month did $1.4 million in sales. It’s one of 223 Washington pot stores that sold $260 million in products in the last fiscal year, generating $65 million in state excise tax and hundreds of thousands of highly happy customers.
This fiscal year, Washington pot sales have skyrocketed to $620 million, and have put $119 million into the state tax coffers. But not all pot entrepreneurs are raking in profits. To help them, and expand their markets, Washington and other states are easing outside-investment restrictions.
“There’s only so many people willing to invest in this risky and new industry,” Colorado state Sen. Chris Holbert, a Republican, recently told the Associated Press, “so allowing people from out of state to become investors in this business … seems like a good idea.”
That’s also how it seems to Jamen Shively’s old company, Diego Pellicer. The former Big Marijuana corporate hopeful has returned with lowered expectations, and is planning to open its first pot store next month.
(Washington and Colorado to Remove Residency Requirements for Cannabis Investors – Weed Finder™ News | Article Credit: Spc Correspondent, Rick Anderson / LA Times)