DENVER – States that have legalized pot are taking a fresh look at making it easier for out-of-state investors to get in the weed business, saying the industry’s ongoing difficulty in banking means they need new options to finance expansion.
The four states that allow recreational pot sales – Alaska, Colorado, Oregon and Washington – have another big reason to take a new look at pot investment. That’s California, the nation’s most populous state and largest marijuana producer, though it allows the drug only for people with certain medical ailments.
California voters could approve recreational pot this fall, giving the nascent pot industries in the other states reason to want to attract investment now, before a giant enters the picture. California has no ban on out-of-state owners, pressuring other pot states to loosen the rules before California opens for business.
“There’s only so many people willing to invest in this risky and new industry, so allowing people from out of state to become investors in this business ... seems like a good idea,” said Colorado Sen. Chris Holbert, R-Parker, and sponsor of a bill to allow out-of-state ownership of marijuana businesses.
The head of the Colorado Cannabis Chamber of Commerce was more blunt.
“We can’t go get a loan from the bank to grow our business to help us accelerate,” Tyler Henson said. “We are susceptible to falling behind other states.”
But the prospect of big out-of-state money flowing into legal pot states still gives regulators pause.
Pot-business residency ownership requirements generally date to the early days of regulated pot as a safeguard against investment by foreign drug cartels. Those fears have largely dissipated, but public officials have hung onto the residency requirements because they believe it keeps the industry small and easier to manage.
Pot regulators also cite the U.S. Department of Justice, which has repeatedly warned pot states they must keep drug money out of interstate commerce or face a crackdown.
“The regulators will say, ‘Do we have money flying cross-country to be deposited in the pot industry? Let’s just keep it local,”’ said Chris Lindsey, legislative analyst for the Marijuana Policy Project, which oversees legalization campaigns in many states.
Alaska’s pot regulators voted last year to ease residency requirements for pot industry investment, then backtracked in December. The regulators ended up using the more stringent standards needed to qualify to receive a yearly check from Alaska’s oil wealth fund.
Residency requirements range from six months in Washington to two years in the other states.
In Washington and Colorado, those requirements apply to business applicants and investors. But Washington’s Liquor and Cannabis Board announced this month that it intends to drop the ban on out-of-state investment to make it easier for marijuana businesses to raise money. The change would take effect in March if it’s approved as expected.
