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Colorado appears ready to open cannabis markets to outside investors

Colorado’s $1.5 billion-a-year marijuana industry appears on the threshold of opening its recreational and medical markets to a potential rush of outside investors and capital, almost a year after former Gov. John Hickenlooper shot down similar legislation.

Bipartisan legislation that would allow publicly held companies to both invest in and hold marijuana licenses in Colorado is being considered again this legislative session – and this time, odds are good it will pass and become law. A state House panel is scheduled to take up the bill Monday.

Dean Heizer, executive director and chief legal strategist for LivWell Enlightened Health, a Colorado-based marijuana retail operator, said the current law barring outside investment puts the state at a disadvantage versus those that don’t have such restrictions.

“What we’re seeing now is states like California, Florida, Massachusetts bring in capital to get ahead of us in infrastructure, R&D, new-product development,” Heizer said.

“That’s not something the Silicon Valley of cannabis – Colorado – should allow to happen.”

Colorado lawmakers passed a similar bill last year, but it was vetoed by Hickenlooper, who called it “premature,” partly because the industry is still illegal on a federal basis and lacks banking services.

Hickenlooper, a Democrat, also expressed concerns about the potential for criminal enterprises to get a foothold in Colorado’s marijuana market. After Hickenlooper’s veto, local cannabis companies threatened to leave Colorado.

New regime, new promise?

Cannabis entrepreneurs in the state have cheered the fact that new Gov. Jared Polis, a Democrat, has positioned himself as a champion of marijuana issues, and MJ industry officials are confident he will back the investment measure as long as it has strong safeguards.

The current law limits out-of-state owners to 15 people. That not only eliminates the potential for a public stock offering or a merger with a publicly held company, but it also shuts out capital raises from venture capital funds that have more than 15 investors.

“We’ve been hindered in our growth because our laws restricted outside ownership and investment,” said Andy Williams, CEO of Denver-based marijuana grower and retailer Medicine Man.

“This is a little late but allows Colorado companies to compete with the rest of the country and the rest of the world. Without it, Colorado would fall further behind.”

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