3 Developments to Watch in 2015: Changing of the Guard, New Markets & Business Accelerator

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By Tony C. Dreibus

While there’s plenty of conjecture about what will happen in the marijuana industry in the new year, numerous developments have already been set in motion.

From a changing of the guard in the U.S. Senate to the emergence of new medical marijuana markets, here’s a closer look at a few of the many developments that will help shape the cannabis industry in 2015.

Capitol Hill Shifts to Republican Control

Voters in November approved recreational marijuana in Oregon, Alaska and Washington DC, but they also voted in enough Republican candidates that the GOP now controls the Senate as well as the House. It’s no secret that conservatives are less friendly to the marijuana movement than their liberal counterparts, so Republican control of Capitol Hill may affect how the industry moves forward.

Marijuana laws have advanced since President Barack Obama took office six years ago, and whether conservatives decide to take on those laws remains to be seen.

“Republican leadership hasn’t tipped their hats on whether to roll back (laws) that have created autonomy and space that have allowed businesses to get going,” said Allen St. Pierre, executive director of the Washington DC-based advocacy group NORML

Fortunately, many conservatives are also staunch supporters of states’ rights and less government, so the shift to a Republican-controlled Hill may not have as big an effect on the industry as many think.

“It’s not perceived as an overt threat to state reforms,” St. Pierre said.

For now, businesses need to take a wait-and-see approach. It should become clear fairly soon how Republicans will respond to cannabis at the federal level in 2015.

New Markets Come Online

Keep a close eye on Illinois, Massachusetts and Nevada. Dispensaries are poised to start in all three states in 2015, and each market could generate significant MMJ revenues.

But the states have experienced unique hurdles along the way, and delays could push back the opening of businesses or dampen sales.

– Illinois legalized medical marijuana in 2013, but it’s taken time for legislators to come up with a plan on how to properly run the industry. Entrepreneurs involved in the licensing process have complained about costs – Illinois has some of the highest MMJ business fees in the nation – and the amount of time it’s taken to get rules in place.

Outgoing Gov. Pat Quinn intentionally made the laws pertaining to medical marijuana stringent, said Joan Lebow, an attorney with Thompson Coburn in Chicago, a firm that practices cannabis law in several states.

“It’s a very demanding statute,” Lebow said. “That’s my subjective opinion, having looked hard at many states.”

It’s unclear when the state will actually select which companies will receive the 21 cultivation licenses and 60 dispensary permits allowed under the law. The initial goal was to name the winners by the end of the year, but Illinois officials are still vetting applicants.

– Massachusetts dispensaries are poised to open soon – but there’s the potential for setbacks. A governor-elect with a less-than-friendly stance on marijuana is preparing to take office, and there’s the possibility of further legal wrangling over the licensing process.

The state has already taken heat for how it handled licensing and delays in getting the program up and running. A recent Boston Globe report showed that the licensing process was fraught with landmines from the start thanks to conflicts of interest and issues tied to vetting applicants.

Still, a judge ruled in at least one lawsuit that patients in Massachusetts have been waiting long enough for relief, and dispensaries appear set to open their doors early in 2015.

The state has awarded 15 preliminary dispensary licenses and could grant more in the new year.

– In Nevada, dispensaries will be able to serve patients from all over the country thanks to a reciprocity law that allows tourists with MMJ cards to acquire medical cannabis while visiting.

The move was calculated, giving tourists another reason to come to Sin City, said Nevada state Sen. Richard “Tick” Segerblom, who represents Las Vegas.

That could help create a sizable medical marijuana industry in the state, even though Nevada currently has just 7,500 patients – which is relatively small compared to other MMJ markets.

Nevada last month handed out 55 preliminary dispensary licenses and more than 300 other types of MMJ business permits.

As in Massachusetts, however, there’s been controversy – and lawsuits – over the licensing process, which could delay some businesses from opening.

Business Accelerator

The legal marijuana industry is growing fast in the U.S., and scores of businesses are trying to keep pace.

But many companies hoping to capitalize on the Green Rush lack a business plan, startup capital and even a basic knowledge of the industry – setting them up for complications and even failure.

Investors also are unable or unwilling to put money into the space, and company valuations are often out of touch with reality.

To address these issues, the high-profile investment network ArcView Group has teamed up with the Colorado company CanopyBoulder to offer a 12-week accelerator program to mentor entrepreneurs on how to properly operate a cannabis business. In exchange, CanopyBoulder and ArcView will take a 9.5% ownership stake in each company.

This development could prove crucial to the cannabis business and lead to the creation of other support offerings for startups.

Accelerators are key components of other industries (particularly agriculture and technology), as they help develop an infrastructure for promising businesses and big-thinking entrepreneurs who might sink on their own.

The accelerator will select up to 20 companies to aid in 2015. Those chosen will receive a $20,000 investment and a host of mentoring, networking and support services.

“They’re going to know every nook and cranny of the business,” said Patrick Rea, the c-founder and managing director of CanopyBoulder.. “It’s so important that we have good entrepreneurs that are chasing good opportunities.”

Next year will be “critical” for the marijuana industry as a whole, Rea said. New companies will come into the market, new laws will be put in place and investors will continue to look for ways into the $2.6 billion industry – making the launch of a business accelerator all the more important.

 Tony C. Dreibus can be reached at Tonyd@mjbizmedia.com