Colorado lawmakers approve marijuana bill to attract outside investors

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Colorado legislators passed a bill to open the state’s $1.5 billion-a-year cannabis industry to outside investors and capital such as publicly held companies and large venture funds.

The measure, which comes a year after former Gov. John Hickenlooper rejected similar legislation, was approved by the Senate after previously being passed by the House, and now goes to Gov. Jared Polis for his signature. Polis has expressed support for the bill.

Andy Williams, co-founder and newly appointed CEO of Denver-based cannabis consultancy Medicine Man Technologies, lauded the bill’s passage, saying it will help drive future growth.

“We now have the momentum behind us to accelerate the closing of our two acquisitions, (cannabis research firm) MedPharm Holdings and Medicine Man Denver,” he said in a statement.

The bill:

  • Repeals regulations that cap the number of out-of-state owners to 15 people, provisions that have blocked publicly traded companies and many venture capital funds from participating in the market.
  • Allows publicly traded companies to hold a Colorado marijuana license.
  • Creates two new kinds of ownership licenses. One license would be for individuals who own at least a 10% stake in a cannabis licensed firm; the other would be for passive investors who own less than a 10% interest.

The legislation also puts in place several safeguards, including a requirement that publicly traded businesses or controlling investors receive a finding of “suitability” from state regulators.

After Hickenlooper’s veto last year, local cannabis companies threatened to leave Colorado, saying their growth opportunities were too limited.

Some, however, fear the newly approved measure will make it more difficult for smaller enterprises to compete.