Colorado Changes Residency Requirement for Marijuana Businesses

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Now awaiting Colorado Gov. John Hickenlooper’s signature: A bill to allow out-of-state individuals to take ownership roles in licensed marijuana companies, a major shift that could open the financial floodgates for Colorado cannabis businesses.

The measure, Senate Bill 40, was given final approval by the state legislature on Wednesday. The Cannabis Business Alliance lauded the move, and said the so-called “Ownership Bill” will help the state’s cannabis industry to continue growing.

Under current law, any owner of a licensed cannabis medical or recreational business must have been a Colorado resident for at least two years prior to applying for a permit. A residency requirement is a common restriction in many states with legal cannabis industries.

SB 40 tweaks that to require direct owners be U.S. residents or a resident of Colorado for at least one year, but if a company has any out-of-state owners, the most it can have is 15 owners total. If all direct owners are Colorado residents, however, there’s no such cap. It further allows for “indirect beneficial interest owners” who could own up to 30% of a cannabis company as long as they’re qualified institutional investors.

That means out-of-state U.S. residents, and even foreign nationals, will probably soon be at least partial owners in Colorado’s marijuana industry.