29 July 2016
MJ Biz Reports, here’s the introduction…
Out-of-state investors are pumping millions of dollars into Oregon’s marijuana industry now that a restrictive residency requirement has been abolished, giving local cannabis businesses a sorely needed pipeline of money to tap as they grow.
In March, Oregon’s governor signed a law eliminating a rule that required every legal marijuana business to be at least 51% owned by an Oregon resident who lived in the state for at least two years.
As a result, cannabis companies are now free to raise money from out-of-state investors in exchange for equity, making the market much more attractive to deep-pocketed individuals and firms looking to fund marijuana businesses.
“For every five people who came into my office, three or four of them were looking for capital, and they couldn’t find it here in Oregon,” said Portland attorney Amy Margolis, who is also the executive director of the Oregon Cannabis Association, which pushed the new law through the legislative process. “It became clear that unless people could reach outside the state for investment money, we weren’t going to have a very successful market.”
Since March, however, the number of deals that have been struck has been sky-high, with all types of cannabis companies – including retailers and cultivators – raising “hundreds of thousands of dollars” each to grow their companies, Margolis added.
“I think the typical raise is under half a million dollars,” Margolis said.
Sam Chapman, a co-founder of New Economy Consulting, said he’s even seen a few raises between $1 million and $5 million from out-of-state investors.
“Without a doubt, there’s more capital available in Oregon now than prior to the residency requirement being removed. Overall, that’s a positive outcome,” Chapman said.