25 March 2016
This LA Times articles highlights the new rules introduced in all three states allowing for inward investment to grow the marijuana industry throughout the NW and Colorado
The LA Times reports
Liquor and Cannabis Board spokesman Brian Smith says the new Washington rule will take effect in June, eliminating a six-month residency requirement for out-of-state investors.
Financiers will still not be allowed to have an ownership stake in the businesses they back, he adds. But a bill before the Legislature, if approved, would permit nonresidents to own as much as 49% of a marijuana operation.
Some worry that “will lead to the big business takeover of the marijuana market in Washington,” said Bellingham, Wash., attorney Heather Wolf, who represents industry entrepreneurs. That was also the concern in 2013, when Washington prepared to launch legal sales of recreational marijuana approved a year earlier.
The state’s fledgling pot market, envisioned as a low-key, mom-and-pop industry, would be Wal-Marted, some felt. Shively, chief executive of a company called Diego Pellicer — named for a Filipino hero and major hemp farmer who was also Shively’s great-great-grandfather — predicted he would mint more millionaires than Microsoft, where he once worked as a corporate strategy manager.
Fox, not involved in Shively’s venture, said he supported the plan in the belief that legal marijuana was the solution to ending the costly drug war that plagues Mexico and the U.S.
But after Shively and Fox dropped out of the picture and the Big Marijuana threat subsided, the mom- and-pop-system went on to success.
So did Uncle Ike’s, a Seattle neighborhood pot store that in one recent month did $1.4 million in sales. It’s one of 223 Washington pot stores that sold $260 million in products in the last fiscal year, generating $65 million in state excise tax and hundreds of thousands of highly happy customers.
This fiscal year, Washington pot sales have skyrocketed to $620 million, and have put $119 million into the state tax coffers. But not all pot entrepreneurs are raking in profits. To help them, and expand their markets, Washington and other states are easing outside-investment restrictions.
“There’s only so many people willing to invest in this risky and new industry,” Colorado state Sen. Chris Holbert, a Republican, recently told the Associated Press, “so allowing people from out of state to become investors in this business … seems like a good idea.”
“We have been tracking Washington’s position on out of state investors,” said Ron Throgmartin, chief executive of Diego Pellicer Worldwide of Santa Monica, which owns the Washington subsidiary, Diego Pellicer Inc. “We applaud their recent changes to allow such investment.”
It’s apparently a good idea to the once-outsider-shy Washington pot industry as well. At several recent public hearings, no one spoke out against the proposals to drop residency requirements, while many spoke in favor.
“This bill would be an incredible tool for the industry to help get it better capitalized, which it desperately needs to do,” said Ezra Eichmeyer, a marijuana industry consultant. “This entire industry had to launch from scratch, in a very short period of time, all at the same time, without any bank loans, and being limited to investment capital only from Washington.”
Today, “that is hindering us,” he said. Despite the millions in annual sales and an average $14 million in monthly tax revenue, Eichmeyer said, “We’ve captured only a fraction of the illicit drug market.” More investors and more sales will mean millions more flowing into the state’s tax coffers and less going to the black market, he said.
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