The bill could allow entities outside of Colorado to invest in the industry
In the case of marijuana investments, Colorado companies are hoping the second time’s the charm. A bill is beginning to gain steam in the state’s legislature that would allow out-of-state investors and private equity firms to invest in Colorado marijuana businesses and jumped an important hurdle this week. It’s the second attempt at the legislation, with the first try failing under then-Governor John Hickenlooper.
The Colorado House Finance Committee unanimously gave its approval to House Bill (HB) 1090 yesterday. The bill seeks to cancel a current restriction that prohibits out-of-state owners from having a stake in Colorado-based marijuana entities that have more than 15 individuals. It would also allow publicly traded entities to apply for, and receive, marijuana licenses in the state.
Last year, Hickenlooper vetoed a similar bill in a last-minute bit of sleight of hand. He axed the measure after the state’s legislative session had ended and prevented it from being reconsidered.
This time, the law has a better chance of surviving. It is already been given support – with requests for minor changes – by the state’s current governor, Jared Polis. Representative Matt Gray explains, “This year, when we introduced a similar bill we got engagement from the executive branch we hadn’t seen before. The governor himself came to us and said, ‘I like what you’re doing but let’s do it a little bit more.’”
HB 1090 also includes another important difference from its predecessor. The ownership threshold to become a “controlling beneficial owner” of a company in the marijuana space would be set at 10%, up from its current 5%. This would allow the inclusion of more “passive” owners who could take a bigger stake in the operations without having to undergo initial background checks.
The move comes in an attempt to attract more marijuana investments to the state. As the executive director of the Marijuana Industry Group, Kristi Kelly, explains, “Colorado was often seen as the most attractive place and most sustainable place to establish a legal cannabis business and today we’ve lost a lot of traction to other states. Investors, both public and private, have turned their attention to other states and other countries.”
The bill now moves forward to be considered by the Senate Appropriations Committee.