Even though it’s a popular cannabis destination, Colorado has not been friendly to out-of-state entrepreneurs. That all could change…
Colorado is known for being a pot-friendly state, but it hasn’t been so kind to investors.
A lot of publicly traded companies and venture capital firms couldn’t participate in this market, and things were so bad that publicly traded companies weren’t even allowed to hold a Colorado marijuana license.
Overall, this means many cannabis companies and investment firms have been on the outside looking in at the Colorado market, which generated $1.5 billion in sales in 2018.
“What we’re seeing now is states like California, Florida, Massachusetts bring in capital to get ahead of us in infrastructure, R&D, new-product development,” Dean Heizer, executive director and chief legal strategist for LivWell Enlightened Health, said in a statement.
The purpose of the restrictions was to help vet new investments and new businesses trying to enter the state, but it came at a big price. Some cannabis companies decided to just leave instead of dealing with all these issues.
However, thanks to a new bill, that’s all going to change.
The Colorado Cannabis Scene Is Evolving
Thanks to the recently passed bill, the current limit to the number of out-of-state owners of 15 people will be repealed. Also, publicly traded companies will no longer be prohibited from holding a Colorado marijuana license.
Already, cannabis CEOs are very excited.
“We now have the momentum behind us to accelerate the closing of our two acquisitions, MedPharm Holdings and Medicine Man Denver,” Medicine Man Technologies (OTC: MDCL) CEO Andy Williams said in a statement.
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This is also exciting news for what this means for cannabis investing moving forward.
With more access to more investors, out-of-state firms that have been eyeing Colorado but have been unable to receive a license can finally expand their footprint. It will also allow firms increase the number of dispensaries they operate, and it will help create national brands.
As we’ve talked about before, the companies that are going to be the Microsoft of cannabis need a footprint everywhere and need to create a national identify with their products.
This is also going to help companies that want to go public.
Raising More Capital
Obviously, the biggest investment firms and hedge funds have more than 15 people. That means, up until now, they couldn’t get into the market. For them, that means they make less money.
For cannabis entrepreneurs, it meant they may not have been able to grow their business as fast as they want, create jobs and hire as many people as they want, and weren’t able to reach as many customers as they may have wanted.
They simply were limited in raising money to do all of those things.
This new bill could change all of that, and it can have a big ripple effect for Colorado cannabis firms. Companies raise money through IPOs, but hedge funds and big investors normally need to fund a company to help it reach a certain size, reach certain goals, have a certain footprint, and generate a certain amount of sales before it goes public.
If a company is still too small and tries to go public or isn’t ready, it could be a flop.
However, if it is funded properly, it could lead to a massively successful public offering.
With Colorado, I also want to mention that politicians in the state are looking at bills that would allow marijuana deliveries and tasting rooms.
Coming soon, I’ll have a report out about a different state that just approved cannabis lounges. Keep an eye out for that, as it shows the normalization of cannabis is spreading quickly.
Until next time,
Executive Director, National Institute for Cannabis Investors
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4 responses to “Colorado Welcomes a New Era of Cannabis Investing”
May 06 2019