Legal marijuana has always carried the promise of economic vitality, of business booms and massive investments and overflowing tax coffers. And with that promise have come fears of the corporatization of “Big Marijuana.”
Those fears are coming to the surface again, as Washington, Oregon, and Colorado prepare to open their legal cannabis industries to out-of-state investors. The move could bring untold riches to these states, but also a corporate element many in the industry oppose.
These worries started almost immediately after Washington and Colorado became the first states to legalize cannabis for recreation, in 2012. At a press conference in 2013, former Mexican President Vicente Fox and businessman Jamen Shivley described plans to build a nationwide marijuana brand with huge economic prospects.
“Yes,” Fox said at the time, “we are Big Marijuana.”
Big Marijuana never happened. But it could soon, if under different management.
Washington pushing bill to allow out-of-state investment
Officials in Washington moved in March to pass a rule that would let outside investors pour their money into pot shops and other corners of the marijuana industry there. A similar rule took effect in Oregon in February, while Colorado will likely enact one soon.
The new regulations will open the doors to massive corporate investments from across the United States. Many in an industry known for its mom-and-pop culture say this could end with something akin to Big Tobacco.
But Washington and the other states where cannabis is legal have other concerns. If California joins the crowd by legalizing in November, as expected, these states could lose a huge pool of investment. Moving now ensures financiers will enter local markets before California acts.
As of now, Washington requires that any marijuana investor set up residence in the state for at least six months before joining the industry. The new rule, set to take effect in June, would remove that mandate, said Brian Smith, spokesman for the Washington Liquor and Cannabis Board.
The rule change won’t allow outside investors to hold an actual ownership stake in cannabis businesses. But the state Legislature could change that, too, as a bill currently before lawmakers would allow non-residents to own up to 49 percent of these companies.
Concerns over the corporate takeover of marijuana
There is concern, said Heather Wolf, an industry lawyer in Washington, that the new rule “will lead to the big business takeover of the marijuana market in Washington.” The same concern surfaced when the drug first went legal in 2013.
Fox and Shively were the public face of that worry. Shively, a former corporate strategy manager at Microsoft, famously predicted his marijuana plans would create more millionaires than the software giant. Fox wasn’t part of the endeavor but said he supported it as a front against the war on drugs.
But those plans quietly died, and the local industries in Washington and elsewhere were built with a decided small-business mentality. Many of those businesses are raking in money, but others are not. And that’s where outside investment comes in.
“There’s only so many people willing to invest in this risky and new industry,” said Colorado state Sen. Chris Holbert. “So allowing people from out of state to become investors in this business . . . seems like a good idea.”
Whether the plan ends in a corporate cannabis culture has yet to be seen. But one thing is guaranteed: a lot more money all around.
What do you think? Is it a good idea for states to allow outside marijuana investments? What can they do to prevent the threat of Big Marijuana?