Cannitrol – Cannabis Control Agent

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Colorado’s marijuana industry opened to outside investors

Colorado’s prohibition on publicly traded cannabis companies, which dates back to legalization and was previously preserved by former Gov. John Hickenlooper, is now a relic of the past.

Gov. Jared Polis signed legislation Wednesday ending the ban, opening up Colorado’s cannabis industry to outside investors for the first time. A publicly traded Denver company says it can now acquire two cannabis companies in the state, earning it millions of dollars in annual revenue.

“There are arguments to be made from both sides of this,” said Kris Krane, co-founder of the cannabis firm 4Front, which does not operate in Colorado. “I think there are some positives that are going to come from opening this up to public companies and there are probably some negatives as well.”

The change in law is expected to bring new cannabis products to Colorado from companies that have previously stayed away from the state. It could also accelerate consolidation, with large national chains purchasing Colorado’s smaller cannabis shops faster than ever, Krane says.

“In the long term, you may see a downward impact on pricing, because you’re going to have companies that are now able to build operations of scale and efficiencies of scales they probably wouldn’t have been able to build without that kind of capital,” he added.

Some of the state’s largest cannabis companies lobbied lawmakers to support the bill. Beyond Broadway LLC, the company behind LivWell dispensaries, spent more than $20,000 on lobbying in the first three months of 2019, including on the investment bill. Medicine Man spent $18,000 on lobbying, The Green Solution paid $16,251 and Native Roots used $15,000, state records show.

After the bill passed, Medicine Man Technologies, a publicly traded cannabis firm in Denver, announced it can now acquire the companies MedPharm Holdings and Medicine Man Denver.

“This is a monumental time for us, and we believe the growth potential is both substantial and compelling,” said Andy Williams, CEO of Medicine Man Technologies, in a press release.

Publicly traded cannabis companies have operated in Colorado for some time, but are restricted in their ability to hold state marijuana licenses. The result is a convoluted trail of ownership. Williams, for example, already owns 38 percent of Medicine Man Denver and holds licenses for its shops.

MJardin, another cannabis consulting company in Denver, has been publicly traded in Canada since November. It manages Buddy Boy dispensaries here, along with cultivation facilities and grow operations, and its founder holds the state marijuana licenses for those companies. After the Boston Globe and Denver Post reported on MJardin’s public trading, the state opened an investigation into the company. MJardin says it’s complying with that investigation.