Natives and transplants: Where should Colorado’s marijuana investment come from?

by DGO Web Administrator

Green begets green: the legalization of cannabis in Colorado has generated enormous amounts of money, a situation that should be a win for everyone involved. But there are a host of problems that have accompanied this green rush. While most of the difficulties bypass the happy consumers, business owners are forced to grapple with a unique set of issues while they navigate the waters between in-state legality and nationwide prohibition.

The first involves who is actually allowed to invest in the cannabis industry. As of now, only Colorado citizens with a minimum of two years of residency have been allowed to have medical or recreational licenses, as granted by the state’s Marijuana Enforcement Division (MED). There is a bill, SB 16-040, that passed the Colorado Senate and awaits the governor’s signature; it would expand the potential pool of owners and investors to include individuals who do not meet the current residency standards beginning in January, 2017.

I remember my first trip to Colorado, in the summer of 2014. Legalization was about six months along. My friend and I stopped into a dispensary as we entered Denver, grabbed a stash for our weekend, dropped in to his cousin’s place for a shower and dinner, and headed out to meet my friend Mark. Mark is a native and a life-long state resident. As the evening proceeded, as conversations deepened, and as Mark’s bourbon tally rose, it became obvious that he carried a strong bias against out-of-state investment in the new and booming marijuana economy. I’m unable to print much in the way of direct quotes, but suffice it to say that, were this column a movie, Mark’s scene would blow any chance at a PG-13 rating.

The schism between the natives and the transplants is a well-known, decades-old, deeply-rooted complex with tendrils that expand in a variety of interesting directions. But this wasn’t just bashing the newbies for the sake of bashing; as he looked directly into my eyes (slightly blurred but also as fiery as a football coach late in the fourth quarter) and grabbed the front of my shirt for emphasis, I knew something that mattered deeply to him was about to come out of his mouth: “We didn’t do this … we didn’t fight for so long to get the laws changed so outsiders could just come in here and make money off our hard work,” he said. “Come here; that’s fine. Have fun. Learn from us … Then go back to your state and get the laws changed there.”

He had a point. Colorado residents put the sweat equity into changing the state’s cannabis laws while also assuming the risk of going into direct conflict with federal regulations and leading the charge in recreational marijuana.

The MED’s residency standards and background checks not only provided preferential treatment for those folks who put in the work to create a legal weed market here, but have also operated as a safeguard against investment by those who might use the new freedom to enrich criminals – including drug cartels – while deftly handling the complications that come with the federal ban on interstate commerce involving cannabis businesses. The program has been a great success so far and the problems that have arisen between the state and the Obama administration have been negligible.

The era of native investment is coming to a close. This is America, after all, and cash is king. As the other legal states – Oregon (2 year residency requirement), Alaska (2 years), and Washington (6 months) – create policies related to who they will allow to invest in their cannabis industries, and as California gears up for ballot measure that would expand its current medical-only program to a full recreational one, Colorado business owners and lawmakers have some important decisions to make with regard to the competition that has grown in other state since 2014. Billions of dollars hang in the balance and there is a tightrope to be walked regarding keeping cannabis money in-state and the potential loss of financing to those investors who might feel hamstrung by the regulations and decide to take their money elsewhere.

Christopher Gallagher lives with his wife and their four dogs and two horses. Life is pretty darn good. Contact him at [email protected]


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