Pubdate: Mon, 18 May 2015
Source: Herald, The (Everett, WA)
Copyright: 2015 The Daily Herald Co.
Author: David Sirota


In January, the SEC for the first time allowed a company that deals 
with marijuana cultivation to sell shares of stock.

The convention floor at Denver Airport's Crowne Plaza on a recent 
afternoon could have been the trade show for any well-established 
industry - gray-haired execs in conservative suits mingling with 
office park dads in polos and fresh-out-of-college types in brand 
emblazoned T-shirts. Only this is a new kind of business conference 
with a special Colorado theme: legal weed.

After Colorado voters legalized marijuana in 2012, more states and 
cities are considering a similar path for themselves. At the same 
time, the cannabis market is looking less like a music festival and 
more like a Silicon Valley confab - upscale, data-driven and focused 
on investors.

Vendors and potential financiers at last month's Marijuana Investor 
Summit here in the Mile High City say the current market for legal 
cannabis is more than $3 billion in the 23 states that have already 
legalized the drug for medicinal or recreational use. Expanding that 
market, they say, will require not just drug reform legislation, but 
also a consistent infusion of capital at a time when the marijuana 
economy still exists in a legal gray area - one where the drug is 
permitted in some states, but still outlawed at the federal level.

"It's going to take time, but it's a great opportunity," said Chris 
Rentner of Akouba Credit, a Chicago small business lender exploring 
the possibility of working with marijuana businesses. "For people 
that think everyone is a stoner lying on the sidewalk passed out, 
it's going to take time for them to get comfortable with it. But 
there's too much money in it. We just need to figure out the risk 
associated with it, but if we can find a way where it makes sense 
legally, then why wouldn't we try to be in this market?"

If Akouba jumps into the marijuana market, the company would be 
trying to address one of the biggest obstacles to the industry's 
growth: access to financial services. Because marijuana is still 
prohibited under federal law, cannabis grow houses and dispensaries 
have trouble finding traditional banking partners, leaving much of 
their business to be conducted in cash.

That not only presents a risk of robbery, it also can limit the 
industry's access to the kinds of lending and accounting services 
that are typically involved in small business development.

Like Akouba, many of the 78 exhibitors and nearly 1,000 attendees at 
the conference are not in the business of actually harvesting 
cannabis. Instead, they aim to provide support services for 
cultivators and distributors.

"The majority of these companies aren't actually touching the plant," 
said John Downs of the Marijuana Investment Company. "There's a green 
line: You are either in the ancillary and tertiary services, or you 
are digging in and growing."

That term - "touching the plant" - is a term of art that 
distinguishes businesses that provide support services from those 
that actually grow cannabis. It's not a minor semantic difference. 
"Touching the plant" can bring greater regulatory scrutiny and 
threats of federal action, thereby putting investors' capital at risk.

That, though, may start to change. In January, the SEC for the first 
time allowed a company that deals with marijuana cultivation to sell 
shares of stock. Meanwhile, the legal situation is becoming clearer 
in Colorado.

Andreas Nilsson of iComply - a firm that helps marijuana business 
follow the law - says that while there remains political opposition 
to weed from leaders like Colorado Democratic Gov. John Hickenlooper, 
the state's officials put together "very well-developed and clear" 
regulations and "decided to go in and create a system that is not 
designed to fail."

Is it a perfect system? Hardly. But has the sky fallen, as drug 
warriors once predicted? No - and it probably will not in other 
states that follow Colorado's lead.
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MAP posted-by: Jay Bergstrom