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Judging Washington State’s Cannabis Business Viability

Investor enthusiasm in the cannabis industry is high! Unfortunately there is not a lot of understanding about how to invest in an industry that is clearly going to boom in the United States. Most investment groups who look into cannabis investment end up at the conclusion that it is safer to invest in businesses that are ancillary to direct-touch cannabis companies. Of course if it is Federal law that an investor is worried about, businesses that aid in the delivery of a Schedule 1 Controlled Substance are clearly engaged in Criminal Conspiracy as well. The bottom line with all cannabis related investment is that they hinge on cannabis. Investment must be made in production facilities for it all to work. What good is it to own a specialty cannabis container company if there is nothing to put in the container? Investment must be encouraged in production for the benefit of all.

Part of the problem is that there are many investors who have instructed their lawyers to tell them when cannabis is “sufficiently legal” so that they can start investing in cannabis businesses. These people are going to be waiting for longer than they think. If you desire to join this industry, as an investor or otherwise, you are going to have to have a level of risk-tolerance, knowledge of policy and have a good understanding of where things are heading and the forces that are steering it.

My next few articles will focus on Washington State. I have been working on changing Washington State cannabis law and policy for more than 20 years so it is the area in which I have the most detailed knowledge. The salient question in this forum is whether Washington State is a good place to invest in cannabis business. My answer is that it is likely about to become the best in the nation. The politics are great for those that are willing to be squeaky clean in their business practices. The problem that has been holding Washington back from really forming a robust industry has been the messy laws and rule-making.

That is, very likely, about to change. There have been 61 cannabis related bills dropped in Washington State’s 2015 Legislative session. Somewhere in all of these bills is success and disaster. If you knew now which of these is going to pass you would have a substantial business advantage. What I would like to do in the coming weeks is give you the inside information as to what is happening in the legislature and also what is happening in the “smoke filled rooms” of the Capital. I will also be providing an analysis as to what this could mean for investment viability.

Washington has the opportunity to become the center of the cannabis industry. It has both medical and adult use recreational laws. It has excellent industry acceptance polling. It has a progressive bent. It has a long history of State and local government dealing with cannabis policy change. It is the most populous state with legalized cannabis with the 13th largest Metropolitan area in the United States. The U.S. Attorneys have existed in a reality of some form of State legalization since 1998. It is also home to the largest cannabis event on earth, Seattle Hempfest. If the elected officials in Washington can get it right in the 2015 session, I believe that this area will take off. So let’s see where this goes. I will provide an update next week. Your homework, if you want to really geek out, is to read Senate bill 2S5052. Also, be aware of House Bill 1461 but know that bill will be changed enough that a reading may be premature.

For the past 20 years, John Davis has fought in the trenches and with his wallet and business interests (not to mention sticking his neck out nationally!) to work diligently to end prohibition in his home state, Washington and  on a national level. In addition to being the Chairman of Seattle Hempfest, John is the founder of the Coalition for Cannabis Standards and Ethics, a board and founding member of the NCIA and a leading policy expert working on international cannabis policy reform.

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