In this 2018 photo, a marijuana plant awaits transplanting at the Hollingsworth Cannabis Company near Shelton. (AP Photo/Ted S. Warren, File)

In this 2018 photo, a marijuana plant awaits transplanting at the Hollingsworth Cannabis Company near Shelton. (AP Photo/Ted S. Warren, File)

To spur investment, marijuana businesses want rules eased

Another group has proposed a low-interest loan program, to help women- and minority-owned startups.

OLYMPIA — A leading marijuana industry group wants to erase a legal barrier to out-of-state investments in existing businesses and create a new stream of funding for start-ups run by women and minorities.

The Washington CannaBusiness Association is looking to get rid of the rule that a person must live in Washington at least six months before they can obtain a license for or purchase equity in a marijuana growing, producing or retailing operation.

This would open the door to potential investors who are now pouring venture capital into recreational markets of other states, said Vicki Christophersen, executive director of the association which represents producers, processors and retailers.

“We’re seeing that our companies are left behind in access to capital,” she told reporters Monday. She couldn’t say how much might be secured by Washington business but said she anticipated “a significant amount” would flow into the state if the restriction is removed.

Removing the residency requirement is a piece of a broader legislative proposal the association hopes lawmakers will embrace in the 2020 session.

Another piece is the creation of a new state-managed revolving loan program, known as the Equity Fund, to assist women and minority license-holders in getting into the industry. The money would come from a new 1% transaction fee on capital investments greater than $500,000 into marijuana businesses.

The fee would expire Dec. 31, 2025, under the proposal.

As envisioned, this Equity Fund would provide low-interest loans for start-up costs and renovations, as well as innovations and upgrades. Money could go into creating new products that rely on new and expensive equipment to manufacture, according to association materials.

The state Department of Commerce would manage the fund. An advisory board would be established to help decide who receives loans and the terms and conditions for paying them back.

Washington became one of the first states in the nation to make it legal to grow and sell marijuana for recreational use with passage of Initiative 502 in 2012.

It’s grown swiftly into a billion-dollar retail industry, employing several thousand workers and generating hundreds of millions of dollars in taxes for state coffers each year.

Across the nation, 11 states now have legal industries — though only Alaska and Washington have residency requirements for ownership and investors, according to the cannabis business group.

Christophersen said “it’s only a matter of time” before the federal government embraces legalization. Getting rid of the residency rules will enable Washington companies to better compete in a global marketplace when that day arrives, she said.

Rep. Shelley Kloba, D-Kirkland, is a member of the House Commerce and Gaming Committee which oversees marijuana industry policy. She’s interested in learning details of the proposal but said the residency requirement is not the chief concern of growers, producers, and retailers with whom she’s spoken.

They’re talking about the state’s high excise tax, limit on the number of retailers and policies which contribute to an oversupply of product.

She said lawmakers should be cautious about messing with the requirement as it was “part of the package” presented to voters.

The original initiative required three months of residency and the Legislature later made it six months.

Assuring only Washington residents could own and invest in marijuana businesses gave voters a greater degree of comfort that any profits would stay in the state, she said. It also served as a deterrent to money from illegal enterprises finding its way into the industry, she said.

Christophersen said the proposal will be drafted in a bill and she anticipated getting Democratic and Republican lawmakers as sponsors.

The 2020 session begins Jan. 13.

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.

Talk to us

More in Herald Business Journal

David Simpson (left) and Scott Murphy.
Port of Everett candidates spar over transparency

An incumbent, David Simpson, is challenged by Everett City Councilmember Scott Murphy.

Rendering of the new terminal that Propeller Airports plans to build at Paine Field in Everett. The terminal, which will serve the general aviation community, will replace Castle & Cooke Aviation's existing building at the Snohomish County-owned airport. (Propeller Airports LLC)
Propeller Airports to acquire Castle & Cooke at Paine Field

Propeller, which owns the nearby passenger terminal, plans a new complex for private aviation.

Everett Farmer’s Market canceled Sunday due to weather

Organizers cited a high-wind advisory. It is to reopen Oct. 31 for the final market of the season.

FILE - In this May 26, 2020, file photo, a sign at the headquarters for the Washington state Employment Security Department is shown at the Capitol in Olympia, Wash. Washington state's rush to get unemployment benefits to residents who lost jobs due to the coronavirus outbreak left it vulnerable to criminals who made off with hundreds of millions of dollars in fraudulent claims. (AP Photo/Ted S. Warren, File)
Washington’s unemployment rate in September was 4.9%

Employers added 17,600 jobs last month, a 7.3% increase over August.

With the Olympic mountains in the background, the first passenger flight by Alaska Airlines Flight 2878 departs for Portland on opening day of the Paine Field Terminal on Monday, March 4, 2019 in Everett, Wash. (Andy Bronson / The Herald)
Alaska Airlines stalls plan for extra flights in Everett

Business has been sluggish, but the airline says it will offer 12 flights a day at Paine Field in the new year.

Hillside homes in Mukilteo are seen from the ferry line on Oct. 20. (Andrea Brown / The Herald)
Mukilteo asks for input on housing density, and it’s complicated

Here’s a guide to what voters should know about the advisory ballot measure. What does it actually do?

People hold signs in protest of the vaccine mandate after Boeing announced it would terminate workers who do not comply on Friday, Oct. 15, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Some Boeing workers protest in Everett over vaccine mandate

The Boeing Company announced earlier this week that its workers must be vaccinated by Dec. 8.

FILE - In this file photo dated Monday, March 11, 2019, rescuers work at the scene of an Ethiopian Airlines plane crash south of Addis Ababa, Ethiopia.  The number of deaths in major air crashes around the globe fell by more than half in 2019 according to a report released Wednesday Jan. 1, 2020, by the aviation consultancy To70, revealing the worst crash for the year was an Ethiopian Airlines Boeing 737 MAX on March 10 that lost 157 lives. (AP Photo/Mulugeta Ayene, FILE)
Former Boeing test pilot pleads not guilty in 737 Max case

He’s the first person to be charged with a crime in connection with the Indonesia and Ethiopia crashes.

FILE - In this March 14, 2019 file photo, Ethiopian relatives of crash victims mourn at the scene where the Ethiopian Airlines Boeing 737 Max 8 crashed shortly after takeoff killing all 157 on board, near Bishoftu, south-east of Addis Ababa, in Ethiopia. Relatives of some of the passengers who died in the crash will mark the two-year anniversary of the disaster on Wednesday, March 10, 2021, by seeking a reversal of government orders that let Boeing 737 Max jets fly again.  (AP Photo/Mulugeta Ayene, File)
Boeing pilot involved in Max testing is indicted in Texas

He’s accused of giving the FAA false information about systems that played a role in two deadly crashes.

Top (L-R): Kim Daughtry, Steve Ewing. Bottom (L-R): Gary Petershagen, Marcus Tageant.
Developers court Lake Stevens council incumbents with over $20K

Over half of the campaign dollars for four candidates came from people tied to real estate or property development.

Traffic drives in view of a massive Boeing Co. production plant, where images of jets decorate the hangar doors, Friday, April 23, 2021, in Everett, Wash. (AP Photo/Elaine Thompson)
Boeing says workers must get the COVID vaccine by Dec. 8

“Compliance with these requirements is a condition of employment,” says an internal company presentation.

The Boeing 737 Max 10 airplane landing at Boeing Field in Seattle on June 18. (Chona Kasinger / Bloomberg)
Boeing ramps up 737 Max but 787 deliveries are still blocked

Boeing last month maintained its steady trickle of sales as it navigates the aviation downturn.