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

An artist’s conception of a Zunum Aero hybrid-electric plane. (Zunum Aero)
Collapsed hybrid-electric Bothell plane-maker sues Boeing

Zunum alleges that Boeing, an investor, improperly used intellectual property and trade secrets.

The Point Wells industrial area next to Woodway, where a developer proposes to build more than 3,000 condos. (BSRE Point Wells)
Point Wells plan should abide stricter rules, critics say

Landslide hazard regulations drew scrutiny at a public meeting this week on BSRE’s longtime proposal.

New Snohomish County online guide aims to boost businesses

County officials have launched an online business directory to help shoppers find local food and wares.

FILE - In this Tuesday, June 20, 2017 file photo a Boing 737 MAX 9 airplane performs a demonstration flight at the Paris Air Show, in Le Bourget, east of Paris, France. Europe’s aviation regulator has taken a step closer to letting the Boeing 737 Max fly again. It published a proposed airworthiness directive on Tuesday that could see it clear the aircraft within weeks to resume flying after nearly two years and a pair of deadly crashes. (AP Photo/Michel Euler, file)
European regulator moves to clear Boeing 737 for flight

The move comes after the FAA already cleared the Boeing 737 Max earlier this month.

Diners Bonnie Breitman, left, and Casey McGan huddle near an outdoor gas fire as they eat lunch outside in a blustery wind Tuesday, Nov. 17, 2020, in Bellingham, Wash. Washington Gov. Jay Inslee on Sunday announced tighter restrictions in the state in response to a flood of new cases of COVID-19, the disease caused by the coronavirus. Restaurants and bars will again be limited to outdoor dining and to-go service, gyms, and some entertainment centers will be required to close indoor services. Retail stores, including grocery stores, will be ordered to limit indoor capacity and indoor social gatherings will be prohibited unless attendees have quarantined for 14 days or tested negative for COVID-19 and quarantined for a week. (AP Photo/Elaine Thompson)
New shutdown expected to cost Washington restaurants $800M

The Washington Hospitality Association urged lawmakers to figure out ways to support hospitality businesses.

Burton Clemans, an employee at Sisters for 8 years, packages up a Sisters cookie on Tuesday, Nov. 17, 2020 in Everett, Wa. (Olivia Vanni / The Herald)
Sisters closes, for now, as eateries enter another lockdown

The four-week ban on indoor dining has local restaurants pondering whether to shut their doors for good.

Washington Gov. Jay Inslee speaks during a news conference, Sunday, Nov. 15, 2020, at the Capitol in Olympia, Wash. Inslee announced new restrictions on businesses and social gatherings for the next four weeks as the state continues to combat a rising number of coronavirus cases. (AP Photo/Ted S. Warren)
Inslee announces $135 million pandemic relief plan

The state will use CARES Act dollars to help businesses and people impacted by latest restrictions.

The AFK Tavern is closing up shop on Nov. 28 after 10 years due to their lease being up and the impact of COVID on November 15, 2020.  (Kevin ClAFK / The Herald)
Game over: After 10 years, last call at Everett’s AFK Tavern

The closing is due to COVID and the end of a lease. The owner hopes to reopen elsewhere in 2022.

Steve Dickson, administrator of the Federal Aviation Administration, at the U.S. Chamber of Commerce Aviation Summit in Washington, D.C., on March 5, 2020. MUST CREDIT: Bloomberg photo by Zach Gibson.
FAA faces its own reckoning as it gives Boeing path to fly jet

The agency is devoting more time and resources to assess how pilots react to emergencies.

Middle-school counselor Shanon Baker poses for a photo in the school's library Wednesday, Nov. 18, 2020, in Sammamish, Wash. A master's degree and a full-time job weren't enough to help Baker land an apartment she could afford in Seattle's east-side suburbs. But a $750 million commitment by a partnership backed in part by Microsoft's affordable housing initiative helped do the trick. Urban Housing Ventures is cutting rents at 40% of the units in three buildings as part of an effort to make sure teachers, nurses and other middle-income professionals can live in the communities where they work. (AP Photo/Elaine Thompson)
Microsoft-led housing effort cuts rents in Seattle suburbs

The plan is to help middle-income professionals live in the communities where they work.

The father of Bhavye Suneja, one of the pilots of a Lion Air plane that crashed in Indonesia, reacts as he leaves for the airport in New Delhi, India, on Oct.29, 2018. The pilot's mother, Sangeeta Suneja, says the FAA and Boeing are bringing the 737 Max back to service prematurely. (AP Photo, file)
Pilot’s mother criticizes FAA, Boeing for rushing Max’s comeback

Her son lost control of a Lion Air plane after an automated system repeatedly pushed its nose down.

Steve Hobbs
Democratic lawmakers ask Inslee to lift ban on indoor dining

They want to try to scaling back on occupancy before forcing an end to inside service.