[author: Anna Bernhardt]

There is money to be made in the marijuana industry, and public corporations are taking notice. Colorado’s House of Representatives introduced HB 18-1011 that would allow for – public corporation investment in licensed marijuana businesses. The bill was approved by the House and Senate and was sent to the Governor for approval on May 22, 2018. On June 5, 2018, however, Colorado Governor John Hickenlooper vetoed the bill, leaving hopeful investors deflated.

Hickenlooper explained that the bill was simply too premature when considering the federal legal landscape. Because marijuana businesses are still technically breaking federal law, the lack of proper banking services and securities laws would make these investments too risky. He stated that opening the door to such a large pool of capital of largely anonymous donors would require a level of oversight that the State is unable to perform without the industry having access to proper banking services. Hickenlooper cited his Administration’s continued focus on ensuring that marijuana legalization was accompanied by strong regulation to safeguard public safety while not unnecessarily limiting the growth of the burgeoning industry.

The Governor’s caution against potentially degrading the regulatory system Colorado has worked so hard to create is understandable, but at what cost? Why should Colorado’s marijuana companies be prevented from accepting capital if the public companies who want to invest understand the risk and want in anyway? This development seems especially surprising considering the recent listing of two Canadian cannabis companies on U.S. stock exchanges.

This decision by the Governor came just weeks after the New York Stock Exchange (“NYSE”) allowed its first Canadian company with cannabis operations to list on the exchange. In February, NASDAQ allowed U.S. investors to trade in the shares of a different Canadian company with cannabis operations. While neither the NYSE nor NASDAQ has released formal rules on allowing the listing of cannabis companies, they are informally willing to accept cannabis companies on a case-by-case basis as long as they comply with all relevant laws in the jurisdiction in which it operates.