When Colorado legalized recreational marijuana in 2014, it prohibited publicly traded cannabis companies from operating in the market. This created a unique Colorado marijuana market populated by a diverse group of smaller, local operators. That is about to change; Governor Jared Polis recently signed into law HB19-1090, a measure that will allow larger, out-of-state investors to enter Colorado’s market effective November 1, 2019.
The law was supported by many of Colorado’s existing cannabis companies. Those companies likely see a potential windfall on the horizon from larger, multi-state operators looking to establish or increase their presence in one of the most successful state marijuana markets. And it did not take long for the first dominoes to begin to fall (or at least teeter). Medicine Man Technologies, a publicly traded cannabis company on the OTCQB market, has announced it plans to acquire two Colorado cannabis companies. Other large multi-state operators will not be too far behind.
For non-Colorado cannabis companies, the change in the law represents an opportunity and a risk. Colorado is a mature (at least in comparison to other state cannabis markets), stable market and is attractive in that respect. But with that maturity and stability comes the risk of not being able to break through with new products and relatively limited growth potential. Entities considering entering Colorado’s market should evaluate their options closely, and we are here to assist in making those decisions.