A Colorado legislative committee is considering HB19-1090, which would pave the way for public investment in the cannabis industry.

 

The legislation recently passed unanimously out of the House Finance Committee.

Right now, Colorado’s marijuana businesses are strictly regulated so that only a limited group of private investors can add capital, says a news report.

“Today as a cannabis company in Colorado, your sources of investment need to be other Colorado residents who are willing to invest directly, personally, so you don’t have access to being publicly-traded,” says Paul Seaborn, an assistant professor of the management department at the Daniels College of Business at the University of Denver. “At this point, all of the investors in this industry have gone through a very rigorous, individual screening.”

That level of scrutiny only applies to businesses that are directly involved in cannabis products. Secondary businesses like marijuana technology, fertilizer or consulting companies do not have to follow these rules and can have public investment.

While those businesses are expanding, Colorado’s cannabis industry as a whole is growing much more slowly since there is only so much private investment to go around, the report says.

The bill would allow publicly-traded companies to invest in marijuana businesses, but it would not allow those businesses to be publicly-traded themselves, because marijuana is still illegal on a federal level.