Recreational Marijuana Investing

Written By Brian Hicks

Posted May 31, 2013

Marijuana usage in Colorado just hit a new milestone, as the state’s Governor, John Hickenlooper, formalized legislation that attends to various aspects of marijuana’s recreational use in that state.

marijuana stocksReuters reports that the legislation includes a November referendum to consider a 15 percent excise tax and an extra 10 percent sales tax on all marijuana sales. In addition, a 5 nanograms/ml blood limit has been set for drivers under the influence, and non-Colorado residents may only purchase a quarter of an ounce of marijuana at any given time.

These rulings have passed without much controversy, since both the state and federal administrations, as well as most voters, were desirous of clear legislation that would make things easier both for lawmakers and consumers. Colorado expects to see its first marijuana retail stores open next year, and this headstart on establishing firm legislative guidelines should set a welcome example to other states (Washington, for example).

These two are included in a list of 20 states and D.C. where marijuana is legal for medical purposes; however, Washington and Colorado also formally approved recreational usage.

Equivalent work remains to be done at the federal level, where things habitually move at a slower pace. At the federal level, marijuana remains a “dangerous narcotic,” and one may not use the drug for any purpose whatsoever (to stay within legal bounds).

Given the building momentum across states, it’s clear that the federal framework will need revision soon. Indeed, Reuters states that the U.S. Attorney’s Office in Denver simply issued a statement to the effect that it is “considering” responses to the national marijuana legalization movement.

As I said, other states will follow. Washington is already drafting, via the state’s Liquor License Board, rules governing marijuana growing and distribution. Licenses to grow, process, and commercially sell the drug are expected to cost around $1,000 annually, as well as a one-time $250 payment for initial application.

National Momentum Grows

What’s most interesting about the Colorado legislative move is that Governor Hickenlooper was not a supporter of marijuana legalization just a year ago. Clearly, the Governor knows the value of standing behind a growing momentum.

Some of the other rulings indicate that adults may either grow up to a maximum of 6 plants or simply purchase from retail stores. As well, as the Washington Post notes, marijuana may not be sold in places offering foods and beverages not infused with cannabis, and such infused-foods must be “to-go” orders rather than consumed in-house.

In another innovative move, the state’s rulings mandate that any marijuana-related publications must be concealed behind sales counters in stores open to those below 21 years of age. The rulings also provide for 24-hour security surveillance at all marijuana outlets (something Washington is also considering).

Clearing Up Marijuana Legislation

All of this is very good news for the emerging marijuana market nationwide. As I said, federal legislative frameworks definitely need to be revised, and as the momentum grows at the state-by-state level, we’ll likely see the federal government making its moves sooner rather than later.

But it’s very crucial that states like Colorado and Washington set down clear frameworks under which the marijuana market can safely operate. Not only does it help would-be marijuana entrepreneurs operate within legal bounds, but it also makes for a freer and safer business climate – which will surely help the federal government see the marijuana sector more favorably.

Earlier this year, 13 House members introduced the States’ Medical Marijuana Patients Protection Act, in a move clearly designed to exert further pressure on the federal government to act favorably toward the national market. The proposed Act would make it feasible for patients using medical marijuana and medical marijuana distributors to freely access and distribute the product in those states that presently allow (medically) legal usage.

Indeed, Businessweek recently indicated that this new sector could experience dramatic market and revenue growth once the whole host of federal laws that target marijuana cultivation, distribution, and possession are relaxed. Companies like GrowLife Inc. (OTCBB: PHOT) and HEMP Inc. (OTCBB: HEMP) offer peripheral and support equipment and services rather than directly dabbling in marijuana growing and distribution. These companies are worth taking seriously, as the support-side of the marijuana industry will certainly cultivate major players as the overall market grows. 


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