Medical marijuana investment funds won’t be allowed in Colorado
Monday, April 11, 2011 at 6:42 pm
Medical marijuana lobbyists vigorously plied their trade Monday in a furious attempt to stop an amendment to HB 1043, the medical marijuana “clean-up” bill, that struck language allowing for the creation of investment funds that proponents hoped would fund a restructuring of the industry. The amendment passed and the funds will not be allowed.
Legislation sponsored by Representative Tom Massey, R-Poncha Springs, and spearheaded by Josh Stanley and the Medical Marijuana Industry Group, could have changed the overall funding structure of the industry in Colorado by allowing individuals to enter into investment funds that would invest in the marijuana trade.
Stanley told the Colorado Independent the passage of Colorado Springs Republican Rep. Mark Barker’s amendment stripping the investment fund from the bill made those voting for it responsible for the racketeering already occurring in the state.
“Racketeering is happening now,” Stanley said. “They say we don’t want money coming in from out of state–tough shit– money is coming in from out of state, but it is coming in black bags–cash–at 35 percent interest. We already know the mafia is here and they don’t want your 35 percent; they want your business. What I don’t understand is that we put this together for law enforcement. Would you rather know exactly where the money is coming from? Class A investors undergoing criminal background checks, or would you rather (have to) guess … what type of money is coming in to this business and who actually owns this business. ”
Massey’s version of the bill would have allowed individuals to place money in investment funds controlled by fund managers who then could decide whether to invest in research and development, dispensaries or grow centers. Individuals could not take part in the fund unless they passed criminal background checks, did not already hold positions in two other similar funds, and passed a series of other requirements.
While Massey said the Colorado Department of Revenue had signed off on the legislation as a better way to keep track of money coming in and out of the industry, most legislators said it also violated federal RICO (Racketeer and Corrupt Organizations Act) laws among other federal provisions.
“While I get why people would like this to happen, as a matter of public policy, it seems pretty clear to me that something this legislature ought not be doing is passing laws that basically authorize our state’s departments and agencies to become co-conspirators in a violation of (RICO),” Rep. Bob Gardner, R-Colorado Springs, said.
Barker said he brought his amendment because of the potential that Colorado organized crime laws, IRS codes, and interstate commerce laws all would be violated with the introduction of medical marijuana investment funds.
“My biggest problem is that we are not only putting our state agencies, but our citizens, at risk of violating federal law,” Barker said. “I think this puts us all at risk.”
The bill, with amendments offered by Massey, would have allowed fund managers to infuse cash into various portions of the industry in an attempt to develop a more streamlined distribution system that relied on centralized grow centers from which dispensaries could purchase their goods. Stanley said that would drive down costs and allow for fund managers to fund legitimate research and development focused on medical cures.
“Now these dispensary owners who knew nothing about business or profit and loss or cash cycles, they don’t have to worry about it; they greet their customers. All the while they have a quality control company which the department of revenue has access to,” Stanley said.
Stanley said that research and development funds could have been used to sponsor research into how cannabanoids not connected to THC could be developed.
“We have had success with cannabinoids stopping the progression of Alzheimer’s disease,” Stanley said. “THC isn’t the medicine; it is the other 73 cannabinoids we haven’t been able to work with until we get this bill passed.”
Barker’s substitute amendment ended at least the funding portion of Stanely’s proposed structure.
“Law enforcement is against this bill because it promotes racketeering,” Stanley told the Colorado Independent. “How does it promote racketeering when you are dealing with grade A investors? The fact of the matter is that they are just opposed to this industry and they see it as an opportunity to shut it down. So the industry isn’t going anywhere. So do you want to promote the black market or do you want to knock it down and create a legitimate industry?”
The bill will now goes to a third reading.