The ink was barely dry on House Bill 1090, the measure that allows out-of-state investors and publicly traded companies to invest in the cannabis industry in Colorado, before one of the state's major players announced the first acquisitions under the new law.
The bill was at least two years in the making; it was vetoed by then-Gov. John Hickenlooper in 2018. Polis signed the 2019 bill on May 29, along with five other pro-cannabis measures.
Among the bill's proponents: Medicine Man Technologies, which last week announced two major investment opportunities.
As first reported by Marijuana Business Daily, the company announced on June 5 it would acquire Los Sueños, which it called "North America's largest sustainable cannabis farm." The farm is in Avondale, east of Pueblo along Highway 50.
The second acquisition is for Pueblo-based Mesa Organics Ltd. (also known as Purplebees), Mesa Organics II Ltd. and Mesa Organics III Ltd., "a leading cannabis dispensary and infused-products manufacturing company, utilizing pure CO2 extracts from the finest locally grown cannabis in Colorado." The trio of companies is collectively known as MesaPur.
The company directly attributed the acquisitions, which are not finalized, to the signing of House Bill 1090.
"The acquisition of Los Sueños and MesaPur was made possible by the passage of House Bill 19-1090, [which opened] up Colorado's cannabis industry to outside investors and enabl[ed] increased investment by venture capitalists and private equity firms," a company news release last week said.
Medicine Man is a publicly traded company based in Denver.
The second big investment news was that Dye Capital, which grew grocery-chain Albertsons from 1,000 stores to more than 2,200 stores, is investing $14 million into Medicine Man. Two of Dye's board members, Jason Dye and Leo Rivera, will join Medicine Man's board, with Dye coming on as chair.
Medicine Man CEO Andy Williams told Colorado Politics that the first set of deals won't go into effect until February at the earliest. That's because House Bill 1090 requires the Marijuana Enforcement Division within the Department of Revenue to conduct a rule-making. That's something Williams will be particularly close to, since he sits on the rule-making body.
"We have binding agreements in place," Williams said Monday. One of the conditions of closing is that they can't finalize the deal until the MED and all state and local authorities approve the transaction.
The bill doesn't go into effect until Nov. 1, so at that time Medicine Man can file for the change of licenses and what's known as a suitability application, which looks for criminal history, for example.
The transaction is lined up, Williams said, and they're hoping for a February closing.
Medicine Man operates several different businesses: cultivation and four retail locations, and MedPharm Holdings, which manufactures products. The company also holds the only research license for cannabis in the nation that is tied to a traditional marijuana and recreational marijuana license.
Williams said the deals will make Medicine Man the largest cultivator of cannabis in the country, and second largest in terms of size of cultivating properties.
The deal with Dye Capital brings in expertise to the company, Williams explained. That expertise includes investors who have billions of dollars of acquisition under their belts. It's the largest-ever investment made in Medicine Man, Williams said.
Those deals announced last week are just the tip of the iceberg. "We're not sitting on our heels" with those recent acquisitions, Williams said. "We plan on acquiring a few more companies and we plan to be one of if not the largest operator in Colorado" after those next sets of deals are done, he said. After that, the company plans to expand nationally and internationally.
Williams said House Bill 1090 will result in more jobs and possibly the largest cannabis operators moving their headquarters to Colorado. "I'm not the only one planning this kind of thing," he added.
House Bill 1090 did more than just open the door to new capital. It also ended a state law that limited out-of-state owners to 15 people. "That not only eliminates the potential for a public stock offering or a merger with a publicly held company, but it also shuts out capital raises from venture capital funds that have more than 15 investors," according to a March 1 analysis of the bill by Marijuana Business Daily.
Kristi Kelly of the Marijuana Industry Group in Denver told MBD that after Hickenlooper's veto last year, the industry experienced "a flight of capital ... deals fall apart 'because investors wanted to go to friendlier states.'"