SEATTLE — When Washington and Colorado launched their pioneering marijuana industries in the face of U.S. government prohibition, they imposed strict rules in hopes of keeping the U.S. Justice Department at bay.
Businesses would need to track plants and products with bar codes. Regulators would have to approve money invested to ensure it was not tied to criminals. Owners of pot operations would have to live in-state and pass background checks.
Five years later, federal authorities have stayed away, but the industry says it has been stifled by over-regulation. Lawmakers in both states have heard the complaints and are moving to ease the rules.
“There’s a saying in the business world: ‘Pioneers get slaughtered, and settlers get fat,’” said Greg James, publisher of industry magazine Marijuana Ventures, based near Seattle. “These rules have made the entire industry very inefficient. We’re going to get left in the dust unless we change some things pretty quickly.”
Since Colorado and Washington became the first states to legalize the recreational use of marijuana, eight others have joined them. California, Nevada, Oregon and Michigan are among the legal states that have taken a more permissive approach to out-of-state ownership and investment.
In Colorado, which already loosened its rules to allow licensed businesses to have up to 15 out-of-state owners, lawmakers from both parties want to further open the industry to include ownership by publicly traded companies and to limit background-check requirements. A similar measure was vetoed by former Gov. John Hickenlooper last year, but his replacement, Gov. Jared Polis, has indicated support.
Washington lawmakers are considering a dual approach: easing financial restrictions while taking a more lenient view of rules violations, making it less likely businesses will lose their licenses for things like sloppy record-keeping. Three dozen have had their licenses canceled since 2015, while