The Green Rush

The legal pot business is already spurring the growth of supporting industries:

[I]n the world of legalized marijuana, pot shops and grow facilities aren’t the only business opportunities; there are also all the ancillary businesses that service those pot shops, grow facilities, and the pot-smokers themselves. “You can relate it back to the gold rush,” says Ean Seeb, co-founder of the Denver Relief marijuana consulting company. “For every chunk of gold, you needed picks and shovels, a pan and a sifter, and the same thing applies to cannabis. For every gram of marijuana, you need a bag, labels, receipts, exit packaging, point-of-sale, a way to pay for it, staff, uniforms, a payroll company, insurance, and so on.” …

Ancillary businesses are particularly attractive to out-of-state investors. That’s because to have an equity interest in a Colorado marijuana business, state law requires at least two years of Colorado residency. So if you’re an out-of-state entrepreneur who wants to bet on the new industry today, the only choice you have is to invest in the picks and shovels—buying interest in megasized garden product stores, consolidating real estate portfolios to lease to Colorado-based pot-store owners, funding research and development for thumbprint-based security systems for grow facilities. Plus, while buying recreational marijuana is starting to feel downright ho-hum here in Colorado, let’s not forget that selling, cultivating, and manufacturing marijuana remains prohibited by federal law. Thus, risk-averse businesspeople might prefer to invest in companies that are not directly involved in violating federal law.