New York State Senator Diane Savino, a Democrat and longtime medical marijuana supporter, and other state lawmakers are calling on professional investors in cannabis companies to get in touch with them to help shape the future of the industry.
“We need to hear from investors, from the people who can create an industry. Spend time talking to people like me,” said Savino, speaking at an event held in Manhattan Thursday and sponsored by Los Angeles-based Green Table, which introduces cannabis entrepreneurs to investors. “Right now we’re only hearing from caregivers and patients.”
That’s only part of the equation, said Savino.
“You need to be there as we make decisions about your industry,” she told the audience, composed of investors, bankers, technology developers, and managers of start-up cannabis businesses. But she added that she is open to input and advice as the industry evolves from the start-up phase.
Some fund managers welcome the call to action.
“Regulators and legislators need to involve participants in the market, whether operators or investors, in setting policy. That's what California did right," says Peter Rosenberg, partner at Merida Capital Partners, a New York-based private equity fund investing in the cannabis industry.
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Rosenberg, who was not at the event, tells Institutional Investor that not getting industry buy-in can result in some businesses moving to the black market.
“If policies are too restrictive or result in the price of the product being too high because of complex regulations, then vendors may supply the black market instead."
New York State passed the Compassionate Care Act in 2014, which legalized medical marijuana, in 2014. That was only the beginning, said Savino. Since then the act has undergone serial amendments, which are still ongoing.
“What was missing in the debate then was the industry,” Savino said at the event.
Even with the Compassionate Care Act in place, New York Governor Andrew Cuomo remained firmly against legalization of weed for recreational purposes — that is, until he was challenged by Democrat Cynthia Nixon, who will run against Cuomo in the gubernatorial primaries in September. Nixon has been gaining ground on a number of issues, including supporting marijuana legalization for adult use. Cuomo has since signaled a change of heart on cannabis.
New York State Senator Liz Krueger, ranking Democratic member on the finance committee, agreed that the investor community needs to get involved.
“We should work together,” said Krueger at the event. In 2015, Krueger backed the Marijuana Regulation and Taxation Act, which creates a regulatory framework for legal adult use of cannabis that is similar to that governing alcohol use.
The Compassionate Care Act, sponsored by Savino and others, allows doctors to prescribe non-smokable forms of cannabis for patients with certain medical conditions.
Today, legal weed got another push. Health Commissioner Howard Zucker announced that he will recommend to Cuomo that cannabis be made legal.