Do Capitalization Requirements Make Sense For The Cannabis Industry?
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Policy Brief

Do Capitalization Requirements Make Sense For The Cannabis Industry?

Small business owners without lots of capital deserve the opportunity to enter the industry without burdensome requirements that do not fulfill their intended purpose.

As marijuana is decriminalized and businesses form to take advantage of the opportunity, some states, such as Michigan and Connecticut, are imposing on them capital reserve requirements similar to those required of insurance companies and banks. Policymakers who are serious about the positive fiscal, economic and social impact of marijuana legalization should recognize that capitalization requirements risk some of those benefits by unnecessarily raising the retail price of marijuana and the cost of doing business.

Policy Brief: Do Capitalization Requirements Make Sense For The Cannabis Industry?

Spence Purnell is a policy analyst at the Reason Foundation, where he works on pension reform, Florida policy issues and economic development.