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Marijuana businesses brace for investment chill as U.S. changes policy

From Reuters - January 4, 2018

SAN FRANCISCO/NEW YORK (Reuters) - Cannabis businesses across the United States said they are bracing for an investment slowdown following the U.S. Justice Departments Thursday directive that will allow the enforcement of federal marijuana laws in states that have legalized the drug.

U.S. Attorney General Jeff Sessions announced that the Justice Department was rescinding an Obama-era policy that eased enforcement of federal marijuana laws amid a wave of legalization in states from Alaska to Pennsylvania.

In the short term, this news will further scare away investors which will, in turn, slow down cannabis entrepreneurship, said Nicolas Ruiz, co-founder of Cloudponics, a San Francisco startup that makes technology which can be used to grow marijuana.

Marijuana legalization has spurred new businesses from growers to retailers, delivery services, providers of supplies and technology startups serving the industry.

Lawmakers from U.S. states that have legalized marijuana, including California and Colorado, denounced the directive, vowing to enforce their laws and protect the burgeoning cannabis industry.

In California, we decided it was best to regulate, not criminalize, cannabis, said California Attorney General Xavier Becerra. Unlike others, we embrace, not fear, change.

The shift in policy comes just three days after California launched the worlds largest regulated commercial market for recreational marijuana.

Funding for cannabis startups has surged since Colorados legalization of recreational marijuana use in 2014. Since then, the industry has seen nearly $1.3 billion in equity funding, with more than $600 million in 2017 alone, according to research firm CB Insights.

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