Your product has great potential to benefit the public. It also has a sketchy past, a dicey reputation, and a less-than-certain degree of legality under federal law. How do you convince lawmakers in Washington, D.C. to clear up the confusion and let your industry thrive?
If you are Acreage Holdings, one of the biggest players in the marijuana industry, you cut a couple of checks and add some heavyweight Republican political figures to your advisory board. John Boehner, the former Speaker of the House, and Bill Weld, the former Massachusetts governor signed on with Acreage Holdings this month.
Cryptocurrency investors, whose product shares more than a few parallels with cannabis, followed the same playbook last month. That’s when two venture capital firms with big cryptocurrency investments dove into the swamp. In late March, representatives from VC giants Andreesen Horowitz and Union Square Ventures met with the SEC, reportedly hoping to establish a “safe harbor” under which some virtual currencies would not be considered securities, and therefore be subject to certain disclosure requirements. The group that met with the SEC called itself the Venture Capital Working Group, and in addition to the VC firms, included lawyers from the plugged-in law firms of Cooley, Perkins Coie, and McDermott Will & Emery. Plunging even deeper into the swamp, cryptocurrency industry groups have staffed their boards with former SEC Commissioner Paul Atkins, former CFTC Chairman Jim Newsome, and former CFTC Commissioner Mark Wetjen.
It’s a strategy that can pay dividends. Talking about the Boehner hiring, cannabis analyst Vahan Ajamian from Beacon Securities told Business Insider that “it is difficult to overstate the impact of this monumental event for the U.S. cannabis sector.” He added that Boehner’s presence “should serve to ‘legitimize’ the sector and further perk of investor interest.” To be sure, the cannabis industry hasn’t waved a magic wand. It still must contend with the fact that Attorney General Jeff Sessions, hardly a fan, has rescinded an Obama-era policy to limit federal interference with cannabis businesses. Even so, large marijuana stocks experienced a pop on the Boehner news.
Crypto investors may have an even tougher road. SEC Chair Jay Clayton is on the record as saying that virtually every token issued through an ICO is a security. Reports indicate that rather than accept the Venture Capital Working Group’s proposal, the SEC is far more likely to create a more limited exemption. The only ICOs that qualify would be those that limit the amount of tokens that an individual investor can purchase, and prohibit re-selling to third parties for profit.
But you never know what’s going to happen in the swamp. Cryptocurrency advocates are knee deep in it now. And if they are playing a long game, the relationships that their new representatives possess could ultimately result in favorable policy decisions. And it doesn’t look like anyone is pulling the plug anytime soon.