NEW YORK (MainStreet) — In a move that has been sharply criticized by legalization advocates and the business community alike, Alaska legislators are currently considering banning third party investors, and start-ups who rely on them for funding, from the newly legit recreational state pot business. In-state license applicants under this plan would have to be completely self-funded.

For all the grumbling about undue political influence, if not carpetbaggers in the state level advocacy community of late, this proposal swiftly garnered harsh criticism from a different quarter - the marijuana business community.

According to Troy Dayton, CEO of ArcView Group, a marijuana investor network that connects investors with startup-activity and entrepreneurial ganja juice across the country, Alaska's current effort is short-sighted.

"This is an effort by moneyed interests in the state to keep entrepreneurs of lesser means from raising the capital they need to compete," he said. "There is no way that protectionist policies like this would stand in almost any other business sector. It's a terrible trend that only serves the super-wealthy in a given state at the expense of everyone else, including consumers."

The move is clearly designed to give a special advantage to larger and established out-of-state recreational players - a tactic that has already started to backfire in places like Washington State - and in more than in one associated industry. For example, the home-grown, highly accomplished IT community in and around Seattle was outraged earlier this year to find out that an out-of-state company had been awarded the million dollar state marijuana compliance contract. This was further complicated by the strange alliance of much-troubled, out-of-stater firm Medbox (MDBX).

In Florida last year, there was equal outrage when the state began to suggest that only growers with decades of experience (outside of marijuana) would be considered for state grow licenses (even for CBD). In effect, what this did was begin a process where out of state companies paid to partner with these in-state, larger farms, leaving smaller, local players out of the running from the starting line. This most recent move in Alaska appears to be of very similar intent. Major producers also appear to in line to exempt themselves from compliance with plant counts, as other smaller growers will not be able to do. This will not only drastically increase compliance costs for those at the start if not the smaller end of the business, but also for those in the caregiving and non-profit dispensary sector. In this instance, the interests of the medical community - often shoved off the table so far in every state in the name of so-called business development - line up exactly with entrepreneurs and small business if not those who invest in them.

The most recent proposal in Alaska is also similar to other "reforms" popping up from Minnesota to New York where efforts dressed up as new market creation have actually created a highly restricted, non-competitive marketplace, explained Mark Ross, an attorney with Sichenzia Ross Friedman Ference LLP.

"This provision [in Alaska], would not be all that different than what the regulations provide for in New York, where there will be only 5 licensees that can hold up to four licenses, in other words, a total of 20 dispensaries, in the entire state," he said.

The marijuana sector represents a real possibility for states to not only encourage local entrepreneurial activity, but also to create state-protected markets for a percentage of the crop consumed (for whatever purpose). This means that the product will be cheaper and more local. It also means that states suddenly have an option of creating home-grown jobs that cannot be shipped to another state or even out of the country. Instead, however, state legislators are largely approaching the proposition from the other perspective of "pay-to-play," which automatically excludes all but the biggest and out-of-state companies. These firms have no home-grown loyalty to the state, the communities they operate in or the workers they hire for the long term. They also cast a huge shadow that stifles entrepreneurial activity.

With this next move in Alaska, it already appears that the legalization of marijuana is a long-term green economic development opportunity that the states are squandering in a desperate rush over the finish line for short term cash infusions of any kind. Ultimately however, such policies will ultimately increase costs for everyone. This includes state officials whose job it is to also oversee and regulate these out of towners as well.

It is also true that this tendency has a great deal to do with the still-present stigma of marijuana - if not the tendency of legislators to continue to want to exert strict control on who actually enters and operates within the industry. Regardless of the reason, however, state legislators increasingly seem to act like voter wishes to legalize the drug are actually a green light to then reshape a brand new and very different industry into the failed policies and space of the past. To date, there has not been a coordinated effort on any level in the industry or those who advocate for it, to stop this development. Those who feared the rise of "Big Pot" - especially at the expense of scientific inquiry and entrepreneurial innovation - have always had a good point. The problem is that now state policies are being shaped to deliberately create that scenario instead of preventing it.

--Written by Marguerite Arnold for MainStreet