What Does US Legalization Mean For Canada?
Since October 18, 2018, Canada has had a federally legal recreational cannabis market, which has given Canadians access to a wide variety of products and ways to consume them.
In addition to being important, the end of prohibition has created a new industry, with companies and careers across the nation. This industry has generated $43.5 billion in revenue for Canada.
The United States provides a stark contrast to our own country when it comes to cannabis legalization. While three-quarters of states have legalized cannabis in some form, it remains illegal at the federal level.
This has been a major setback for the sector’s growth potential because cannabis cannot be exported or imported.
If the United States were to end cannabis prohibition, what effect would that have on Canada and its burgeoning pot sector?
The US has flirted with federal cannabis legalization for some time
The U.S. is gradually moving closer to legalizing cannabis at the federal level. Although there has been much discussion on the topic over the years, it seems that progress is finally being made.
The repercussions of this event will undoubtedly be felt in Canada.
There have been a number of failed attempts to legalize cannabis in the US over the years, so I’m not optimistic about the prospects for success in the near future.
Maurer believes that even if Canada does experience a recession, not much will change in the short term.
As long as there are barriers to trade between countries when it comes to cannabis, I think we will continue to see companies from the United States and Canada trying to enter the market. This happens when an American company finds a Canadian company to manufacture and sell their products, or vice versa.
Maurer believes that even if the United States were to legalize cannabis, the Canadian government would be unlikely to open up a cross-border market for the drug. He believes that the Canadian government is trying to protect its own cannabis cultivators and manufacturers.
“Limited partners have invested a lot of time and money in the facility here,” he said, likely because of onerous licensing requirements. “Allowing American products, or even worse, products from countries that cost less to grow like Mexico and Latin America, [would be detrimental].”
More brands like Cookie, Keef, and Bhang on both sides of the border
Maurer believes that without cross-border trade, U.S. legalization might actually create more product licensing on both sides of the border. This would benefit some Canadian LPs who partner with American companies to make “American” products. Federal legalization without open cross-border trade may spur more of these relationships to take hold.
There are already many American brands that have a strong presence in Canada. For example, Bhang chocolate and Wana gummies have helped London-based LP Indiva achieve a 50 percent market share in the edibles category.
Cookies, a California-based product created by American rap star Berner, has made its way north along with infused soda originally made by Keef, a Colorado-based manufacturer. This product is high-quality and persuasive, and is sure to be a success in the market.
If the U.S. were to legalize cannabis, would Canadian products still be held in high regard?
“I think some Canadian limited LP companies and retailers might be able to carve out a nice little niche in the US, however, the US market (by population) is about 10 times the size of Canada,” said Maurer.
It is difficult for Canadian products to compete in America, and this is especially true in the cannabis industry. Canadian brands are already struggling to gain market share, and they will face even more competition if they try to enter the US market.
Canada’s cannabis sector might get access to bigger banking services
The lack of access to banking services is a major problem for the legal cannabis industry in the United States. Financial institutions are reluctant to work with cannabis companies because they fear violating money-laundering laws and angering the federal government.
Maurer believes that with federal legalization, the banking issue will improve significantly.
“Federal prohibition makes it difficult for federally regulated companies to participate in the cannabis industry,” Maurer said. “Even in Canada, cannabis is legal at the federal level, given that most of the big banks want to avoid cannabis companies. [This is because] many of them Banks also do business outside of Canada, such as in the United States.”
Maurer went on to say that if the U.S.ends prohibition, banks will be much more comfortable and protected when servicing clients in the sector.
If cannabis were legalized at a federal level in the United States, it would become much easier for cannabis companies to access financial services.
The MORE Act would put Canada’s pardon process to shame
The MORE Act is a crucial cannabis reform bill that would end criminal penalties by removing marijuana from the List of Controlled Substances. This would be a major step forward in the legalization process in the United States, and it is imperative that we make this happen.
The House of Representatives recently passed a bill that, if enacted, would provide much-needed relief to those with past cannabis-related arrests, charges, and convictions. The legislation faces an uphill battle in the Senate, but if it ultimately passes, it would set a strong precedent for other countries to follow.
According to Public Safety Canada, 467 applications for cannabis pardons have been received and 265 have been granted. However, unlike the MORE Act, cannabis pardons in Canada are not automatic. Canadians need to pay $644 for the application and wait up to ten years for a verdict. Many people do not have the financial means to pursue this process.
The recent conversation about pardons was reignited by a tweet from Justin Bieber’s father, asking people to sign a petition to have the government reconsider current requirements. Unfortunately, the tweet came a day too late for the petition to get the 500 signatures it required.
A new petition is asking for an act to provide expedited, no-cost record expungement for nonviolent cannabis convictions. This is an essential first step for the federal government to recognize the impact of holding criminal records for something that is now legal, and which disproportionately affects marginalized communities that are trying to move on with their lives.
We are very close to our goal of 500 signatures on our petition. Once we reach that number, we will present the petition to the House of Commons.
Conclusion
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