Canada91裸聊视频檚 cannabis industry, banking on the chance to expand into the United States, is nervously eyeing the American political calendar and the Biden administration91裸聊视频檚 narrow legislative window to ease federal prohibitions on recreational marijuana.
The White House has said President Joe Biden supports decriminalizing cannabis, legalizing pot for medicinal purposes and changing how marijuana is classified by the Department of Justice to allow for further study of its potential positive and negative effects.
But while Democrats currently hold all the political cards on Capitol Hill, their control of Congress remains precarious, and progressives fear the Republicans are likely to take over the House of Representatives following the 2022 midterms.
That means if change is going to happen in the United States, it needs to happen soon, said David Culver, vice-president of global government relations for Canopy Growth Corp., one of the largest players in Canada91裸聊视频檚 legal cannabis market.
91裸聊视频淲e were literally dealt, in my opinion, the perfect political hand for cannabis reform to occur during this Congress,91裸聊视频� Culver said in an interview.
91裸聊视频淭he White House made it very clear when they took office, at least to our industry, that they needed to get this pandemic under control. We91裸聊视频檝e been sitting with this perfect political hand for almost six months now 91裸聊视频� and we91裸聊视频檙e still waiting patiently as it relates to the administration.91裸聊视频�
The cannabis landscape in the U.S. is an ever-changing patchwork; the drug is or will be allowed for medical use in 36 states and for recreational use in 13, as well as the District of Columbia. But federal law still considers it a Schedule I controlled substance with high risk of abuse and no accepted medical use, alongside drugs like heroin, LSD and peyote.
As a result, it91裸聊视频檚 impossible for companies operating in a legal state landscape like California or Colorado to make use of institutional banking or financing services, access capital markets or do business outside their respective state lines. Nor can they take advantage of tax writeoffs for routine business expenses, capital equipment like computers or payroll costs.
Still, there is rampant enthusiasm among Canadian players looking for opportunities to expand into the U.S., where the prospect of a legal market that could soon top US$40 billion annually offers a salve for what have been largely disappointing results at home.
That doesn91裸聊视频檛 mean it hasn91裸聊视频檛 been complicated: in 2019, Canopy entered into an elaborate acquisition deal with New York91裸聊视频檚 Acreage Holdings, amended last year, that91裸聊视频檚 contingent on an important 91裸聊视频渢riggering event91裸聊视频�: changes to U.S. federal law.
91裸聊视频淭he United States is going to be a core market for Canopy Growth,91裸聊视频� CEO David Klein said in a statement announcing the amended deal.
Aphria Inc. CEO Irwin Simon said much the same in April of his Ontario company91裸聊视频檚 acquisition of SweetWater Brewing Co., an Atlanta craft beer purveyor that aligns its brands with a 91裸聊视频渃annabis lifestyle.91裸聊视频� Aphria merged last month with B.C. giant Tilray, which now controls more than 17 per cent of Canada91裸聊视频檚 retail cannabis market.
Kelowna, B.C.91裸聊视频檚 Valens Co. agreed in April to spend US$40 million to buy out Green Roads, a Florida-based producer of oils, topical ointments, edibles and supplements infused with cannabidiol, or CBD, a non-intoxicating component of the marijuana plant.
As long as the COVID-19 pandemic continues to wane in the U.S., Culver said expects the Biden administration and Congress to get serious about cannabis reform at some point in the fall.
That could happen in a number of ways: Senate Majority Leader Chuck Schumer is planning a comprehensive legislative effort to remove cannabis entirely from the federal schedule of controlled substances. Failing that, the SAFE Banking Act 91裸聊视频� a bill that aims to make financing more accessible 91裸聊视频� has already passed the House of Representatives and is currently before a Senate committee.
In February, Schumer and Democratic allies Sen. Cory Booker of New Jersey and Sen. Ron Wyden of Oregon vowed to begin drafting their legislation 91裸聊视频渋n the early part of this year91裸聊视频� and that it would be a top priority for the Senate.
The politics, however, are complicated. Schumer has said he fears U.S. lawmakers on the fence about full-blown legalization would see the SAFE Banking Act as a more reasonable compromise should it come up for a vote in the Senate first.
91裸聊视频淭here is a huge political challenge in getting all the reform advocates to agree on the right model,91裸聊视频� said Douglas Berman, an Ohio State University law professor and expert on marijuana policy.
91裸聊视频淚t becomes dangerously easy for the status quo of no reform to persist, even if there91裸聊视频檚 widespread affinity for reform in general.91裸聊视频�
Not everyone in the sector in the U.S. is keen to see the federal laws change.
Living inside a walled garden has its advantages, said Frank Knuettel, the chief executive of Terra Tech Corp., a high-tech grower and dispensary operator with facilities in California and Nevada.
91裸聊视频淚 actually like the fact that it91裸聊视频檚 federally illegal right now, because we have a competitive moat around the business,91裸聊视频� said Knuettel.
91裸聊视频淲e have an opportunity to build our company and our industry without the outside competition from really large consumer packaged goods companies or beverage or tobacco companies.91裸聊视频�
Knuettel said he91裸聊视频檚 more worried about those heavy hitters 91裸聊视频� Big Tobacco in particular 91裸聊视频� than he is about the prospect of a Canadian invasion of the U.S. cannabis sector.
91裸聊视频淭obacco consumption91裸聊视频檚 declining, and while it91裸聊视频檚 still a really good cash cow, they91裸聊视频檝e got to be looking down the road and wondering how long that cash cow91裸聊视频檚 going to last,91裸聊视频� he said.
91裸聊视频淚 think the threat from Big Tobacco is potentially the largest threat that our industry and any company in it would see.91裸聊视频�
There91裸聊视频檚 another firewall, said Knuettel. Canadian operations that work directly with cannabis 91裸聊视频� so-called 91裸聊视频減lant-touching91裸聊视频� companies 91裸聊视频� are allowed to list their stocks on U.S. exchanges because they do business in a foreign jurisdiction where their product is legal.
That listing ability goes away as soon as they buy a plant-touching company in the U.S. 91裸聊视频� a wrinkle that Knuettel said has kept some would-be Canadian suitors at bay while American companies have been able to take advantage of recovering capital markets and a widening legal landscape.
91裸聊视频淎s a result, the large U.S. suppliers and companies are now on a much more equal footing than the large Canadian counterparts,91裸聊视频� which have been struggling domestically, he said.
Eventually, those would-be Canadian suitors could find themselves becoming the hunted instead of the hunter.
91裸聊视频淎t some point, the script is going to flip,91裸聊视频� Knuettel said.
91裸聊视频淐anada represents one of the largest non-U.S. markets, and I could envision a scenario where some of the largest players pick up on the large Canadian players at some point in the future, if the current dynamic continues.91裸聊视频�
91裸聊视频擩ames McCarten, The Canadian Press
