11.23.2016
policy

How Canada Quietly Became the World's First Pot Super Power

Let's count the ways the Great White North is winning the green rush.

If you think about it, marijuana is the Canada of drugs: Voluminous and all encompassing like a massive terpene-rich summer cloudbank. A vast harbor of re-creational opportunities that trend toward chill and benign; open spaces, wondrous vistas, and easy reentry to whatever state it is you came from.

Safe and nonlethal, weed and Canada never give visitors jarring culture shock or a traveler’s hangover.

So maybe it’s poetic destiny that Canada is poised to become the first international superpower in the global cannabis trade. More likely, Canada’s primary advantage in world domination is that the United States federal government is dragging its feet on marijuana and ruining everything for American entrepreneurs.

A recent Financial Post analysis suggested that Canada’s marijuana producers are poised to capitalize upon the swell of weed normalization in the United States, and will forge ahead in ways that no U.S. weed company is free to do. 

Sessions has a soft spot for weed as scapegoat, which is unsettling. 

The Financial Post’s marijuana trade-war warning triggered a High Times policy piece that lamented and celebrated Canada as the new weed capital of the United States.

Preceding these stories, in June 2016, KINDLAND pointedly asked, “Will America Sit Idle as Canada Conquers the Weed World?”

The answer to that question, like it was six months ago, is apparently yes.

The incoming U.S. President has not said outright that he plans to reverse states’ rights legalization of adult-use marijuana. That uncertainty is the most positive thing you can say regarding the Trump Administration and America’s marijuana future.

Our new Attorney General, Republican junior Senator from Alabama Jeff Sessions, has voiced open nostalgia for the Just Say No years of the Reagan-era War on Drugs. Sessions has a soft spot for weed as scapegoat, which is unsettling. He will be commanding the Drug Enforcement Administration, among other highly funded, nationwide, militarized law-enforcement agencies.

Still, America’s second-tier position in the hierarchy of marijuana super powers can’t be blamed exclusively on Donald Trump. After all, Canada’s great marijuana strides were outpacing the United States way back when Hillary Clinton was still our presumptive next President.

Image via HuffPo

In Canada, military veterans are eligible to have weed prescribed by doctors. In the U.S., a V.A. medic suggesting pot to a patient is sitting adjacent to committing a federal infraction. Meanwhile, to the north, not only is marijuana recommended for a range of ailments common to military personnel, nationalized health insurance covers the costs of that marijuana.

In fact, Canada’s pot provisions for its vets have been so robust that regulators in Ottawa have been forced to cut back on the country’s generous weed benefits. Going forward, Canada’s health insurance will pay only for up to three grams per day of an old soldier’s weed medicine, or the equivalent in oils. 

When it comes to filling those prescriptions, Canada’s largest pharmacy chain is on board for delivering quality medicine, responsibly packaged in consistent dosages. In fact, the country’s service industries seem to be widely supportive of cannabis care. For instance, Victoria, British Columbia, the capital city of that province, is home to the Great Canadian Canna Mall, a collection of shops and lounges catering to the area’s medical marijuana beneficiaries. 

It’s unthinkable that a major U.S. marijuana producer would be cleared to finance university research into the mental-health benefits of marijuana. 

The United States currently contains 65 million Americans who live in legal weed states—if you count in the four states that passed adult-use measures in the November elections. None of those residents have a cannabis mall in the neighborhood.

In Canada, marijuana businesses are part of the social fabric.

Recently, a team of Canadian and American researchers conducted clinical trials exploring cannabis protocols in treating depression, social anxiety, alcoholism, and PTSD. The research was conducted, of course, outside of the United States, at the University of British Columbia. Marijuana’s Schedule 1 status under the Drug Enforcement Administration places laming obstacles in the path of marijuana research in the United States.

Right now, today, it’s unthinkable that a major U.S. marijuana producer would be cleared to finance university research into the mental-health benefits of marijuana. That’s exactly what Canadian cannabis producer Tilray did with this recent Canadian study.

“I think we are entering a different world,” lead researcher Zach Walsh of the University of British Columbia told Time. “For now a lot of the research, at least in Canada, is funded by the producers.”

If Canadian scientists, with an assist from select U.S. researchers and Canadian pot producers, do manage to unlock pot’s curative powers, there is a sense that the healing effects will be affordable to patients on every budgetary tier. In other words, Canada’s heavenly flower is trending toward retailing at a dirt-cheap price point.

It’s only natural that the future for Canada’s domestic weed industry is globalization: Canadian producers are right now exporting expertise and product to three continents outside of North America.

More from the Financial Post:

The riskiness of investing in the U.S. compels Canadian companies to focus expansion efforts on countries where the drug is legal at the federal level, including Germany, Italy, Czech Republic, Brazil and Australia, said marijuana analyst Daniel Pearlstein of Dundee Capital Markets.
“You are already seeing Canadian licensed producers establishing partnerships elsewhere in the world to take advantage of progressive regulation in different countries that aren’t the U.S.”

Initially, Canada trailed the United States in the race to normalization. California legalized medical marijuana with Proposition 215 in 1996. Canadians weren’t permitted to possess or grow personal quantities of cannabis for medical purposes until 2000, which put our neighbors to the north in the position of playing catch-up, a position they have reversed.

In 2014, the Canadian national government did something the U.S. is far from doing at a federal level: It began licensing private companies to set up large-scale marijuana grows to meet the demands of patients finding relief from chronic and painful ailments through marijuana.

Currently, Health Canada (the equivalent of the U.S. Department of Health and Human Services) has issued weed production and distribution permits to more than 40 companies. One of those businesses is Canopy Growth Corp. The Ontario, Canada-based pot producer became North America’s first ever billion-dollar cannabis company in a stock surge during the days following weed’s victories in the U.S. elections.

It’s not just that the cannabis playing field hasn’t been level while Barack Obama has been in the Oval Office; basically, no U.S. company is even playing in the same venue as Canopy.

Back in the USA, Privateer isn’t even allowed to transport its Marley Naturals product across state lines—not even between two contiguous, cannabis-legal states. 

An international incident that played out at the U.S.-Canada border in 2014 begins to illustrate the absurdity of U.S. pot policy under Obama: After admitting to border agents that he was a marijuana user, British Columbia resident and medical marijuana cardholder Matthew Harvey was denied entry to Washington State—and told not to come back. Medical marijuana was legal in Washington State in 2014. 

The official disconnect that passes for policy at the U.S. border is only one of the cogs crushing foreign confidence in the U.S. weed industry’s stability.

Again, from the Financial Post:

One in five Americans now live in states where pot is legal for adult use and the U.S. market for recreational marijuana is twice the size of Canada.
However, U.S. producers face a major problem with their product: It is still on the federal government’s list of Schedule I narcotics, alongside heroin and LSD.
Marijuana companies in the U.S. are hamstrung by their federal outlaw status, which prevents them from receiving corporate tax breaks and exporting products across borders. Conflicting U.S. laws also dissuade investment in research and development—which could help determine potential benefits and side effects—because patents are federally issued.

Stock in Ontario’s Canopy Growth Corp. sold at a high of $17.86 per share on Wednesday after the election. That share price was back down to $8.25 two weeks later, further underscoring the folly of Canada’s burgeoning weed conglomerates determining their value on U.S. market forces.

A risky regulatory environment limits Canadian business opportunities in the U.S., but that hasn't stopped savvy American companies from inviting themselves to Canada’s pot party. Seattle, Washington-based equity firm Privateer Holdings has stakes in Canada’s trade, and from there is doing business in the wider world.

Privateer’s portfolio of weed-based companies includes Vancouver Island-based Tilray. Tilray, aside from funding university-conducted clinical trials, operates North America’s largest government-sanctioned grow facility—in Nanaimo, British Columbia. Where does all that weed go? Tilray has deals in place to export medical marijuana products to Croatia, New Zealand, and Australia.

“When America is ready, we can enter with strength rather than participate in the evolution of a frayed market.”

Back in the USA, Privateer isn’t even allowed to transport its Marley Naturals product across state lines—not even between two contiguous, cannabis-legal states. Only the Marley branding and package art can travel.

However much American pot entrepreneurs might envy the governmental advantages of the Canadian worldwide marijuana moment, Canada’s green swell is only beginning. The boom is expected to explode once adult-use recreational is approved countrywide. Unlike the American method, Canada isn’t waiting around for state-by-state weed normalization.

From Financial Post once more:

Canada’s Liberal government announced last year that it plans to table legislation this spring that will make recreational marijuana use legal. The Canadian recreational market, expected to be operational by 2018, has been estimated to be worth as much as $10 billion.

So, presuming Jeff Sessions doesn’t ride in on a DEA all-terrain vehicle and pull California's cash crop out by the roots, the Canadian market will be on a par with the Golden State’s, but will have a wider global impact than the international reach of all 50 U.S. states combined.

“When America is ready,” , Canopy Growth CEO Bruce Linton told the Financial Post, "[the Canadian producers] can enter with strength rather than participate in the evolution of a frayed market.”

Don’t hold your breath until then, Mr. Linton—unless you’ve just taken a big dab.

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