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- Canada opted to fully legalize marijuana in mid-June. What dominoes will that tip?
And while Uruguay was the first country to do so, Canada is the first Group of Seven (G7) nation to legalize marijuana. G7 consists of Canada, Germany, France, Italy, Japan, the United Kingdom and the United States, and it accounts more than 62 percent of global net wealth.
“It is our hope as of Oct. 17, there will be a smooth operation of retail cannabis outlets operated by the provinces with an online mail delivery system operated by the provinces that will ensure that this happens in an orderly fashion,” Trudeau said during a news conference following the Canada Senate’s passage of Bill C-45.
Naturally, with Canada taking one of the more progressive steps in the world of cannabis, the focus can and will be directed back toward the United States. As it stands, nine states and Washington, D.C., have legalized adult use of marijuana and 31 states, the District of Columbia, Guam and Puerto Rico allow for medical usage.
But with marijuana still illegal at the federal level, the most immediate impact on U.S. markets — according to Morgan Fox, media relations director for the National Cannabis Industry Association — will be felt from a tourism standpoint.
“I don’t necessarily think it’ll affect it too much in general [in the United States], since it is still illegal federally,” Fox said. “But if anything, it may have an impact on Canadian tourists who come to the U.S. specifically for cannabis tourism.”
The number of out-of-state tourists reporting they are more likely to visit Colorado because of marijuana has climbed 10 percent since 2013, according to the Colorado Tourism Office. They also conducted a survey two years after legalization that found 12 million tourists (15 percent of all tourists) participated in marijuana activity and 5 percent were motivated to visit the state because of marijuana.
But the bigger, more long-term effect is whether Canada’s move will open the door for federal legalization in the U.S.
“Right now there’s definitely a strong undercurrent of advocacy at work in the industry, but it needs to increase,” Fox said. “This is something that needs to happen.”
Fox also noted that European countries are looking into recreational legalization, as well, meaning that if the U.S. continues to ban the drug federally, it could soon be an outsider.
“The existing cannabis industry here is a wonderful example of innovation and professionalism,” he said. “It would be a pity to see all that talent and all those resources be locked in the current system that we have while we’re watching other countries surpass us.”
Of course, there’s already plenty of dispute on the matter of federal legalization, as both the U.S. and Canada were part of the global prohibition on marijuana from the 1961 United Nations Single Convention on Narcotic Drugs, which classified marijuana as a Schedule I drug along with heroin and LSD, among others.
The U.S. had maintained it was not in violation because marijuana is still federally prohibited, but Canada will technically be in violation of international law. Attorney General Jeff Sessions rescinded Obama administration memos that called for non-interference with states that had permitted marijuana consumption. And while President Donald Trump reportedly committed to U.S. Senator Cory Gardner, R-Colorado, that he would not interfere with state legal industries, Sessions seems as intent as ever on cracking down. Meanwhile, Senate Minority Leader Chuck Schumer, D-New York, has introduced a bill to remove marijuana from the Controlled Substances Act, decriminalizing it federally and allowing states to regulate it or outlaw it as they please. A similar bill was earlier introduced by Gardner and Sen. Elizabeth Warren, D-Massachusetts.
While Canada’s federal legalization is complicated and will take time, the country did allow for a more symbolic moment for the marijuana industry, and one that will heat up the conversations and advocacy for nationwide legalization.
“Canada helps the conversation,” says Daniel Yi, senior vice president of corporate communications and investor relations for MedMen Enterprises. “From an economics standpoint, it’s not as significant. It’s a smaller market than California; it’s a smaller economy than California. But it’s good, having a G7 country on a major global stage legalizing adult use and, quite frankly, exercising common sense, which I think we should be doing here, it’s great for the conversation.”
Yi made it clear that Canada’s legalization did not come as a shock to those at MedMen. The cannabis company, with operations in California, Nevada, New York and Florida, has a joint venture with The Cronos Group to open facilities in Canada.
“It’s not like we stopped to celebrate, because I think this industry is very much on this track to get to this future world (of full legalization),” Yi says. “We didn’t stop in our tracks to soak in this moment.”
MedMen went public a little more than a month ago on the Canadian Securities Exchange, and its valuation is $1.6 billion, making it the most valuable public cannabis company in the U.S.
While some marijuana shops may take a hit because of a decrease in Canadian tourists, MedMen will gain from legalization in Canada by immediately entering the market. And Yi thinks the state-level impact we will see in the near future will be more northern states revving up for recreational-use policies.
So while the company isn’t stopping to celebrate, they recognize the long-term goal of full-blown legalization in the U.S. — something Yi says the company is 100 percent confident will happen — is getting closer, even if it takes baby steps to get there.
“If you look at the track record in the 22 years since California became the first state to legalize marijuana, if you look at the trajectory of acceptance of marijuana in the mainstream, it’s been an exponential trajectory,” Yi says.