Canadian cannabis business leaders and investors are simultaneously thrilled and disheartened by U.S. Attorney General Jeff Sessions’ revocation of an Obama-era policy that allowed legal cannabis to flourish in states across the country.
Sessions, who has equated weed with heroin, released a memo on Thursday rescinding a 2013 policy that provided narrow guidelines for federal prosecutors on when they could target cannabis business people in states that have legalized cannabis. This could impact states that have opened legal cannabis markets, such as Washington, Colorado, Oregon, and, most recently, California, which is now the world’s biggest cannabis market.
A reversal of this policy encourages U.S. attorneys in states with legalized cannabis to enforce the federal cannabis ban.
“Given the Department’s well-established general principles, previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately,” Sessions wrote in a memo issued by the Department of Justice that heralded the move as a “return to the rule of law.”
Canadian 'head start'
American cannabis advocates have already slammed the memo as flying in the face of public opinion that broadly supports legalization and hindering an industry estimated to be worth around $16 billion. The threat of prosecution could further stifle the businesses that are already prohibited from operating on a national, let alone global, scale.
In Canada, where medical cannabis has been legal for decades and legal recreational cannabis market will open this year, business leaders and analysts say Sessions’ move will boost Canada’s already thriving cannabis sector.
But that optimism is somewhat dampened by the fact that the policy reversal further perpetuates the war on drugs south of the border.
“I don’t want to be out there cheerleading this policy, because it’s a net negative for the cannabis industry in general, but from a purely selfish Canadian perspective, it just prolongs the head start that we have,” Aaron Salz, a cannabis investment advisor who founded Toronto-based Stoic Advisory Inc. told VICE News. Canada’s legal recreational market will open this year and will allow adults over 18 to purchase and consume cannabis in certain forms. Exactly how it can be sold and consumed is being decided by individual provinces and territories.
Medical cannabis companies licensed by Health Canada (licensed producers) will supply the country’s future legal recreational market expected to be worth billions annually, and many have already been granted licenses to export their product to other legal markets around the world, such as Germany and Australia. Canadian licensed producers such as Canopy Growth and Aurora are already worth billions and have positioned themselves to be global leaders in legal pot sales.
“Historically [U.S. companies] haven't been competitive because they can’t be. They can’t go into these markets,” Salz explained. “So you see a policy like this and it kicks them back a notch. Our head start of a couple of years now turns into three or four, longer than we expected.”
Even though Canadian cannabis stocks, including Canopy and Aphria, plunged following the news of Sessions’ policy reversal, Aurora’s executive vice president Cam Battley told VICE News that Canada’s cannabis sector can only benefit from it. But like Salz, he’s wary of being too overjoyed by any policy that demonizes cannabis.
“We’ll see a prolonging of the social harms associated with cannabis prohibition. And we can anticipate at least in the short-term that this could hinder U.S. cannabis [businesses],” Battley, whose company just partnered with a Danish tomato company to cultivate weed in Europe, said in an interview. “It’s an odd feeling to know that this may very well benefit the Canadian cannabis sector by driving more investment and investors and opportunities to Canadian companies. And it does suggest also that for the foreseeable future as companies like Aurora expand around the world, we will not be bumping into U.S. competitors."