Canada’s Legal Marijuana Attracts Some U.S. Cannabis Companies

Oct 19, 2018

After nearly a century of prohibition, Canada became the first major economy this week to legalize recreational marijuana (though Uruguay was the first in 2013), and it has U.S. companies lining up.

For Canadians, legalization has opened new business opportunities. A report by the CIBC, one of the country’s largest banks, predicts the industry will grow to $5 billion (USD) by 2020. But Canadian businesses aren’t the only ones vying for a foothold in that market, which officially opened Wednesday.

One of the largest cannabis dispensaries in Colorado, Native Roots, has sold recreational marijuana since the state legalized it in 2014. The company currently has 20 storefronts located across the state, but their two newest locations will open in Winnipeg next year.

Native Roots communications manager Kim Casey said the company will use the brand name “garden variety” and that they hope to have a total of four stores in the province of Manitoba in the next few years.

“Canada is very appealing because of the very welcoming business environment,” she said.

Because federal law still bans cannabis in the U.S., companies like Native Roots are barred from federally regulated resources, like traditional banking and business loans. And their customers don’t have the convenience of using a credit card. Casey said the company values the expertise they’ve gained in Colorado, but they’re excited about growing in a country with fewer restrictions.

“The entire cannabis industry is exceptionally excited about Canada,” she said. “It does open up an entire new avenue ... which is that it has federally legalized (cannabis) across the board.”

Others in the U.S. industry see this step as a sign that the U.S. Congress needs to act. Neal Levine, the CEO of the Cannabis Trade Federation, a national coalition of cannabis-related businesses, called the continued prohibition on cannabis in the U.S. illogical.

“Why send an industry to other countries when the states are so far down the path and the industry is advancing at such a rapid rate?” he said.  

Levin is hoping for passage of the bipartisan STATES Act, which promises to grant states greater control over the cannabis industry. Among many things, it would remove existing barriers for cannabis business owners and exempt them from federal prosecution.

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