Here’s How a U.S. Federal Marijuana Crackdown Could Affect Canada

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Here’s how a U.S. federal marijuana crackdown could affect Canada By Patrick Cain. An employee of a newly legal cannabis store in California shows products to a customer on January 2, 2018. Despite what his T-shirt says, however, marijuana is still federally illegal in the U.S.

On New Year’s Day, California became the latest — and most populous — U.S. state to legalize marijuana.

But the U.S. federal ban on marijuana hasn’t gone anywhere, though a delicate Obama-era truce between Washington and states that have legalized recreational cannabis prevented a crackdown — up until now.

As Californians revelled in their new-found freedom, federal Attorney General Jeff Sessions, a diehard enemy of marijuana who has compared it to heroin, has signalled that the party may end before it’s really started, opening the door to a federal crackdown on legal marijuana in tolerant states.

So what will it be like for Canada, with full legalization of recreational pot, to live next to a big, powerful country whose government is more and more hostile to it (even as the American public gets more tolerant)?

There’s good news and bad news. First the good news:

It may open the way to Canada dominating the marijuana research industry internationally.

Because recreational pot is still illegal in the U.S., lenders are edgy about giving marijuana businesses credit. If you lend a business millions of dollars, you need to be sure that U.S. marshals won’t show up with a warrant, and that your own profits won’t be defined as the proceeds of crime.

Last June, for example, a medical cannabis processing plant operating openly in Santa Rosa, Calif., was closed by police, who confiscated millions of dollars worth of machinery and arrested the owner.

And in October, the TMX Group, the company that operates the Toronto Stock Exchange and the TSX Venture Exchange, warned that companies with business activities that violate U.S. federal law regarding marijuana could face delisting.

Canadian pot entrepreneurs have made the case that the logical place for a flourishing cannabis industry, especially expensive time-consuming research into new recreational and medical products, is Canada.

(Having said that, some investors apparently disagree — Canadian and American marijuana stocks both fell today on the U.S. news.)

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