Article by Sunny Freeman, Financial Post
The groundswell of American states that bent toward legalization last week may give a big boost to Canada’s marijuana industry — not because Canadian producers want to move south, but because the drug’s murky U.S. legal status positions them to have their weed and smoke it too.
California, Nevada, Massachusetts and Maine voted to legalize recreational marijuana last Tuesday and four more states voted in favour of medical marijuana use.
The vote sent cannabis stocks in Canada and the U.S. soaring. Shares of Los Angeles-based Pineapple Express Inc. rose 29 per cent Wednesday while the legalization news pushed Canada’s largest marijuana company, Canopy Growth Corp., to a billion-dollar valuation.
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.