The Prime Minister of Canada, Justin Trudeau, celebrated last night as he was a able to keep one of his top campaign promises. While Canada’s Senate voted and approved the Cannabis Act or C-45 on June 8th which legalized marijuana nationally, the bill was finalized yesterday by a vote of 52-29 making Canada the first G7 country in the world to permit the adult-use of cannabis legally. The new framework for the law is set to be in place by sometime in September.
The world will now turn its attention to Canada’s economic powerhouse of a southern neighbor, the United States. Our country is driven by financial gain, yet the economic promise of the fastest growing industry has made little difference to many lawmakers on Capitol Hill. Nine states along with Washington D.C. have legalized adult-use cannabis on a state level but with a Schedule 1 status on the Controlled Substance Act, marijuana remains very illegal federally.
Canada has implemented a cannabis law with very strict regulations, and so marijuana legalization opponents here in the U.S. will be able to see whether cannabis can be an effective legal commodity contributing to a large economy, or instead tear it down, if states like Colorado and Washington have not already proven the former. Canada’s new law allows adults 18-years or older to carry up to 30 grams of legal cannabis on their person while in public, and cannabis must be purchased from a province or federally licensed dispensary and cannot be sold with alcohol or tobacco. Legal punishments for driving under the influence of cannabis or selling it to a minor were increased as well. And, laws have been specifically designed to protect Canada’s youth, mirroring their laws surrounding both alcohol and cigarette sales and marketing to minors.
At the heart of Prime Minister Justin Trudeau’s push for nationally legalized cannabis is the protection of children. He has time and again spoken about eliminating the illicit market in Canada through legalization and therefore removing a marijuana market minors could access. His beliefs towards the legalization of cannabis also has to do with having cannabis sales contribute to the Canadian economy rather than the black market. Canada’s legal marijuana industry is projected to become an over billion dollar industry especially with the high taxes they will attach to sales. According to BDS Analytics, the U.S. brought in over $9 billion in cannabis sales in 2017. Can you imagine what that number would be if cannabis was legalized nationally here?
Each province in Canada will be able to build out their recreational cannabis market as they see fit using C-45 as a base, meaning they can decide how may dispensaries can open and increase the adult-use age from 18. It sounds a whole lot like the recent bill introduced here in the U.S. by Senators Gardner and Warren, The STATES Act. If that bill were to pass it would allow each state to construct its own set of rules for the legalization of adult-use cannabis, including prohibiting it entirely. It would legalize the financial proceeds of cannabis sales allowing banks to feel comfortable that they would not be prosecuted for money laundering by accepting a cannabis company’s funds.
Earlier in the month, when Canada’s Senate first passed C-45 and The STATES Act was introduced, President Trump gave his tentative endorsement of the new bill saying he knew what Senator Gardner was doing. While on his own campaign trail, President Trump told voters that he backed states rights to decided on legalizing cannabis and the 10th Amendment. Since taking office he appointed Jeff Sessions as Attorney General which left many voters scratching their head over the President’s stance on cannabis. The attorney general rescinded the Cole Memo earlier this year which had advised U.S. attorney not to go after state legal cannabis which ultimately only scared investors away from the cannabis industry. Meanwhile, Canadian companies like Canopy Growth Corporation and OrganiGram Holdings Inc. have established themselves as world powerhouses in the cannabis industry with exporting contracts in the EU and Australia. Canopy Growth Corporation was listed on the NYSE earlier this year (CGC) and has seen a nearly 60% climb in its share price since April, approaching near all-time highs.
Now that Canada has legalized marijuana nationally, the United States will have to see just how much tourism picks up in Canada. As a data driven economy, how long do you think the businesses, politicians and people of the United States will be alright with people traveling to Canada, shopping there, eating there and just spending money? What will it do to exchange rates? What will it do to the import/export business that President Trump is plainly concerned about?