After decades of prohibition and intense policing, the American states are finally loosening restrictions against cannabis. So far, 36 states allow medical marijuana, 16 states have legalized recreational medical cannabis, and several more states are considering whether or not to pass cannabis legislation. The state-legal cannabis sector has been insanely profitable so far, earning billions of dollars in revenue and providing states with plenty of tax revenue, even amid the coronavirus pandemic, while other industries faltered.
Consequently, cannabis firms from the Great White North have been eyeing the U.S. market, waiting for the government to pass federal decriminalization laws before swooping in to for a piece of the cake. With President Joseph Biden in the White House and Capitol Hill currently in the Democrats’ control, there has never been a more ideal time for cannabis to come out from under the shackles of federal prohibition. However, the ongoing coronavirus pandemic has held the Biden administration’s attention for nearly one and a half years, and with the 2022 midterms approaching, there is a risk the Democrats may lose their tenuous hold on Capitol Hill.
David Culver, vice president of global government relations for Canadian cannabis firm Canopy Growth Corp., says these legislative changes will need to happen soon before Biden’s potentially narrow legislative window closes. Although Biden has said he supports medical marijuana, decriminalizing cannabis, and updating the Department of Justice’s classification of cannabis to allow cannabis research, he doesn’t support recreational cannabis. However, Senate Majority Leader Chuck Schumer supports legalizing adult-use cannabis, and he is currently working on a federal cannabis legalization bill with Senators Ron Wyden and Cory Booker.
At the moment, marijuana’s status as a Schedule I controlled substance makes it extremely difficult for even local cannabis companies to operate. But with the U.S. cannabis market projected to bring in $40 billion yearly, Canadian entities hope the United States eases restrictions, especially since the Canadian market hasn’t been as lucrative as anticipated.
In 2019, Canopy Growth had an acquisition deal with New York-based Acreage Holdings, which was amended last year and is contingent on a major “triggering event,” referring to changes to U.S. federal cannabis laws. According to Canopy Growth CEO David Klein, the U.S. is going to be a core market for the Canadian company.
Aphria Inc. acquired Atlanta-based craft beer vendor SweetWater Brewing Co. last November, and CEO Irwin Simon also believes the U.S. will be a major source of revenue for the Canadian company. But while the coronavirus pandemic rages on, Culver says the government will likely focus its efforts on the pandemic and turn its attention to cannabis in the fall.
Needless to say, other companies that already have a firm foothold in Canada, such as Pure Extracts Technologies Corp. (CSE: PULL) (OTC: PRXTF), would relish the opportunity to enter the U.S. market and make their mark there as well.
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