“The U.S. is the one that turned the industry into what it is today, with all the products we make, not Canada.”
Canada is reaping the rewards of exporting its pot far and wide as a conflicting patchwork of regulation keeps the U.S. from entering the fray.
The crop may be legal for recreational use in about a dozen U.S. states (and the District of Columbia) but it remains prohibited at the federal level, meaning companies are not allowed to ship their products to other countries, or even other states.
A report released by Arcview Market Research and BDS Analytics paints a grim picture of the business that is passing the U.S. by. Worldwide sales of cannabis were expected to rise 36 per cent to US$14.9 billion in 2019 and surpass US$40 billion by 2024. It is a massive untapped market.
“Canada has a huge advantage, because they can fill a gap,” said Rezwan Khan, vice-president of global corporate development for DNA Genetics, according to CPR.
While Canadian companies have been raising capital and establishing trade ties, U.S. firms, and their “superior” product have been forced to watch, Khan said. U.S. expertise is hard to match, he argued, because California has been growing the product legally since 1996, longer than anywhere in the world, save for Amsterdam.
“California has been the epicenter of cannabis culture for many years,” he said.
This experience has led to innovations in production and genetics that are highly sought after, said Michael Sassano, CEO of Solaris Farms, owners of a massive marijuana hybrid greenhouse. “The world wants that technology,” Sassano said.
“The Netherlands had a big jump; they could have done anything. But the U.S. is the one that turned the industry into what it is today, with all the products we make, not Canada,” he added.
Still, Canada is the one reaping the rewards. Legalizing the drug at the federal level has streamlined regulatory issues for companies north of the border, giving them access to valuable banking services not easily attainable in the U.S., as well as the ability to ship their wares abroad. And with a bill that would remove cannabis from the list of prohibited substances stalled in the U.S. Congress, the situation likely won’t change anytime soon.
“There’s more than enough time for American companies to catch up,” said Kris Krane, president of 4Front Ventures, a company that produces and sells cannabis in nine U.S. states. “But the longer that we wait, the longer we continue to maintain this unsustainable prohibition, the more difficult it’s going to be for American companies to catch up,” Krane suggested.
“It’s just a matter of time,” he said. “How much time is very much a question of debate.”
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Written by David Yasvinski