Canadians will be surrounded by the logos of new recreational cannabis brands at a variety of fun events this summer as pot purveyors are exploiting a once-in-a-lifetime chance to market their products before government restrictions fully kick in.

At recent concerts by both classic rockers Jethro Tull and rap superstar Kendrick Lamar, banners bearing the Tweed logo were everywhere at Toronto's Budweiser Stage. Tweed is the recreational brand of Canopy Growth, a marijuana company based in Smiths Falls, Ont.

Alberta-based Aurora Cannabis is inviting music fans to enter a ticket contest to see free shows by Kings of Leon, The Cult and Sam Roberts, among others, at venues across the country.

And then there's Up Cannabis and members of the Tragically Hip, which recently staged a music and lifestyle event for media in the countryside outside of Toronto, where bassist Gord Sinclair unveiled Up's new strains of cannabis — named for the band's songs.

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Top photo courtesy of Adobe Stock

This article originally appeared in the June 2018 print issue of Cannabis Business Times. To subscribe, click here.

The world is watching as more states around the nation legalize marijuana for medical and recreational purposes. The lion’s share of the West Coast has begun permitting cannabis for adult use, and it appears the Northeast-another economic behemoth with significantly more cross-border traffic-is quickly headed in the same direction.

So how will the dominoes fall on the East Coast (which market research firm Brightfield Group projects will host a $2.5-billion cannabis market by 2022)?

First Off the Line

Massachusetts: Among the two enterprising states that have led the East Coast in legalizing recreational marijuana as well as regulating its sale, Massachusetts appears to be (by far) the most likely to ramp up growth quickly and attract a great deal of cannabis-driven tourism during its first years-especially from neighboring New York. Sales are set to launch this summer after some minor regulatory setbacks.

5-year market size forecast: $589 million

Maine: Though it has moved to legalize and regulate an adult-use marijuana program early (compared to other East Coast states), given Maine’s remote location, it is not expected to be a major tourist draw (especially with Canada set to legalize recreational cannabis this summer, robbing the state of more tourism revenue). Its limited population will keep the program small, and top-down delays in program implementation continue to hamper recreational growth prospects in the state.

5-year market size forecast: $222 million

To read the full article in the June 2018 issue of Cannabis Business Times, click here

Top photo courtesy of Adobe Stock

Editor's Note: While Supreme Court nominee Brett Kavanaugh has not ruled on cannabis-related issues, per se, his past judicial orders on health care issues may provide insight as to how he will influence the court--in the event that the U.S. Senate confirms him.

WASHINGTON — Brett Kavanaugh, President Trump’s nominee for the Supreme Court, has left a trail of rulings and opinions concerning the Food and Drug Administration, pharmaceutical companies, and medical device manufacturers in his dozen years on the District of Columbia circuit court.

At one point, Kavanaugh urged judges to defer to the FDA and other scientific agencies, largely on the grounds that courts could not compete with the agencies’ expertise. He also sided with the FDA in a case over whether the agency should be forced to provide access to an unapproved drug.

Kavanaugh, whom Trump announced as his second nominee to the nation’s highest court on Monday, has sat on the District of Columbia Circuit Court of Appeals since 2006. Health care, broadly, is expected to figure heavily into the Senate’s fight over his confirmation: specifically, whether Kavanaugh would support upholding provisions that guarantee insurance coverage for Americans with pre-existing health conditions, and whether he would rule in cases involving access to abortion.

But the 53-year-old Yale Law graduate already has a wealth of experience in other cases of varying political importance and obscurity within the health care industry.

In 2007, Kavanaugh was among an 8-2 majority when the D.C. Circuit Court upheld a ruling that terminally ill patients had no constitutional right to access unapproved drugs.

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For years, U.S. Customs and Border Protection (CBP) officers have been given the discretion to quiz incoming Canadian citizens about their past marijuana use. As a Schedule-I substance, of course, marijuana use remains federally illegal in the U.S.

Anecdotes litter the websites of major news organizations: People who say they’ve smoked marijuana in the past have often been barred from entering the U.S., in some cases forever. 

Canada’s marijuana legalization law is expected to go into effect  mid-October. According to a 2018 CBC News report, as much as 40 percent of the Canadian adult population may purchase and use legal marijuana. That translates to a major problem at the border, if CBP questioning continues apace.

Len Saunders, an immigration attorney in Blaine, Wash., says that the problem not only persists—but that this particular brand of border patrol is becoming more focused, more intense. He testified before a Canadian Senate committee on March 19: “When Trump talks about building a wall on the southern border, I see a wall on the northern border for Canadians because of marijuana,” he said.

Nowadays, it’s not only cannabis users who are getting caught up in border disputes. Saunders says the entire cannabis business class of Canada could be detained and questioned—and possibly barred from the U.S. for life.

“It used to be the marijuana-related cases were almost always someone who admitted to smoking it,” Saunders tells Cannabis Business Times. “Within the last six months, I’ve seen a huge uptick on people who work for or own a marijuana-related business.”

He points, by way of example, to venture capital companies in Canada that have begun pouring investments into U.S. cannabis companies. With only nine states having passed legal adult-use cannabis laws so far, the market remains fragmented. Access to capital is limited at best, and, with no formal path to domestic stock exchanges or small business loans, foreign investment is often a tentpole financial strategy for legal U.S. cannabis businesses. Investors across the border in Canada are a prime source of much-needed capital.

And the investment trend isn’t slowing down.

“It’s going to make it worse,” Saunders says. “The Americans know that Canadians are producing it, … [and] it’s going to make Canadian business executives a target.

“When the Americans—the CBP—pick up that these individuals are involved in the marijuana business, even indirectly, they’re denying them for one of two reasons: reason to believe that they’re involved with drug trafficking, which is a legitimate reason for denying them, or they're living off the proceeds of drug money because they're making money,” Saunders says. “They’re indirectly getting paid through the marijuana industry. These are people who don’t grow it, they don’t sell it. They’re merely involved with basically raising money and financing it from Canada.”

The increased pressure is placed on all corners of the cannabis industry—not simply investors who are financing its growth. The Toronto Star ran an article in early July that detailed one business executive’s experience and subsequent lifetime ban from entering the U.S.

From the newspaper: "Jay Evans, CEO of agricultural equipment manufacturer Keirton Inc., was crossing into the U.S. in early April along with two employees, both engineers with Nexus passes and spotless criminal records. 

"They’d intended to meet with an American company to begin design work on a new machine that would streamline labour costs for cannabis producers.

"'We had not yet designed the product, we had not yet marketed the product and we’d not yet sold the product,' Evans said in an interview.

"During routine questioning, one of the three men mentioned their design would eventually be used in the Canadian cannabis industry, and they were immediately taken into the secondary inspection facility for further scrutiny.

"Keirton is not involved with the production, distribution or sale of cannabis. But because its equipment is explicitly intended to be used by people who are, Evans and his colleagues were told after a six-hour interview they were 'drug traffickers' according to U.S. federal law.

“'The border guard supervisor told me he felt really bad, and felt it wasn’t right, and had a lot of empathy toward us,' Evans said.

"Nevertheless, Evans and his coworkers now have lifetime bans on entering the United States, and must obtain waivers allowing them temporary entry into the country."

Cannabis Business Times has filed a Freedom of Information Act request to obtain records of Canadian citizens being turned away at the U.S. border for these reasons.

“The Americans know that Canadians are producing it, and it’s going to make Canadian business executives a target."

- Len Saunders

U.S. Customs and Border Protection provided this statement to CBT:

“U.S. Customs and Border Protection enforces the laws of the United States.  Although medical and recreational marijuana may be legal in some U.S. States and Canada, the sale, possession, production and distribution of marijuana all remain illegal under U.S. federal law. Consequently, crossing with marijuana is prohibited and could potentially result in fines, apprehension, or both.

 “CBP is always concerned about criminal activity at our U.S. borders. CBP officers are the nation’s first line of defense, including prevention of illegal importation of narcotics, including marijuana.  U.S. federal law prohibits the importation of marijuana and CBP officers will continue to enforce that law.

 “CBP works closely with state and local law enforcement partners. If an individual is suspected of driving under the influence, CBP will coordinate response with the proper local authorities.

 “CBP officers are highly trained to detect the illegal importation of narcotics. CBP’s mission to prevent this illegal importation will remain unchanged.”

 If someone is suspected of working or investing in the cannabis industry (or if he or she admits to doing so), CBP officers may send the person home and insist that if they do attempt to cross the border in the future, that they do it only for “pleasure” purposes; officers are given broad discretion in deciding when and how to allow someone a pass. (Cannabis Business Times has also filed a Freedom of Information Act request to obtain all internal memos relating to this discretion.)

On the other hand, officers may put the traveler under oath and take a sworn statement on his or her purpose for traveling—and his or her role in knowingly violating the country’s controlled substances laws. The traveler may then receive a lifetime ban from traveling to the U.S., if the officer decides it’s warranted.

Then, to apply for a waiver, a Canadian citizen must provide proof of employment (ideally not by a cannabis business), two character-reference letters and a “letter of remorse.” They must also submit to a criminal background check. Waiver applications cost $585 to file, and then there are the attorney fees and the standard four- to six-month waiting period. The waiver, if approved, is only good for one to five years.

In sum, the problem adds up to a considerable amount of time dedicated to an issue that, by late summer, will no longer be illegal on one side of the border (and on broad swaths of the U.S. side).

“Americans are worried about a ‘thickening’ of the border,” Saunders says, “and about it being a business issue for Canadians coming down here.”

Policy experts tend to agree. According to the Border Policy Research Institute’s 2018 report, “Cannabis in Cascadia: Impacts of Legalization in the Region,” longer wait times are inevitable under the current U.S. federal law enforcement regime: “[I]f legal cannabis sales are any indication of usage trends, the region is likely to see a growing number of consumers. This could result in ports-of-entry like Peace Arch/Douglas, the second busiest passenger crossing on the Canada-U.S. border, dedicating a disproportionate amount of inspection time and space to issues related to personal consumption [or] possession of cannabis. This has the potential to ‘thicken’ the border by consuming infrastructure and staffing resources.”

One concern cited by Saunders—drug trafficking, or “diversion”—has become less pronounced with the early waves of legalization. While U.S. law enforcement patrols the Colorado-Kansas border for cannabis products being transported across that state line, as a counter-example, the U.S.-Canada border is surrounded almost entirely by legal (or soon-to-be-legal) markets, including Washington state, Maine, Vermont and Michigan. Canada’s legalization efforts are crystallizing into a regulated marketplace this fall.

“Legalization on both sides of the border, however, should decrease illicit flows of cannabis into Washington, as the profitability of trafficking a substance that is legal on both sides of the border diminishes,” according to the Border Policy Research Center report.

During the March 19 hearing, Canadian Sen. Mobina S.B. Jaffer (British Columbia) put the question out there: Would the U.S. CBP amend its policy after Canada’s legalization is in place?

“It is obviously unclear whether the federal government in the U.S. will move forward with such reform,” John Hudak, deputy director of the Center for Effective Public Management in the Brookings Institution said at the hearing. “My guess, however, is that there would be significant pressure, given a new legalization regime in Canada, to amend those policies in ways that allow Canadians entry into the U.S. while still speaking honestly with U.S. border agents. I think it would be an extraordinary moment in a country that now has states that have legalized cannabis that include about 20 percent of the American population to say to a friendly neighbor that, no, we won’t reform our laws to reflect the reality of their own.”

For now, the reality remains uncertain. Again, from the Border Policy Research Center report: “The policy framework that will guide U.S. CBP in these matters remains to be seen, but if small amounts of personal possession (which are legal in Washington, forthcoming in Canada) result in enforcement or administrative actions that require secondary referrals, it is likely that the border will indeed thicken for all travelers in the region.”

Top photo courtesy of Mat Hayward/Adobe Stock

Assistant digital editor Melissa Schiller contributed reporting to this story.