Canadian Cannabis Entrepreneurs are Afraid of the US – Here's Why

Canadian Cannabis Entrepreneurs are Afraid of the US – Here's Why

Canada is about to become the first G-7 nation and only the second country in the world to fully legalize both medical and recreational cannabis. Despite our neighbor to the North approving the plant, the United States is standing firm on its federal ban. In fact, many Canadians involved with legal cannabis are running into issues when trying to enter the U.S. – and some are even receiving lifetime entry bans due to their dealings with something that will soon be legal in their home country. This impacts both people directly involved in “plant-touching” businesses (such as growers and processors) and investors.

Recently Sam Znaimer, a Canadian businessman, was denied entry to the United States while attempting to cross the border in Washington state. Border officials said his investments in U.S. Cannabis companies made him ineligible to enter the country and issued a lifetime ban.

“In the course of four hours, they never did ask [about cannabis consumption] and I believe that was because they wanted to send a message to Canadians that it has not only to do with your personal behavior but whether in any way you have invested in these companies,” he said in an interview with CTV-Vancouver. “I was truly shocked by what happened to me.”

While Znaimer cannot appeal the ban, he is filing for a temporary waiver which would permit him to cross the border for up to five years. Problems at the border could impact thousands of Canadian investors who have put an estimated $25 billion to $30 billion into Canada's biggest pot production companies.

Barinder Rasode, the CEO of the National Institute for Cannabis Health and Education, says a fear of a lifetime ban is leading some business people to take extreme measures.

"[They are] wiping their phone clean or only communicating in certain apps so they can delete the app, or even shipping their phone ahead to their destination,” he told the CBC. “These are realities we're not used to as Canadians."

Some industry insiders believe that the issues Canadians are facing at the border are just another example of how the U.S. is lagging behind on the global cannabis scene, which could cause a ripple effect.

"Canada has matured as a market, with better regulation, faster and earlier," said analyst Giadha Aguirre De Carcer in an interview with CBS News. "It could have a very damaging effect to legal cannabis businesses in the United States, and it could do so to the point of crippling the market."

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David Kani

David Kani is a Newport Beach, California based business lawyer with a focus on cannabis companies, their investors, employees and cannabis-related litigation.
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