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America’s Neighbors Apply Peer Pressure on U.S. Cannabis Policy

America’s Neighbors Apply Peer Pressure
PHOTO Tony Webster

Politics

America’s Neighbors Apply Peer Pressure on U.S. Cannabis Policy

While Canada works out the details for its federal cannabis legalization program, Mexico’s knocking at the door. The pressure is ramping for America to answer.

When it comes to marijuana, the drug war is quickly turning into a rout, with prohibition in broad retreat. Look no further than the surrender of the America’s closest geographical neighbors, Mexico and Canada. Both have opened the doors to recreational cannabis in the past year — and it’s already having a downstream impact on the U.S.

The most obvious impact is that it’s getting harder for federal officials to combat the case for legalizing recreational use. Canada was the first G7 country to legalize the plant, opening up its market on October 17, 2018, and the sky hasn’t fallen in since. Other European countries are also likely to follow suit within the next decade, according to Marijuana Policy Project’s Deputy Director Matt Schweich.

“There’s a steadily growing sense among global leaders that marijuana prohibition is a misguided policy,” Schweich says. “Canada and Mexico moving forward certainly increases the pressure on the United States.”

Already 11 states have legalized recreational use, with the state of Illinois being the latest. It was the second to do so by legislative action, following Vermont. Previously it had taken ballot initiatives to drag legislators toward the predominant public view.

Then there’s the odd fact that almost half the states that have changed their cannabis laws share a border with Canada (Michigan, Alaska, Washington, Vermont and Maine). Because their actions predated Canada’s move, it’s possible to consider Canada originally bowed to pressure from U.S. states, but it appears the pendulum could now swing back.

To the south, marijuana use in Mexico resides in a legal gray area. A series of court cases over the past four years culminated in a Supreme Court ruling in October that sets the stage for legal weed. The court’s ruling determined that Mexicans have a binding right to grow and consume cannabis, and gave the country’s legislature the task of writing the new law. The journey’s not over in Mexico; a legislative fix must be produced by October 2019 and that poses its own issues.

In both cases, the policy reversals mark the success of the popular will and the failure of drug prohibition.

“What fuels all this debate about drugs in Mexico is exhaustion from the War on Drugs,” says Tony Payan, Director of the Mexico Center of the Baker Institute for Public Policy at Rice University. “[Andrés Manuel] Lopez Obrador rode that exhaustion to the Mexican presidency.”

Driving the change in Mexico is an odd legal construct called “amparo,” which Payan describes as a cross between an injunction and an annulment. It allows any citizen or entity to stop the government from enforcing the law against them, provided they have a proper excuse.

Amparos against prosecution for smoking marijuana for medicinal reasons had succeeded on numerous occasions, but then this summer, actor Gael Garcia Bernal pressed a very public amparo to use recreational marijuana — and won.

“The court essentially told him he could have one cigarette of marijuana for recreational purposes per day,” Payan chuckles. “They were very specific.”

However, while the courts have sided against prohibition, a legislative fix could be a long time in coming. First off, Mexico’s President Lopez has many more pressing concerns. Beyond that, Lopez’s political party, Morena, might have trouble moving legalization due to its “Faustian bargain” with the country’s evangelicals.

“They are not a huge force in Mexico, but they’re substantial and important enough that they can influence policy,” Payan says. “And the evangelicals are not likely to approve of this.”

Given the miles Mexico still has to travel on the road to legalization, Schweich feels there’s nearly as much pressure on the U.S. government as from the Southwestern states to legalize cannabis as from Mexico, as Texas and Arizona increasingly push for legal cannabis.

But Schweich says that U.S. citizens aren’t looking to legalize cannabis just because other countries are doing so.

“Research tells us that most people want to end marijuana prohibition for other reasons,” says Schweich. “Namely that marijuana prohibition is a waste of law enforcement resources and that marijuana arrests disrupt and even ruin the lives of otherwise law-abiding adults.”

Indeed, the greatest pressure may not be from other countries or recreational users but commercial concerns as companies struggle with the disconnect between federal and state laws.

“Canadian companies, for example, don’t have to worry so much about issues with banking and taxes, which create headaches for cannabis operators in the U.S.,” Schweich says. “The inability to deduct business expenses from their tax liability puts a strain on liquid capital and business investments. Federal law also prevents the legal movement of cannabis across state lines. It’s clear that federal law is limiting U.S. cannabis companies’ growth in key ways.”

Meanwhile, so much money is pouring into Canada, they can’t even make use of all of it there.

“We’re seeing a lot of U.S.-based companies that are going public in Canada and these Canadian companies are flush with cash. They have more cash than they can reasonably deploy within Canada,” says David Abernathy, vice president for data and government affairs for Arcview, a cannabis consulting firm. “So they’re looking at international markets. They’re investing in acquiring U.S. companies as well as looking at infrastructure for export to Europe.”

It’s worth noting that the California recreational market alone is larger than Canada. So it’s easy to overstate the advantage of a head start. However, the regulatory hoops created for American companies can only hinder their efforts as interest in cannabis grows.

“Some U.S. cannabis companies are already operating in multiple states, which potentially gives them greater market access than their Canadian counterparts,” Schweich notes. “Being able to tap into U.S. consumers could be a decisive factor in which companies end up becoming the dominant players in the global cannabis economy.”

TELL US, do you think America is leading on cannabis policy?

4 Comments

4 Comments

  1. Maxcatski

    July 31, 2019 at 9:00 am

    Good luck with federal legalisation In your life time, Beachken. This will require Democratic control of both houses and I don’t see that happening for a while. And, when it does, your taxes are going to be ridiculous.

    Meanwhile, here in Canada, we have a robust, federally legal system with unlimited production allowed for both medical and recreational cannabis. Sure, there is too much packaging but at least our pot is regulated! Canada rules! And in my lifetime, too.

  2. sonny

    July 26, 2019 at 2:21 pm

    one joint a day?did it say how big the joint can be?you get my drift.

  3. beachken

    July 26, 2019 at 7:12 am

    Overall, we’re doing good as a host to cannabis.

    Sure Canada was first, but the government has too many fingers in the distribution and sales. Everyone knows how agile and competitive governments are when it comes to taxes and product promotion. Cannabis is viewed as a cash cow by the government, high taxes reduce overall legal sales. Packaging requirements coupled with restrictions on product marketing will keep Canada as an also ran in cannabis.

    Mexico will have rules in place by October for recreational cannabis. They will probably be in commercial production 1st Qtr 20. Mexican cannabis, long a staple, inexpensive option(illegal) for the US, has a reputation of being ‘cheap'(price & quality) and that’s now a problem. They’ve already earned the reputation, tough to change.

    American MSOs are ideally situated in the grow zones. Legal & Medical state numbers continue to grow. Only thing holding American MSOs to the ground are current federal laws. Cannabis must be legalized and treated like other business. I expect banking will be freed to service the industry this year and the federal government will completely legalize cannabis in 2020 due to political(reelection) pressure.

    • Maxcatski

      July 30, 2019 at 6:23 am

      Good luck with federal legalisation In your life time, Beachken. This will require Democratic control of both houses and I don’t see that happening for a while. And, when it does, your taxes are going to be ridiculous.

      Meanwhile, here in Canada, we have a robust, federally legal system with unlimited production allowed for both medical and recreational cannabis. Sure, there is too much packaging but at least our pot is regulated! Canada rules! And in my lifetime, too.

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